Cineworld set to file bankruptcy following lower ticket sales
posted Sunday Aug 21, 2022 by Scott Ertz
Many industries were negatively affected by the COVID lockdowns across the world, but a few have not recovered. It is no secret that movie theaters have been having trouble following the lockdowns. Ticket sales have not recovered to their pre-pandemic levels, and in fact, are not even close. Because of this, Cineworld, the world's second-largest theater owner, plans to file for bankruptcy in the coming weeks, according to a report from The Wall Street Journal (subscription required).
Who is Cineworld?
Depending on where in the world you live, you may or may not be familiar with the brand Cineworld. However, you are almost certainly familiar with one of their theaters. This is because they operate theaters under different names in different countries. In the UK and Ireland, they operate under the Cineworld and Picturehouse brands. Throughout other parts of Europe, they operate as Cinema World, but Yes Planet in Israel. Here in the US, they operate under the Regal Cinemas brand.
The company operates over 9,000 screens across 751 theaters under all of these differing brands. Behind AMC, Cineworld represents the second largest brand on the planet.
What caused the problems?
While AMC has managed to weather the storm of the pandemic, this has little to do with their size, scale, or behaviors. In their case, it had almost everything to do with becoming a meme following GameStop. Cineworld has not had the same luck in turning its notoriety into success, leading to this situation.
For Cineworld, and the movie theater industry as a whole, the largest problem came from customers. During lockdowns, people got comfortable with the idea of staying home to watch new movies. So many new titles came out on streaming services and, overall, viewers did not feel like they had lost enough of an experience to return to theaters for most movies. This has caused people to wait a little longer to see these movies until they come home.
The second issue is that new titles don't stay in theaters as long as they used to, and there isn't the long delay between theatrical release and home streaming that there used to be. Traditionally, there is a lead time between a movie leaving the theater and its move to DVD, streaming, or TV. Following lockdowns, studios changed their deals and started offering at-home viewing faster, sometimes at the same time as theatrical release. This change was expected to be a problem for theaters, causing AMC to boycott Universal pictures, a decision that did not stand.
A bankruptcy for Cineworld does not mean that the company will go out of business. It could mean that they are looking to restructure some of its nearly $5 billion in debt. It could also mean that they are looking to change their asset structure - possibly spinning off or selling off some of their brands. No matter what it means, it will almost certainly have a lasting effect on the movie industry for a long time to come.
Have you been to the movies as often after lockdowns as you did before? Let us know in the comments.
