Is Streaming Really a Threat to Vue Cinemas?

Tim Richards, the CEO of Vue International, one of the UK's largest cinema chains, asserts that streaming services do not pose a threat to cinema attendance. He believes that both cinemas and streaming platforms coexist within a single ecosystem, emphasising the importance of collaboration between studios and cinemas. Despite challenges posed by the pandemic and recent strikes in Hollywood, Richards remains optimistic about the future of cinema, noting a return to pre-pandemic trading levels and a strong appetite for the big screen.

Last updated: 01 October 2023 (BST)

What’s happening now

Tim Richards' recent statements highlight a growing confidence within the cinema industry, particularly as Vue International has rebounded to pre-pandemic trading levels. The CEO's perspective offers insight into the current dynamics between cinemas and streaming services, suggesting a collaborative rather than competitive relationship. This optimism comes at a time when the entertainment sector is navigating economic pressures, including rising operational costs and changing consumer spending habits.

Key takeaways

Tim Richards believes streaming services and cinemas can coexist without direct competition.
Vue International has returned to pre-pandemic trading levels, with expectations for growth in the coming year.
Richards stresses the importance of collaboration between cinema chains and studios in the industry.
Despite economic pressures, Richards is optimistic about the film industry's future.
The demand for cinema remains strong, with audiences showing a preference for the big screen experience.

Timeline: how we got here

The past few years have been tumultuous for the film industry, with significant events shaping its current landscape:

2019: Vue International experiences its best year ever.
March 2020: The Covid-19 pandemic leads to cinema closures.
2020-2021: Cinemas are effectively closed for nearly two years, significantly affecting revenue.
August 2021: Hollywood strikes disrupt film production, further impacting the industry.
2023: Vue International reports a return to pre-pandemic trading levels and anticipates growth.

What’s new vs what’s known

New today/this week

Richards' comments during the BBC's Big Boss Interview podcast reflect a growing confidence among cinema executives regarding the recovery of the industry. He insists that streaming services are not competitors but rather part of a broader entertainment ecosystem, indicating a shift in how cinema chains perceive their relationship with digital platforms.

What was already established

Before this interview, it was widely acknowledged that the pandemic had significantly impacted cinema attendance and revenue. Many studios had experimented with direct-to-streaming releases, but the long-term effects of this model were still under scrutiny. The industry's struggles during the pandemic and the Hollywood strikes had led to speculation about the future of theatrical releases.

Impact for the UK

Consumers and households

For UK consumers, the return of Vue International to pre-pandemic trading levels suggests a resurgence in cinema attendance, which may provide a boost to the local economy. However, ongoing cost-of-living pressures could still affect discretionary spending on entertainment. Families may be more selective in their choices, but the demand for cinematic experiences remains strong, particularly for blockbuster releases.

Businesses and jobs

Vue International's recovery signifies positive news for employment within the cinema sector. Richards' commitment to avoiding layoffs during the pandemic showcases a dedication to preserving jobs. As cinemas continue to thrive, there may also be opportunities for recruitment and business growth, particularly as the demand for cinema experiences increases.

Policy and regulation

Richards highlights concerns regarding government policies that may inadvertently harm the entertainment industry. As the sector seeks to recover, it may advocate for supportive measures in upcoming budgets to alleviate financial pressures. This could include considerations around taxation, public funding for the arts, and support for small businesses within the entertainment ecosystem.

Numbers that matter

10,000: The number of employees Vue International aims to support amid economic challenges.
2019: Vue's best year ever, highlighting the potential for recovery.
£9.50: The approximate minimum wage in the UK, impacting operational costs for cinemas.
100%: The percentage of Vue International's cinemas that were closed during the height of the pandemic.
£100 million: Estimated losses faced by studios that attempted to bypass traditional cinema distribution during the pandemic.

Definitions and jargon buster

Streaming services: Online platforms that deliver films and television content directly to viewers without requiring a physical medium, such as DVD or cinema.
IP: Intellectual Property, referring to original ideas and stories created for films.
Minimum wage: The lowest wage permitted by law, which affects operational costs for businesses, including cinemas.

How to think about the next steps

Near term (0–4 weeks)

As cinemas gear up for the holiday season, attendance is expected to increase with high-profile releases. Vue International may look to leverage its recovery momentum to attract audiences back to theatres.

Medium term (1–6 months)

Cinemas will need to navigate ongoing economic pressures while ensuring they remain a viable entertainment option. Strategic partnerships with studios may become essential to secure exclusive releases and drive footfall.

Signals to watch

Changes in consumer spending patterns as the cost-of-living crisis evolves.
The performance of upcoming blockbuster films at the box office.
Government announcements regarding policies impacting the entertainment industry.

Practical guidance

Do

Consider attending cinemas for new releases to support the industry.
Stay informed about government policies affecting entertainment and leisure sectors.
Explore subscription services that might offer cinema-based perks.

Don’t

Don’t assume streaming will completely replace cinema attendance.
Don’t overlook the value of shared viewing experiences in cinemas.
Don’t ignore emerging trends in consumer behaviour regarding entertainment choices.

Checklist

Check local cinema listings for upcoming releases.
Evaluate personal entertainment budgets, accounting for potential cinema outings.
Explore group discounts or loyalty programs at cinema chains.
Consider the impact of inflation on future entertainment spending.
Stay updated on cinema industry news for insights into upcoming trends.

Risks, caveats, and uncertainties

While Richards expresses confidence in the cinema industry's resilience, uncertainties remain. The ongoing cost-of-living crisis poses risks to discretionary spending across entertainment sectors. Furthermore, shifts in consumer preferences could quickly alter the landscape, especially if economic conditions change. The potential for further government intervention or regulation may also impact the operational environment for cinemas.

Bottom line

The outlook for cinemas in the UK appears cautiously optimistic, with Vue International's recovery signalling a desire for collective growth within the industry. As cinemas adapt to changing consumer behaviours and economic challenges, maintaining a focus on collaboration and innovation will be crucial for long-term success.

FAQs

Are streaming services really not a threat to cinemas?

According to Tim Richards, streaming services and cinemas coexist within the same ecosystem, with audiences often engaging with both formats. He believes that there will always be a strong demand for the cinema experience.

How has Vue International fared post-pandemic?

Vue International has returned to pre-pandemic trading levels and anticipates continued growth, reflecting a resurgence in cinema attendance and audience interest.

What challenges does the cinema industry face currently?

The cinema industry is grappling with rising operational costs, shifts in consumer spending due to the cost-of-living crisis, and the potential impact of government regulations.