Thousands of Chinese Cinemas Could Close Permanently, Industry Report Indicates

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More than 40% of surveyed Chinese cinemas say they are “very likely to close” in the near future due to the impact of coronavirus-related closures, a new study from local film industry associations reveal.

Movie theaters have remained dark in China longer than any other country — it is now 130 days since they were ordered shut on Jan. 23. Although they may soon reopen, the move may come too late for many as the prospect of bankruptcy looms.

The China Film Association (CFA) and China Film Distribution Association conducted a survey of 187 theaters at the end of April, with participation from nearly 20 major chains including Wanda, Hengdian and Dadi. It found that as many as 42% of participating cinemas believe they are “very likely to close” in the near future.

Just 10% said they would undergo changes in ownership but continue to operate, while 28% saying they were still waiting further decisions from central management on their fate.

At the end of 2019, China had 69,800 cinema screens in operation, according to official state media. They were located at some 12,400 complexes. A 40% closure could therefore mean the loss of 5,000 venues and 27,920 screens.

Those figures tally with data previously disclosed by Asian cinema investment and industry research consultant Artisan Gateway. “China suffered the permanent closure of at least 2,300 cinemas through the first two months of the COVID-19 industry shutdown. This equals a loss of 12,000 screens, nearly 20% of China’s theatrical release capacity,” Artisan Gateway chief Rance Pow told Variety in April.

China’s top administrative body said last month that cinemas in regions with low coronavirus risks can reopen with reduced capacity and daily disinfecting measures, but operators are still awaiting permission from local authorities to do so. These approvals were expected to hit after the end of the so-called “Two Sessions” meeting of China’s parliament — which concluded last week without further signs of green-lighting.

Online ticket sites such as Alibaba’s Taopiaopiao and rival Maoyan currently show no forward release schedule across any part of the country.

The CFA report estimated that even if cinemas were to reopen this month, it would still take six months for revenue to build back to normal levels. That would mean a year-on-year fall in box office of 66% from last year’s RMB64.3 billion ($9.01 billion, at current exchange rates) to RMB21.8 billion ($3.05 billion). However, a reopening that is delayed to October would cut 2020 revenues by 91%, down to just RMB5.79 billion ($810 million), according to the CFA’s calculations.

Those numbers are even worse than the stark figures published in late April by the National Film Administration, the government body that oversees the industry. Then, the NFA warned that box office revenue could suffer a RMB30 billion ($4.2 billion) drop.

In previous years, the NFA has set a target for the country to have 80,000 cinema screens in commercial operation, serving its population of 1.4 billion. The body has yet to say whether that goal will be revised, or by how much.

The majority (41%) of cinemas participating in the CFA survey were located in second-tier cities, were mid- to large-sized venues with 500-1500 seats (78%), and had been in operation for less than five years (50%).

The findings showed that smaller cinemas, older cinemas in operation for more than seven years and new ones opened in the past year have been hardest hit by the pandemic.

By the end of March, a fifth of cinemas had already laid off staff, while 12% said their employees were receiving adjusted salaries, and that the possibility of future layoffs still loomed large. 

The study said that the Wanda chain’s 626 cinemas have not yet undergone large-scale layoffs, despite reports elsewhere that some 30% of staff has been let go. Yet with nearly 15,000 employees costing on average $18 million (RMB130 million) a month in salaries, the company is facing immense pressure.

The survey indicated that 90% of cinema operators are not optimistic about a resurgence of cinema-going in the short term. Over a third of respondents think it will take more than half a year to get back to movie-going levels from before the epidemic.

Almost all cinema operators said they felt audiences are most likely to be drawn back in by new films. However, it will be very difficult to get strong titles to agree to debut at a time when attendance is lackluster. In the meantime, “the industry must work together to save itself” by figuring out how to market and entice viewers to re-screenings, the report said, advising a focus on 3D films and VFX-heavy titles.

Although various local authorities have issued measures ranging from loans, tax exemptions and screening incentives to try and help the faltering industry, nearly 60% of cinemas surveyed expressed dissatisfaction with measures proposed, with 42% saying they were of no help at all and 15% saying they were only minimally helpful.