Cineworld is set to reopen – but will punters flock back to screens?

Cineworld became something of a hot stock earlier this year, when a stampede was sparked by an army of small investors driven by message boards, first in retailer GameStop then in several other unloved companies. 

The shares managed to hold on to their gains. By close of play on Friday, they’d doubled over the course of 2021. Vaccination programmes and the promise of reopening have added to their sheen. 

So why the wobble on the back of the formal announcement of the silver screen flickering back into life in the company’s two biggest markets (the US and the UK) alongside a deal with a major studio?

The nature of the deal might have something to do with that. 

Selected American outlets will open on April 2 for Godzilla vs Kong, the latest edition of the venerable creature feature from Warner Bros, which is creating a bit of early buzz in the Twitterverse. 

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But it will also debut on HBO Max at the same time, which, as Warner has previously announced, will be the primary venue for all its US releases this year. 

The picture will go on wider release alongside Mortal Kombat, another Warner offering for which the same will apply, a couple of week’s later. 

From 2022, Cineworld’s exclusive window reappears but for just 45 days, “with certain provisions” as opposed to the previous 90. Those provisions aren’t defined but I’d be willing to bet they’re favourable to the studio and its streaming service. 

In the UK, where movie theatres will reopen in May under the current plans, the window will be 31 days prior to Warner films going to premium video on demand (PVOD), with an extension to 45 days for pictures that do the requisite business. 

This is, of course, just one deal with one studio. What emerges from the others will probably depend on where their streaming strategies, of which Disney’s is the most advanced, stand and how they think cinemas might work alongside them. 

Warner’s deal has, however, set the market. 

Will movie goers return in sufficient numbers to justify it? That’s the big question. Everyone knew the 90 day window was dead. The announcement has, however, served to focus the minds of investors on what the business might look like without it. 

Cineworld is reopening at 50 per cent capacity, a level at which it says it can sustain a profit. But can its outlets sustain 50 per cent capacity? 

Maybe the desire to get out of the house in places where the pandemic restrictions have been tightest, like in Britain or LA or New York, will be enough to move the dial with customers. 

But if they’re still worried about the virus, they might just shrug and stick with VOD. 

Cinemas actually did a fine job with safety measures the last time they were allowed to open in Britain but they didn’t always get the credit they might have for that.

The group’s CEO sought to talk things up ahead of what are expected to be a fairly horrible set of results. 

“This is a great moment for us – the US market represents 75 per cent of our business – and soon will be followed with all our markets. We are great believers in the theatrical experience, which only a year ago generated $43bn [£31bn] worldwide,” Mooky Greidinger declared.

Of course, he has good reason to sound bullish. He and other top executives stand to net shares worth more than £200m if the share price recovers sufficiently, an astonishingly generous plan for a business that has only narrowly avoided going under. 

To make the theatrical experience he speaks of sing, to make it worth people abandoning their couches and their VOD for the silver screen, Cineworld obviously needs good movies but the assistance of an enthusiastic and engaged workforce surely wouldn’t hurt.

Employee relations haven’t been so good. In response to the reopening announcement, the Cineworld Action Group tweeted this: “Once again staff have found out vital information about the reopening of our cinemas via the media. We need the reopening of our cinemas to put workers first.”

The group is not asking for much: the living wage, union recognition and measures to keep members safe. It’s really the least Greidinger could do for the people he’s relying on to make him another fortune.