June 16, 2020
Motivate Val Morgan’s Chief Operating Officer, Avinash Udeshi looks at the effect of the COVID-19 pandemic on Cinema and how it will change this industry in the long term.
“I’ll be back!”
This iconic dialogue from the Terminator series comes to my mind when asked to write about the state of cinema as a medium post the COVID-19 imposed lockdown.
Cinemas, globally as well here in the Middle East, have been asked to stop operating by their respective governments. We and similar organizations thus face a serious challenge as business has come to a 100% standstill.
We are currently working from home attending to the administrative side of the business, keeping in regular contact with cinema operators, agencies & advertisers and working on pre and post-opening strategies.
While in business we are pursuing prudence on reductions where possible, we cannot deny that there is serious pressure on operational costs as cash flow management is affected by delay in collections. Luckily, we are blessed to have great partners who are supporting us as much as they can, sometimes the agencies even pay us prior to receiving the dues from their clients, and a terrific core management team that believes in protecting the work force for the day when things start to take a turn for the better.
As we have always seen, any event brings out polarizing views. In the recent weeks, we have heard doomsayers predicting the death of movie theatres and the rise of streaming services as a complete replacement. The entire incident with Trolls: Word Tour – an animated movie set to release in cinemas before the pandemic hit, being directly released on VOD has cinemas at loggerheads with Universal Studios.
The negative voices become louder when there is news that some of the smaller cinema chains or standalone movie theatres are going to close down. Yes, there will be closures but not because of the death of the medium, but instead due to a lack of liquidity or higher operational costs within these individual businesses. These pressures on profits existed even before the forced COVID-19 closures. These are the same challenges as with any other business, where the objective is higher demand and lower operational costs, in which rents play a very significant role.
In the end, let us not forget that ‘Movie Theatrical Release’ is a very successful business, and that even amid fears of competition from streaming and other media, worldwide box office revenues in 2019 reached a new global record of $42.5B, as reported by Comscore. The other rights viz. Cable, VOD, DVD etc. contribute a substantial revenue for the Studios but that is post the revenue derived from cinemas. Thus the cinema business model will continue to thrive, with KSA and China continuing to multiply their screen count. All of these “viewing outlets” will continue to live in harmony with each other and one cannot/will not be replaced by the other.
My personal opinion too is that we as humans are a very resilient race and our ability to accept hardships as a new normal has always shone through. I, for one, despaired hopelessly when wearing a mask as mandated while going for a daily walk on day one, but by the third day accepted this as a standard if I wanted to step out of my home. Similarly, once cinemas reopen with the proper safety protocols in place, there will be consumers. Initially there will be lesser admissions which will slowly rise up to good capacity, as we all love the larger than life cinema experience and are finally ‘social’ at heart.
The key to the magic of this medium has always been the consumption of content in the best viewing conditions and that is what will always drive patrons to cinema. Thus, the fact that most studios have delayed their film releases has proved that their ideal curtain raiser is cinema, a fact that negates the doomsayers.
On the overall local and global market, just like in every crisis, those who survive and/or have war chests, will come out far stronger and success stories will start rising again. One important thing to remember is that those that remain have to support each other with flexible terms and avoid rigidity.
Cinema has survived catastrophic events such as world wars and other pandemics, and will undoubtedly emerge as a medium of choice again. Our region has one of the highest cinema occupancy percentages in the world and that is not going to change. The third and fourth quarter movie releases remain intact with a number of blockbusters releasing and in fact, some of our advertisers have already confirmed that they are looking forward to returning to cinema for advertising – hence ensuring that we as a medium will not be terminated, even by a global pandemic. We’ll be back!
This article was also published in Campaign Magazine Middle East