The Cinema Strikes Back

The British cinema industry is enjoying a welcome period of upward success. With the weakening pound and government tax credits attracting foreign studios, major franchises like the new Star Wars trilogy are bringing in huge box office revenues. [1] Despite the perceived disruption coming from streaming services, such as Netflix or Amazon Prime, that have supposedly heralded a paradigm shift in the way that we watch film, head of the UK Cinema Association, Phil Clapp says that this threat is posed “to the rest of the home entertainment sector, and not to one offering an immersive out-of-home experience”. [2] And he has a point; UK cinemas grew by over 17% last year and are projected to grow further this year and next. As technology disrupts how we watch films, cinemas have struck back with innovative new ways to ensure that cinema-going remains part of modern life.
“UK cinemas grew by over 17% last year and are projected to grow further this year and next.”
Luxury cinemas are attracting people who see watching a film as a social activity, rather than simply a way to pass the time. The 21 cinemas in the Everyman group typify this approach, with gourmet burgers, antipasti, craft beer and cocktails all enjoyed from the comfort of a sofa or armchair. Complete with a foot rest, Everyman have redefined the cinema experience from London to Leeds, and are set to expand further in the coming years.
Similar settings can be enjoyed at upmarket independents, such as Notting Hill’s Electric Cinema – one of the country’s oldest working cinemas. The Electric, now owned and run by member’s club Soho House, has taken the upmarket food and drink element of cinema a step further, working with companies like Edible Cinema, who carefully curate canapes and cocktails to enhance the senses of cinema-goers, bringing taste, smell and touch to the fore for a more immersive sensory experience.

Taking immersion to a new level the Cineworld’s 4DX experience also plays on the senses, using high-tech motion seats and special effects like wind, fog, lightning, bubbles, rain and smell to simulate the hero’s adventures. It might be a bit gimmicky, but it’s a unique experience that isn’t available at home on Netflix.

Innovative concepts like Fabienne Rigall’s Secret Cinema combine both the social side of movie-going and an immersive experience. Secret Cinema brings movies to life, putting on large scale re-enactments of cult films in abandoned spaces turned film sets, creating cine-worlds where audiences participate by dressing up in costume and interacting with performers. 2015’s production of The Empire Strikes Back brought 100,000 people to a derelict printing factory refashioned into some of the most memorable locations of the film, including a Toatooine inspired marketplace, ‘Cantina’ themed bar and regular glimpses of your favourite characters, from Chewie to R2D2. At £75 a ticket, the box office amounted to approximately £7.5 million. [3]

On top of booming box offices, Secret Cinema brings cinephiles together. Forbidden from taking photos and using technology, spectators are encouraged to fully immerse themselves in the experience, and seek connections with strangers. Whilst technology has revolutionized the way that we watch movies, for many this means watching films alone in bed on an iPad, or on the daily commute to and from work. Secret Cinema provides a welcome alternative: “I think people are hungry for experiences that would make them feel alive and connected to people,” said Rigall. [4]
“The concept of cinema as an event allows young creatives to get together and make cinema cool again.”
One of cinema’s early appeals in post-war Britain was that it was a place where people could get together and enjoy themselves for very little money. The cost has increased, but this sense of communality is what Secret Cinema and Curzon are working towards with their collaborative Secret Cinema X project, where upcoming releases are previewed in a mini-version of bigger Secret Cinema events. With tickets selling at £30 in comparison with the average ticket-price of £7.40 [5], consumer demand for exclusive screenings and the opportunity to watch cult classics gives independent new releases an opportunity to thrive at the box office thanks to Secret Cinema X. [6] According to Rigall, the project’s focus isn’t on admissions, but rather on ‘creating a sense of event around the film, about word-of-mouth amongst that audience sector [millennials]’. The concept of cinema as an event allows young creatives to get together and make cinema cool again.
For those that don’t live near a cinema and are eager to catch the newest releases, Curzon has embraced online viewing and also allows you to watch the most recent films from the comfort of your own sofa (without the mark-up for popcorn). Curzon’s strategy is less an imitation of streaming services than a business model hoping to use integrated solutions to create a sustainable future for cinema. Phill Knatchbull, Chief Executive of Curzon, noticed that big cinema chains like Odeon and Vue enforce a distribution policy that plays into the hands of illegal downloading. They typically demand film distributors wait 12 to 16 weeks before releasing films online, so that they can get the maximum amount of customers to show up at the box office. However, as Knatchbull argues, “that just creates pent-up demand, which is filled by piracy”. [7]
“[ Phill Knatchbull] decided to create a new business strategy that allows cinema-going and online on-demand streaming to work alongside each other”
Fearing that online piracy would have the same effect on film as it did on the music industry, he decided to create a new business strategy that allows cinema-going and online on-demand streaming to work alongside each other. By merging indie film distributor Artificial Eye with Curzon cinema group, and then launching Curzon Home Cinema off the back of this, Curzon enables film lovers to stay up-to-date with a curated cinema programme on a pay-per-film basis, whilst also being able to venture to the big screen when they have the time. Of course, this isn’t a world away from streaming services specializing in independent films like MUBI or BFI, but it keeps arthouse films in the cinema and out of downloads folders by allowing film fans to opt-in to a streaming service to prevent piracy capitalizing on the demand for hard-to-find indie films.

Whilst digital streaming services gave birth to the concept of binge watching, and have fundamentally changed our relationship with the screen, the desire to go out to the cinema is still very much alive – whether that involves craft beer and burgers or dressing up as Yoda. As CEO of Everyman group, Crispin Lilly, highlighted, ‘People need escape… How often and what other opportunities do you have, other than maybe theatre, where the phone gets turned off and for two or three hours, you get transported somewhere else?’ What underlines many of these new cinema experiences is a push and pull between using new technology to enhance our cinematic experience and safeguard against its failings. Keeping the tradition of cinema alive is a key part of ensuring we don’t become a nation who never leave the living room, or who let the film industry become saturated by piracy. What’s more, it can be fun too.
This article was inspired by a panel talk we hosted at House of Killik Mayfair in October 2017. It is designed to throw an everyday lens on some of the issues being discussed and debated by investors across the world; it is not research, so please do not interpret it as a recommendation for your personal investments. If something has piqued your interest and you would like to find out more or discuss what investments might be suitable for you, please contact one of our Investment Managers on 020 7337 0777.