60 Seconds on cinemas: A tough year in prospect?

September 5 2017

The current situation:

  • US cinema attendances are down 52% y-t-d (per Box Office Mojo).
  • BOM unhelpfully adds ‘summer 2017 is closing out with the worst Labor Day weekend in 17yrs’.
  • Such trends have a habit of crossing the pond.

How did we get here?    

  • TV did the damage 50yrs ago.    
  • Cinema subsequently rallied (modestly).
  • But now it faces the on-demand revolution.    
  • Services such as Netflix, Amazon Prime & Facebook Watch compete for eyeballs with cinema – and they arguably offer better value for money.

Collateral damage?

  • Multiplexes tend to be co-located with casual diners.
  • The symbiotic relationship has benefited both in the good times – but this year may be more challenging.
  • Restaurant Group (many of whose Frankie & Benny and Chiquito’s outlets are located alongside cinemas) acknowledged softer attendances hurt the latter in 2016.
  • Beauty & the Beast anchored a good Q1 this year but the outlook is less good.
  • This, alongside other headwinds faced by the casual diners (NLW, rates, consumer confidence/spending drop, input price rises etc.), is distinctly unhelpful.

Where are the winners?

  • Working harder & adding value remain critical.
  • Experiential leisure operators continue to trade strongly.
  • Casual diners add little to cinema outliers such as Everyman Media, which focuses on enhancing viewer experience by serving food and drink to seat.