Research
Interview Synopsis

UK cinemas – Cineworld, Odeon & Vue – 2021 revenue & profitability opportunities

  • Multi Asset
  • Consumer
  • Europe

As the UK gears up to reopen indoor venues after the latest COVID-19 lockdown, Third Bridge Forum spoke to a former director at Odeon Cinemas Group Ltd to discuss the outlook for UK cinemas, with a focus on Cineworld, Odeon and Vue.

Click on the hyperlink below to access the full Forum transcript.

Impact of COVID-19 plot twist on UK cinemas

How long it will take to open all UK cinema sites was first on the agenda, including capacity limits and how this might change throughout 2021. “You need a minimum for the opening, I would say, of four weeks,” the expert said. “Obviously, you’ve got the issues with the equipment to check, you’ve got the stock to take in, and above all, you’ve got the protocols on the cleaning.”

While there is certainly pent-up demand, the expert doesn’t anticipate a full recovery in terms of box office earnings. “I would say there’s going to be a 50% decline this year in gross box office earnings in the UK,” they said. “In 2022, I think it will be 30%. 2023, I don’t see it fully recovering, but it will be 20%, and then for the remaining years, I see it levelling off at 10% below that average.”

After exploring the various reasons for these declines, the Interview acknowledged that many cinemas need investment, particularly Odeon. “The question to ask is ‘is there CAPEX?’, given the high debt levels in these companies, for the future, or a contribution from landlords? I think that is a risk.” Divestitures and piracy were also flagged as industry risks.

In terms of revenue trajectory, ticket pricing is expected to remain a challenge, with subscription-based incentives a significant driver. “If you looked at the UK from 2010-16, you had a 25% increase in average ticket prices. They were going up between 3% and 5% each year during that period. When you look at 2017-19, there has been a 5% decline.”

The lasting impacts of the pandemic could exacerbate pricing hurdles if attendance levels fail to bounce back. There is also a concern about rising retail costs, particularly in light of Brexit. Meanwhile, many films have moved to premium video on demand, impacting customers’ perceptions of affordability.

To access all the human insights in Third Bridge Forum’s UK Cinemas – Cineworld, Odeon & Vue – 2021 revenue & profitability opportunities Interview, click here to view the full transcript. 

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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