What does the chart show?
It shows the number of cinema tickets sold in the UK between 1935 and 2016. The peak year was 1946 when there were 1.64bn admissions. That was followed by a gentle decline for 10 years or so, and then admissions went into freefall in the 1960s and 1970s. The industry hit rock bottom in 1984, when only 54m tickets were sold. Since then there’s been a steady recovery, with 168m cinema admissions last year — setting the scene for potential M&A activity in the sector.
Why did admissions fall from 1946 to 1984?
Growth of TV ownership played a big role — but this was not the only factor. Cinemas suffered from a lack of investment and many were dingy and dirty. Often the films were not that great either. The most popular film in 1971 was the painfully unfunny On the Buses (if you’ve never seen it, count yourself lucky). Then the rise of VHS video recorders delivered a further blow in the early 1980s.
Why did admissions pick up from 1984?
The arrival of the multiplex. More screens meant a much wider choice of films could be shown, and cinemagoers could enjoy a more pleasant environment.
“Cinemagoing is a habitual thing. So once people get used to going back to the cinema, they go more often,” says Phil Clapp, chief executive of the UK Cinema Association.
At the same time, the big Hollywood studios started to invest in big-budget blockbusters. As attendances picked up, more small boutique cinemas were opened, while existing smaller cinemas were often modernised.
Ticket sales have been pretty much static since the early noughties. Mr Clapp suggests increased competition from other leisure activities, such as bowling, sporting events and eating out has been a constraint on growth.
What’s happened to ticket prices?
Box office revenues have risen by 4.4 per cent a year since 2002, even though the number of admissions has been broadly static. Over that period, average inflation has been 2.9 per cent. Cinema operators justify the inflation-beating rise in ticket prices by pointing to the level of investment in the quality of cinemas.
How important is popcorn?
Food sales are very important because — unlike ticket revenue — the cinemas don’t have to share any of this income with the film distributors and producers. Even so, ticket sales still account for about 70 per cent of operators’ profits, with about 25 per cent coming from food sales and the rest coming from advertising.
And it’s not just popcorn. The Vue cinema chain now offers pizzas and pies at many outlets, while Odeon and Cineworld have been rolling out Starbucks and Costa Coffee shops.
What other investments are the big chains making?
In some cinemas, traditional seats are being ripped out and replaced with luxurious sofas and soft seating. This reduces capacity, but operators report it improves occupancy. Another development is “4D cinema” where your seat may move or vibrate at certain points during the film. You can’t get that at home.
With the rise of online streaming services such as Netflix, will cinema admissions start to fall?
This is the $64,000 question, according to Sahill Shan, an analyst at N1 Singer. On balance, he reckons that cinemas will not suffer too much “as long as the quality of movies remains high.” He points out that about 55 per cent of the film industry’s revenues still comes from the cinema box office — that puts the cinema operators in a strong negotiating position with the studios.
At least one of the big streaming companies is trying to work with the cinema industry, rather than against it. “Amazon sees the importance of cinema raising the profile of its titles and is very supportive of cinema releases,” says Ben Luxford, head of audience at BFI.
Get alerts on Netflix Inc when a new story is published