Hard-hit cinemas bank on Avatar
Analysts have warned against cinema chains pinning too much hope on upcoming blockbusters like Avatar sequel, which is due to drop this week.
Although Imax’s chief exec said the James Cameron’s sci-fi movie had “one of the highest pre-sale levels we’ve ever seen”, big screens may need to do more to turn the tide – with Cineworld and Vue’s shares both down nearly 90 per cent so far this year.
Executive director at research firm Edison Group Neil Shah warned cost of living woes meant households are still turning to streaming services like Netflix instead of cinema trips.
“In the long term, any potential short and sharp stimulus provided by blockbusters such as Avatar this Christmas will be ultimately offset by reduced consumer spending in the New Year,” he told Morning Wire
This was echoed by lead equity analyst at Hargreaves Lansdown Sophie Lund-Yates.
“The enormous fixed costs that come from running a cinema chain, together with the huge debt piles many of the big names are lugging around, makes current conditions highly challenging. Sadly, one popular film won’t be enough to iron out all the bumps in the road,” she told Morning Wire
Cineworld forecast box office sales to remain below pre-pandemic levels until 2025, with concerns about footfall and delayed movies weighing down hopes.
However, media analyst at Enders Analysis Jamie MacEwan said cinema continues to be relatively “recession proof”, with larger scale Hollywood hits becoming more important than ever before.
Whereas blockbuster hits made up around 35 per cent of box office revenues pre-pandemic, they now account for over 50 per cent, says the BFI.
MacEwan said this was likely to bolster “higher-end” experiences, such as Imax or Curzon, with movies being seen as more of a “treat”.
For this reason, he said there were more “reasons to be cheerful” as head into 2023, with a roster of delayed hits set to be released