J59.140 Cinemas in The UK Industry Report

UK INDUSTRY (UK SIC) REPORT J59.
140
Cinemas in the UK
More admissions: As COVID-19 restrictions are lifted, pent-up demand is expected to
contribute to a rise in revenue
Krasimir Dinev | August 2021
IBISWorld.com +44-20-7222-9898 info@IBISWorld.com

Cinemas in the UK J59.140 August 2021
Contents
About This Industry...........................................5 Competitive Landscape...................................31
Industry Definition..........................................................5 Market Share Concentration....................................... 31

Major Players................................................................. 5 Key Success Factors................................................... 31
Main Activities................................................................5 Cost Structure Benchmarks........................................ 32
Supply Chain...................................................................6 Basis of Competition................................................... 36
Similar Industries........................................................... 6 Barriers to Entry........................................................... 38
Related International Industries....................................6 Industry Globalization..................................................39
Industry at a Glance.......................................... 7 Major Companies............................................ 41
Executive Summary..................................................... 10 Major Players............................................................... 41

Other Players................................................................48
Industry Performance..................................... 11
Operating Conditions...................................... 50
Key External Drivers.....................................................11
Current Performance................................................... 13 Capital Intensity........................................................... 50
Technology And Systems........................................... 51
Industry Outlook............................................. 17 Revenue Volatility........................................................ 53
Regulation & Policy...................................................... 55
Outlook......................................................................... 17
Industry Assistance..................................................... 55
Performance Outlook Data......................................... 19
Industry Life Cycle....................................................... 19 Key Statistics.................................................. 58
Products and Markets..................................... 22 Industry Data................................................................58

Annual Change.............................................................58
Supply Chain................................................................ 22
Key Ratios.................................................................... 58
Products and Services.................................................22
Demand Determinants................................................ 25 Additional Resources...................................... 59
Major Markets..............................................................26
International Trade.......................................................28 Additional Resources.................................................. 59
Business Locations..................................................... 29 Industry Jargon............................................................ 59
Glossary Terms............................................................59
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Covid-19
Coronavirus IBISWorld's analysts constantly monitor the industry impacts of current events in
real-time – here is an update of how this industry is likely to be impacted as a result
Impact Update of the global COVID-19 pandemic:
• Industry revenue has been decimated by the pandemic. The closure of industry
establishments during the lockdown periods, combined with a lack of new films and
low consumer confidence, have caused admissions to plummet. Data from the UK
Cinema Association (UKCA) shows that admissions were just 44 million over 2020,
compared with 176.1 million the year before, representing a 75% decline. For more
detail, please see the Current Performance chapter.
• Revenue is expected to surge in the current year as cinemas have been allowed to
reopen from May 2021 and social distancing measures being removed from 19 July
2021. According to the UKCA, admissions reached 7 million in June 2021. A strong
film slate over the current year, including the release of highly anticipated films that
were postponed in 2020-21, is expected to support industry demand. For more
detail, please see the Current Performance chapter.
• When establishments were allowed to reopen during 2020-21, major cinema

chains such as Cineworld and Showcase Cinemas began screening classic films to
lure in customers, with major new film releases including No Time To Die and Dune
postponed. However, operators recorded low admissions and low revenue. For
example, Cineworld reported a 76.3% decline in revenue in the United Kingdom and
Ireland in 2020, with admissions also falling by 76.3% to 11.4 million. For more
detail, please see the Major Companies chapter.
• The government has introduced the Culture Recovery Fund, worth approximately
£1.6 billion, to aid culture, arts and heritage organisations. This is expected to have
provided some support for operators, although the UK Cinema Association had
called for additional funding for the industry due to the strict measures. By the end
of June 2021 when the final £300 million of funding was announced, CRF had
provided £1.2 billion to over 5,000 organisations across the country, protecting an
estimated 75,000 jobs and supporting close to 100,000 freelancers, according to
the government. For more detail, please see the Industry Assistance chapter.
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About This Industry

Industry Definition Cinemas show films in designated film-projection facilities, which are usually
indoors but can also include open-air venues.
Major Players Cineworld Group plc
Vue Entertainment Ltd
ODEON Cinemas Group Ltd
Natl Amusements (UK) Ltd
Main Activities The primary activities of this industry:

Projecting films
Operating open-air film projectors
Retailing drinks and snacks
The major products and services in this industry:

Box office - top 20 films
Box office - all other films
Food, beverages and merchandise
Other
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Supply Chain
SIMILAR INDUSTRIES
Motion Picture Production in Film, Video & TV Programme Film, Video & TV Programme Television Programming &
the UK Post-Production in the UK Distribution in the UK Broadcasting in the UK
RELATED INTERNATIONAL INDUSTRIES
Movie Theaters in the US Cinemas in Australia Cinemas in China Movie Theatres in Canada
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Industry at a Glance
Key Statistics Key External Drivers % = 2017-2022 Annual Growth
£1.2bn -6.4%
Cinema admissions
-0.9%
Consumer confidence index
Revenue
0.9% -5.7%
Annual Growth Annual Growth Annual Growth Real household disposable income Demand from television programming and
broadcasting
2017-2022 2022-2027 2017-2027
1.6%
Demand from advertising agencies
-6.9% 7.1%
Industry Structure
£36.6m
Profit POSITIVE IMPACT
Annual Growth Annual Growth
Barriers to Entry
2017-2022 2017-2027 High
-25.1%
MIXED IMPACT
3.0% Life Cycle

Mature
Industry Assistance
Medium
Profit Margin
Regulation Technology Change
Annual Growth Annual Growth
Medium Medium
2017-2022 2017-2027
Globalization
-5.9pp Medium
NEGATIVE IMPACT
212
Businesses Revenue Volatility Capital Intensity
Very high High
Annual Growth Annual Growth Annual Growth
2017-2022 2022-2027 2017-2027 Concentration Competition
High High
-3.5% 1.5%
16,236
Employment

2017-2022 2022-2027 2017-2027
-2.7% 3.4%
£288.2m
Wages

2017-2022 2022-2027 2017-2027
-0.3% 4.8%
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Key Trends
The COVID-19 pandemic led to a fall in revenue due to
lockdowns leading to a drop in admissions
Over the past five years, rising external competition has
increasingly threatened the industry
Operators have invested in technology such as IMAX over the
past five years in order to attract more customers
Competition from SVOD services means operators are
forecast to invest in technological improvements over the
next five years
Over the next five years, the screening of alternative content
is likely to be a big change in the product offerings of
cinemas
The creation of a Global Screen Fund is expected to offset
funding lost from Creative Europe
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Products & Services Segmentation
51.2% 25.2% 16.7% 6.9%
Box office - top 20 films Box office - all other films Food, beverages and Other
merchandise
Cinemas
Source: IBISWorld
Major Players % = share of industry revenue SWOT
STRENGTHS
High & Increasing Barriers to Entry
Medium & Increasing Level of Assistance
Low Imports
Low Customer Class Concentration
WEAKNESSES
High Competition
Very high Volatility
Low Profit vs. Sector Average
High Product/Service Concentration
Low Revenue per Employee
High Capital Requirements
OPPORTUNITIES
High Revenue Growth (2022-2027)
High Performance Drivers
Demand from television programming
and broadcasting
THREATS
Very Low Revenue Growth (2005-2022)
Low Revenue Growth (2017-2022)
Cinema admissions
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Executive The Cinemas industry includes all operators that show films in
Summary designated film-projection facilities.
Most of these facilities are indoors, but some are open-air. The majority of industry
revenue is generated from box office sales, with blockbuster films contributing the
most to this product segment. Food and beverage sales and screen advertising are
also important revenue streams for industry operators. The industry is highly
concentrated, with the top four industry players expected to account for 82.3% of
industry revenue in 2021-22.
High cinema admissions and a strong film slate have supported industry
performance over the majority of the past five years. The release of highly popular
films aided revenue growth over 2017-18 and 2018-19, with admission numbers
reaching 177 million in 2018, according to the UK Cinema Association (UKCA).
However, over the five years through 2021-22, industry revenue is expected to
decline at a compound annual rate of 6.9% to £1.2 billion. This is largely due to
revenue plummeting in 2020-21, as a result of the forced closure of cinemas during
nationwide lockdowns amid the COVID-19 (coronavirus) outbreak, with admissions
falling by 75% over 2020, according to UKCA data. Additionally, a lack of new films
negatively affected demand when restrictions for cinemas were initially eased. As
restrictions are completely lifted, pent-up consumer demand and a strong film slate
are expected to contribute to revenue surging by 281.7% in 2021-22. However,
alternative forms of leisure and entertainment are likely to constrain revenue growth
over the year.
Over the five years through 2026-27, industry revenue is forecast to rise at a
compound annual rate of 7.1% to reach £1.7 billion. A continued recovery from the
pandemic is anticipated to support growing consumer confidence and higher
disposable incomes, benefiting admissions and spending on industry services. The
screening of alternative content could account for a greater share of revenue in the
coming years, and the popularity of IMAX and 4DX screenings is anticipated to
support growth in ticket prices, aiding revenue. However, the industry faces
increasing competition, particularly from subscription video on demand service
providers, as well as the threat of a shorter theatrical window. These are anticipated
to constrain revenue growth over the coming years.
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Industry Performance
Key External Cinema admissions

Drivers The number of people that choose to visit the cinema has a major influence on
industry revenue and profit levels. Higher numbers of cinema admissions increase
box office revenue and support higher concession stands sales. In 2021-22, cinema
admissions are forecast to rise, presenting an opportunity for the industry.
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Demand from television programming and broadcasting

TV is the main form of competition for the industry. Demand for TV programming
and broadcasting is indicative of the success of the industry and therefore the level
of competition cinemas face. TV broadcasters compete both in terms of
advertising revenue and viewers. IBISWorld expects demand from TV programming
and broadcasting to increase over 2021-22, posing a threat to industry operators.
Consumer confidence index

Consumer confidence can affect individuals' willingness to spend money. Lower
consumer confidence is likely to lead to consumers becoming more conscious
about their spending and instead opt to save more. In 2021-22, consumer
confidence is expected to increase. This is expected to result in higher cinema
admissions and more spending on food and snacks at the cinema.
Real household disposable income

The average level of real household disposable income across the United Kingdom
influences the industry's performance. Significant decreases in disposable income
may limit cinema attendance and expenditure per attendee. IBISWorld expects real
household disposable income to rise in 2021-22.
Demand from advertising agencies

Screen advertising generates a solid portion of the industry's revenue. Demand
from advertising agencies is an indicator of the strength of the advertising market.
In 2021-22, demand from advertising agencies is expected to increase, to the
benefit of the industry.
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Current The performance of the Cinemas industry is influenced by a number

Performance of factors.
The amount that people spend on visits to the cinema is affected by economic
conditions and household budgets. The popularity of upcoming films has an effect
on cinema attendance over the year, while alternative leisure activities and major
sporting events can also draw attendance away from cinemas. Cinema operators
can also invest in technology and their facilities to create a better experience for
customers, which can encourage attendance. High and rising external competition
has weighed on industry performance over recent years.
Over the five years through 2021-22, industry revenue is expected to decline at a
compound annual rate of 6.9% to £1.2 billion. This is due to an significant collapse
in 2020-21, where cinemas had to close for long periods of time due to strict
government restrictions aimed at tackling the spread of the COVID-19 (coronavirus)
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outbreak. However, as restrictions ease in the current year and cinemas reopen,
revenue is expected to rise strongly, by 281.7%, albeit to remain below pre-
pandemic levels.
A slow start
Revenue fell by 5% at the base year of the period, as cinema

admissions fell from 171.5 million in 2015 to 168.3 million in 2016,
representing a 1.9% drop, according to the UK Cinema Association
(UKCA).
In 2017-18 and 2018-19, revenue returned to growth, supported by an attractive film
slate and solid admission numbers, reaching 177 million in 2018. However, over
2019, box office revenue fell by 1.9%, with admissions declining to 176.1 million
according to the UKCA, contributing to revenue decline in 2019-20. Continued
economic and political uncertainty contributed to weak consumer confidence,
which has subdued spending. Nevertheless, a strong film slate, including Avengers:
Endgame, which became the highest-grossing film of all time, limited revenue
decline. The coronavirus outbreak at the tail end of 2019-20 also contributed to
revenue falling over the year, with the nationwide lockdown from 23 March 2020
leading to admissions dropping to just 4.8 million in March 2020, compared with
11.4 million in the prior year, according to the UKCA.
Decimated demand
The closure of cinemas during nationwide lockdowns has been

highly detrimental to the industry's performance, particularly over
2020-21.
According to the UKCA, there were just 44 million admissions over 2020, a 75%
decline on the previous year, and box office revenue collapsed by 76.3% to £296.7
million. Even when cinemas were allowed to reopen over the year, they had to oblige
by strict guidelines in order to be safe for employees and consumers, which meant
that auditoriums were limited to approximately 60% of their capacity, further
denting revenue. Additionally, spending on industry services had been reduced due
to a plunge in consumer confidence and falling disposable incomes. UKCA data
shows that average annual spending per head population was just £4.37 in 2020,
down from £18.72 in 2019, with the average ticket price falling by 5.1% to £6.75.
Furthermore, due to the disruption caused by the pandemic, new blockbuster films
that were due to come out over the year were postponed. In turn, revenue suffered
due to the lack of new releases, with some cinemas turning to screening classics to
generate some revenue. Amid the significant negative effect of the pandemic on the
industry, the government has provided some support through the Culture Recovery
Fund, among a range of other supportive measures. For more detail, see the
Industry Assistance chapter. Nevertheless, some cinemas, particularly smaller,
independent ones, are likely to close due to the significant challenges over the year.
In turn, enterprise numbers are expected to fall at a compound annual rate of 3.5%
over the five years through 2021-22.
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Road to recovery
Cinemas have been allowed to reopen May 2021 as part of the

government's plan to lifting restrictions.
UKCA states that admissions reached 7 million in June 2021, compared to just half
of that in May 2021, with admissions likely to grow even further in the coming
months as social distancing measures are lifted from 19 July 2021. A strong pent-
up demand from consumers seeking the unique cinema experience is expected to
support admissions and spending on industry services over 2021-22. Additionally, a
strong film slate, including some films that were due to come out in 2020 but were
delayed, such as No Time To Die, Dune and Black Widow, is expected to support
revenue growth. However, industry recovery is anticipated to be constrained by high
and rising competition from alternative forms of leisure and entertainment.
Moreover, major sporting events over the summer, including UEFA Euro 2020 and
the Olympics are expected to subdue admission numbers.
Small-screen competition
Over the past five years, external competition in the form of digital
pay TV (see IBISWorld report SP0.021), Subscription Video on
Demand (SVOD) service providers (see IBISWorld report SP0.017),
plasma and LED screens, and home theatre systems has
increasingly threatened the industry.
These technologies enable consumers to replicate the cinema experience from
their home.
SVOD services that offer a range of film and TV content, such as Netflix, Now TV
and Amazon Prime Video, have grown in popularity over the past five years, making
them a great threat to the industry. The coronavirus pandemic is expected to have
accelerated this trend, due to the closure of cinemas over lockdown and the
government's stay-at-home advice causing demand for SVOD services to surge. The
prices of SVOD services are lower than cinema prices, making them an attractive
prospect to cost-conscious customers. However, SVOD services lag behind
cinemas, in that the most anticipated films are still released first on the big screen
rather than on these providers. Consequently, if customers want to see a film as
soon as it comes out, cinema is still the more attractive option, providing an
important unique selling point.
Technology plays its role
To deal with rising external competition, operators have had to

invest in technology.
Developments in technology are key for the industry, as it enables operators to offer
viewers new and better audio and visual experiences, as well as a better customer
experience overall, from booking tickets and buying food and beverages, to the
experience of watching a film. People go to the cinemas due to the unique
experience it provides through the technology such as IMAX and 4DX that cannot
be replicated at home. Supporting this, by 2017, most large TV manufacturers
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ceased production of 3D-capable TVs. This has been beneficial for cinemas, as it
means that 3D technology remains a unique selling point, although its popularity
has been declining.
Over the past five years, major industry players Cineworld and ODEON have
increasingly acquired IMAX cinemas, as these screens show films in better quality
and dispose of the need for film stock, which is costly to work with. Additionally,
there has been an increase in the popularity of 4DX films, whereby films are
screened in rooms fitted with motion chairs and special effects technology that
operate in sync with the film being screened, creating a more unique customer
experience. There has also been growth in the use of assistive technology in order
to make cinema screenings more accessible to disabled cinemagoers, including
those with autism and hearing difficulties. Technology has also been improved in
areas such as ticketing and digital.
Profit performance
IBISWorld estimates that profit will account for 3% of industry

revenue in 2021-22, a decrease from 8.9% in 2016-17.
This is mainly due to the negative effects of the coronavirus pandemic, with
revenue falling significantly while costs have remained fairly high. Prior to the
pandemic, margins had been fairly strong, supported by increased retail offerings
and a fairly high average ticket price. Large companies have created ticket booking
systems that can be accessed via the internet and smartphones, making it easier
and more convenient for patrons to book tickets and avoid queues. Additionally,
cinemas use ticket machines to improve efficiency and automate the process,
reducing demand for labour. However, even prior to the pandemic, the average
ticket price has fallen marginally to £7.11 in 2019, down from £7.41 in 2016.
Moreover, average annual spending per head population has fallen to £18.72 in
2019, from £19.18 in 2016, somewhat constraining margins. Margins have been
further subdued by high and increasing levels of external competition, rising film
hire costs and the introduction of the National Living Wage in April 2016.
Historical Performance Data

Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
(£m) (£m) (Units) (Units) (Units) (£m) (£m) (£m) (£m)
2013–14 1,525 449 747 222 17,933 N/A N/A 232 N/A
2014–15 1,596 486 743 223 18,293 N/A N/A 255 N/A
2015–16 1,829 598 771 248 18,534 N/A N/A 262 N/A
2016–17 1,738 602 788 253 18,601 N/A N/A 292 N/A
2017–18 1,787 630 801 273 18,916 N/A N/A 297 N/A
2018–19 1,890 662 811 271 19,129 N/A N/A 316 N/A
2019–20 1,798 628 840 262 19,199 N/A N/A 329 N/A
2020–21 319 -14.5 843 243 11,769 N/A N/A 131 N/A
2021–22 1,219 450 816 212 16,236 N/A N/A 288 N/A
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Industry Outlook
Outlook Over the next five years, the industry is anticipated to grow, as
cinemas continue to recover from the plunge caused by the
COVID-19 (coronavirus) pandemic.
Industry revenue is forecast to grow
at a compound annual rate of 7.1%
over the five years through 2026-27
to reach £1.7 billion. Over the period,
consumer confidence is forecast to
return and disposable incomes are
anticipated to rise, increasing
spending on industry services and
supporting cinema admissions, with
consumers seeking the cinema experience. However, Screen Daily has reported that
some cinema analysts do not expect global box office to completely recover until at
least 2023. The industry is anticipated to also benefit from earlier investment in
technology that improves the customer experience. Despite this, 2D films are
forecast to remain the industry's main product, as 3D films have been losing
popularity since 2010, although they still contribute well to revenue. Upcoming
blockbuster films such as the Avatar sequels and Marvel Cinematic Universe films,
are likely to aid revenue generated from 3D, IMAX and 4DX screenings. In addition,
improved offerings at the cinema are expected to support admissions and aid profit
margins growth.
However, increased competition from substitutes, particularly from Subscription

Video on Demand (SVOD) service providers (see IBISWorld report SP0.017), is
expected to weigh on industry performance over the next five years. Consumers are
increasingly subscribing to those services, a trend which has been accelerated by
the pandemic.
Technological advancements
Increased competition from SVOD services means that industry

operators are anticipated to continue to invest in technological
improvements in order to retain a competitive advantage over these
forms of entertainment, and to continue to add value to the cinema
experience.
However, the coronavirus pandemic has accelerated competition from SVOD
services, with people spending more time at home due to social distancing
measures. This could result in a shift in viewing and film distribution dynamics after
the pandemic, aggravating external competition. Consumers are streaming video
content online more than ever, and production houses have responded by making
recently released films available online. For instance, Disney made Pixar animation
Onward available to rent on video-on-demand services just over a month after its
premiere. The largest industry operator, Cineworld, announced in March 2021 that it
had signed a multi-year agreement with Warner Bros. to an exclusive theatrical
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window of between 31 and 45 days in the United Kingdom before it goes to

premium video on-demand. This is far below the average window across all UK
releases in 2019, which was 109 days, as reported by Screen Daily. This poses a
significant threat to the industry going forward.
The continued roll-out of IMAX and 4DX cinemas is anticipated to support the
average ticket price, as these types of films have higher selling prices. The first
ScreenX screen – a screen that wraps around the room, with the film expanding
from the main screen to the side walls – was opened in the United Kingdom in
2018. However, not every film may be viewed on ScreenX as they need to be made
with that technology in mind and not many have yet been created. In another push
for innovation, electronics companies such as Samsung and Sony are developing
Direct View Display, high brightness and contrast LED screens that offer improved
picture quality. They also offer a long lifespan that can replace laser projection and
the screens can be easily and quickly repaired, in addition to adding more space for
extra rows. However, a high price tag could be a stumbling block for some cinemas,
in particular smaller operators, and high-profile film directors have criticised this
type of screen, as they are similar to a big TV screen.
Increased and varied offering
Industry operators are seeking to improve their food and drink

offerings and increase the share of revenue generated from these
sales.
For example, a rise in branded coffee shops, such as Costa in ODEON cinemas, VIP
offerings and meals may be introduced to enhance the customer experience. This
represents an opportunity for niche players to differentiate themselves and attract
certain types of customers. For example, the success of Everyman Cinemas is
largely due to the company offering a distinct style of cinema and a personalised,
high-end experience.
The screening of alternative content is likely to be one of the biggest changes in

product offerings of cinemas over the next five years. The growing trend towards
streaming live theatre, opera, concerts, exhibitions and sporting events indicates
operators diversifying their offerings to compete more effectively. A current
example of this trend is National Theatre Live, which broadcasts UK theatre
performances live to cinemas. The potential to show sporting events could provide
operators with the opportunity to mitigate the negative effects of competition from
major sporting events being shown on TV. Screenings of alternative content also
allows for higher ticket prices, boosting revenue, as tickets to screenings of non-
film content can command prices of two to three times that of regular cinema
tickets. Many alternative offerings are provided by smaller operators in order to
compete in niche markets. As a result, enterprise and establishment numbers are
forecast to grow at respective compound annual rates of 1.5% and 2% over the five
years through 2026-27.
Future funding
The industry previously benefited from Creative Europe funding

through the Europa Cinemas scheme.
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The aim of this scheme was to increase European programming in film theatres and
to raise attendance, particularly of European non-national films, as well as to
promote diversity and support the transition to digital projection. A report by the
British Film Institute in 2018 states that the UK screen sector had received £298.4
million in funding from the European Union since 2008. In 2018, Creative Europe's
MEDIA sub-programme investment in film in the United Kingdom totalled £3.5
million. However, the UK's exit from the European Union means that qualifying for
Creative Europe funding is no longer available to operators after 31 December 2020
when the transition period ended. Nevertheless, in the Spending Review from
November 2020, the government has confirmed the creation of a Global Screen
Fund to offset funding lost from Creative Europe, with £7 million of funding
confirmed in the first year. Additionally, under the new trade deal, the United
Kingdom will participate in the EU's Horizon Europe 2021-2027 programme, which
includes a strand supporting culture, creativity and inclusive society.
Performance Outlook Data

Demand
2022–23 1,546 581 852 222 17,764 N/A N/A 328 N/A
2023–24 1,651 627 868 225 18,433 N/A N/A 347 N/A
2024–25 1,698 662 881 226 18,818 N/A N/A 355 N/A
2025–26 1,739 687 894 228 19,188 N/A N/A 363 N/A
2026–27 1,717 687 901 228 19,224 N/A N/A 364 N/A
Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS

Industry value added is expected to increase at a similar rate to the UK economy over the
10 years through 2026-27
New products for cinema viewing, such as 3D films, 4DX screens and motion seating,
continue to evolve
The industry is consolidating as major cinema chains are acquiring smaller operators
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The Cinemas industry is in the mature phase of its economic life cycle. Industry
value added (IVA), a measure of the industry's contribution to the wider economy, is
expected to increase at a compound annual rate of 1.3% over the 10 years through
2026-27. UK GDP is forecast to grow at a compound annual rate of 1.1% over the
same period. This suggests the industry is growing at a similar rate to the UK
economy.
There have been some changes in industry products in recent years. The
development of technology, including digital screens, 3D films, and 4DX and
ScreenX screens has contributed to industry growth over the past five years. These
new product segments have resulted in increased patronage and new revenue
streams. The industry has benefited from the popularity of 3D films, which cinemas
can charge higher viewing fees for and increase income from hiring or selling 3D
glasses. Other new technologies are also evolving in the industry, such as IMAX and
4DX screening rooms, as well as the newer ScreenX. Alternative content is likely to
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appear more widely in the coming years. However, the introduction of new products
has not fundamentally changed the revenue streams of cinema operators.
Despite the growth of new products, innovation, the application of newer

technology, and associated ticket price rises, the industry has reached maturity.
The number of establishments has grown over the five years through 2021-22, at a
compound annual rate of 0.7%. However, this rate has been slowed by the
challenging conditions created by the coronavirus pandemic. Enterprise numbers
have fallen at a compound annual rate of 3.5% over the same period, as a result of
the coronavirus pandemic where many independent cinemas are expected to have
been hit hard due to their small size and low resources. There has also been
consolidation between larger players in the industry. Prior to the pandemic,
enterprise numbers had been growing as a number of operators screening niche
and independent films joined the industry.
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Products and Markets

Supply Chain KEY BUYING INDUSTRIES KEY SELLING INDUSTRIES
1st Tier 1st Tier
Advertising Agencies in the UK Film, Video & TV Programme Distribution
in the UK
Consumers in the UK
Office & Shop Furniture Manufacturing in
the UK
Juice, Mineral Water & Soft Drink
Wholesaling in the UK
Confectionery Wholesaling in the UK
Motion Picture Production in the UK
2nd Tier
Sawmilling & Wood Planing in the UK
Iron & Steel Manufacturing in the UK
Soft Drink Production in the UK
Bottled Water Production in the UK
Fruit Drink & Functional Beverage
Production in the UK
Chocolate & Confectionery Production in
the UK
Bread & Bakery Goods Production in the
UK
Film, Video & TV Programme Post-
Production in the UK
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Products and
Services
Box office
Box office sales account for the main source of industry revenue.
The amount of revenue generated from box office sales each year depends on the
total number of admissions and the average price of tickets purchased. The
schedule of film releases helps determine both the number of admissions, as the
spread of big film releases over the year influences attendance, and the average
price, as 3D film releases command higher ticket prices. Overall, box office sales
are expected to have increased over the past five years, to account for 76.4% of
industry revenue in 2021-22, most of which is expected to be from the top 20 box
office films.
The biggest contributors in this segment are blockbuster films, with the top 20
highest grossing films accounting for the majority of box office sales. In 2020-21,
many high-profile films that were supposed to be released were postponed, due to
the COVID-19 (coronavirus) pandemic and the temporary closure of industry
establishments, including Warner Bro's Dune and the new James Bond film, No
Time To Die. This has constrained the share of revenue generated by new
blockbuster films over the year and contributed to the significant industry revenue
decline. Nevertheless over 2020, some high-profile films include 1917, Sonic The
Hedgehog, Tenet, Bad Boys For Life and Dolittle. These were the top five UK films in
terms of box office revenue over 2020, generating £104.9 million, according to the
UK Cinema Association (UKCA). This compares with £310.8 million generated by
the top five films in 2019. However, the top film, 1917, was released in December
2019, which was before the effects of the pandemic were felt and it is a reason why
it had generated more than double the revenue to the second film in the list. Tenet
can claim the top spot for the film that has generated the highest revenue of films
released during the pandemic, in August 2020, at £16.2 million, as per UKCA data.
In the current year, the release of highly anticipated blockbuster films, including No
Time To Die, The Matrix 4, Fast and Furious 9 and A Quiet Place 2, is expected to
boost box office revenue.
23 IBISWorld.com
The remaining box office sales come from screening smaller independent and
specialist films, as well as other non-film content. Mainstream cinema chains derive
a much higher proportion of their revenue from blockbuster films than single or
small chain operators. However, once cinemas were allowed to reopen following
the initial nationwide lockdown, there was a lack of new blockbuster films on show
for audiences and cinemas turned to screening smaller independent and specialist
films and classic films to generate revenue. For example, major player Cineworld
screened films such as Goodfellas, Back To The Future and The Shawshank
Redemption. At the same time, Showcase Cinemas offered admission for just £5 to
lure patrons.
Over the past five years, revenue generated from box office sales has grown. Prior
to the coronavirus outbreak, the number of cinema admissions had increased,
although the average price of tickets had decreased slightly. In 2019, admissions
reached 176.1 million, compared with 171.5 million in 2015. UK box office revenue
exceeded £1.2 billion for the fifth consecutive year in 2019, although it fell by 1.9%
compared with 2018, according to the UKCA. However, UKCA data also shows that
the average ticket price was £7.11 in 2019, compared with £7.21 in 2015, due to it
falling over 2018 and 2019, which were the only declines in the average ticket price
since 2001. The average ticket price rise at the start of the period was partially due
to inflationary pressures over the period, but predominantly due to the expansion of
premium offerings, including the rise in the number of IMAX and 3D screenings. The
performance of 3D films can fluctuate significantly depending on the film slate over
the year. However, the box office revenue generated from 3D film screening has
decreased over the past few years, with less 3D films being released, partly
contributing to the fall in the average ticket price. According to the British Film
Institute (BFI), box office revenue generated from 3D film screening was 3% of total
box office revenue in 2018, a decline from 6% in 2017. In 2018, only 39 3D films
were released, generating £43 million; this revenue is less than half of the total
achieved in 2017.
Ticket prices fell further in 2020, to £6.75, with admissions plummeting to just 44
million, as a result of the pandemic and cinema closures. However, other segments
in the industry are expected to have fallen at a faster rate during the pandemic.
Food, beverages and merchandise
Over the five years through 2021-22, revenue from retail sales of
food, beverages and other merchandise is expected to increase as
real household disposable incomes have grown, leading to a higher
average spend per visit in the cinema.
In 2019, the BFI reported that the average spending on refreshments per individual
visit fell from £3.15 in 2017 to £3.10 in 2018. However, many industry operators
have invested heavily in expanding their retail offerings over the past five years, due
to the increasing demand for a more diverse offering in terms of range of products
as well as premium offerings for customers to choose from. As a result, total
refreshment sales in 2018 were £549 million, an increase of 2% on 2017, according
to the BFI.
The wider choice of offerings allows customers to customise their cinema

experience to an even greater degree. For example, Cineworld benefited from higher
24 IBISWorld.com
retail revenue in 2018 as a result of its broader range of retail offerings, including
Starbucks products; and its VIP system, which provides an exclusive private lounge
with luxury seats and a gourmet buffet, including alcoholic drinks, on offer before
the film starts. However, the financial stress caused by the pandemic, including
falling disposable incomes and low consumer confidence, have constrained
spending on this segment, with food and beverages sold at cinemas already
commanding high prices. For example, the largest industry operator, Cineworld,
states in its latest annual report that retail revenue has fallen at a slightly higher
rate than box office revenue over 2020. As cinemas reopen and economic
conditions improve, retail sales are expected to pick up; however, some consumers
may avoid spending high amounts on retail offerings as they still recover from the
effects of the pandemic. During 2021-22, retail sales are expected to account for
approximately 16.7% of industry revenue.
Other
This segment includes screen advertising, online booking fee

revenue, and the hire of facilities for corporate and private events.
The largest contributor to this segment is screen advertising, which is influenced by
admission trends and the value of advertising sold. However, revenue generated
from advertising is expected to have fallen significantly during the coronavirus
pandemic. According to the AA/WARC Expenditure Report from April 2021, out of
all media, cinemas were the most adversely affected in terms of ad spend, falling by
81.7% in 2020. Moreover, social distancing measures and falling business
confidence and spending have negatively affected revenue generated from the hire
of facilities for corporate and private clients over 2021-22. As cinemas reopen and
downstream demand conditions improve, revenue generated by this segment is
expected to grow. The AA/WARC Expenditure Report forecasts cinema ad spend to
grow by 266.8% in 2021. This segment is estimated to account for 6.9% of revenue
in 2021-22.
Demand There are several factors that affect cinema attendance.

Determinants
Attendance is largely driven by pricing and the level of disposable income. Over the
past five years, real household disposable income is expected to increase slightly,
aided by rising social benefits and a reduction in taxation levels due to the operation
of fiscal stabilisers. As a result, the industry is expected to benefit as people have
more money to spend on leisure activities. However, whether consumers choose to
spend money on industry services or other leisure activities depends on both
consumer preferences and available free time. Moreover, consumer confidence can
affect attendance levels. If consumer confidence is low, many may opt to save and
be more cautious with their spending, in turn reducing demand for cinemas. The
COVID-19 (coronavirus) pandemic has had a catastrophic effect on the industry.
Lower consumer confidence and falling disposable income have resulted in lower
expenditure on discretionary services such as those offered by the industry.
Moreover, government-imposed social distancing measures and lockdowns have
significantly disrupted industry operations, with cinemas closing for long periods of
time over 2020-21. Returning consumer confidence and rising disposable income
are expected to support industry demand over the current year, with the easing of
25 IBISWorld.com
restrictions, amid the fast roll-out of the UK vaccine programme, allowing cinemas
to reopen from May 2021.
Technological change also plays a part in generating demand for cinema. The rate
of technological change has quickened recently, and resulted in a proliferation in
the number of alternatives to the cinema. High-definition and 3D films may easily be
viewed at home, through HDTVs and Blu-ray Discs, and films can now easily be
downloaded onto Smart TVs. Moreover, Subscription Video on Demand (SVOD)
service providers such as Netflix and Amazon Prime are increasing in popularity
and are substitutes to the cinema, offering the chance to watch many films and
videos by paying a monthly price. Nevertheless, demand for cinemas is driven by
the uniqueness of the film-going experience, and as a result, the implementation of
IMAX and 4DX cinema has ensured that the experience of going to the cinema
cannot be fully replaced at home, maintaining demand. However, government-
imposed restrictions during the coronavirus pandemic have increased the time
consumers spend at home, resulting in demand for SVOD service providers
booming.
Industry demand also depends on the quality of the available films for screening
and appeal of these films to customers. The release of highly anticipated films
drives cinema attendance, as people prefer to see them in cinemas, where the
experience is expected to be better. In order to generate revenue, some cinemas
have decided to screen classics. Although film quality is dictated by the upstream
Motion Picture Production industry (IBISWorld report J59.111), effective advertising
can boost the level of cinema admissions.
Additionally, industry operators have expanded their retail offerings over the past
five years, providing healthier options in food and drink alongside traditional
offerings. This gives customers more choice and a better experience when visiting
the cinema, aiding cinema attendance. However, good weather and demand for
other popular events, such as concerts or sport events, can negatively affect
industry demand.
26 IBISWorld.com
Major Markets
The major markets for the Cinemas industry can be segmented according to age
group. While cinema attendance is fairly evenly spread across different age groups,
each group has slightly different characteristics. Attendance by age group varies
year-to-year depending on the types of films released over the period. All films are
age rated by the British Board of Film Classification; some films are not appropriate
for certain age groups.
People aged between 7 and 14 years
People aged between 7 and 14 years are estimated to account for 13.8% of total UK
cinemagoers in 2021-22. The majority of viewers in this market are young teens.
These consumers enjoy a fairly large amount of leisure time compared with other
age groups, which outweighs their far lower spending capacity. Family films and
animations appeal the most to this age group. Over the past five years, this
segment has marginally decreased, due to the success of films aimed at older
people.
People between 15 and 24 years of age are expected to be the largest market for
UK cinemas in 2021-22, accounting for an estimated 27.5% of cinemagoers.
Viewers in this segment have higher levels of disposable income than younger
cinemagoers but less leisure time. Substitute forms of entertainment are a key
threat to demand from this market and have resulted in a small, but steady,
downward trend in the proportion of cinemagoers from this age group over the past
five years. However, films at the cinema offer people in this age group a chance to
spend some social time together.
27 IBISWorld.com
People aged between 25 and 34 years are the second largest market for UK
cinemas, accounting for approximately 18.9% of the market in 2021-22, a share that
has marginally increased over the past five years. Consumers in this segment have
fairly high spending power, but are more likely to opt for alternative forms of
entertainment. Many people start families in their late twenties and early thirties,
which increases the range of films people in this market view at the cinema, but
that also reduces the leisure time they have available.
The third largest market segment is audiences aged between 35 and 44 years, with
an estimated 18.2% of cinemagoers in 2021-22 being in this age group. This
segment has the highest average income. Consumers aged between 35 and 44 visit
cinemas both on their own and with their children. This segment contains a high
proportion of parents and carers who tend to have fairly high levels of disposable
income. This market's share of revenue has increased over the past five years, as
more films targeted at this age group have been produced.
People aged between 45 and 54 years are expected to account for 10.4% of
cinemagoers in 2021-22. Along with the oldest age group, the number of people
attending the cinema in this age group has been increasing in recent years.
People aged 55 years and over
People aged 55 and over are a small but growing market for UK cinemas,
accounting for an estimated 11.2% of cinemagoers in 2021-22. People in this
market tend to view fewer mainstream films. Instead, they watch more films
outside the top 20 titles, including art-house and alternative films. Consumers aged
55 years and over can sometimes benefit from price discounts for pensioners.
People in this group also have more time available to view films. Additionally, the
growth of accessible and ‘silver' screenings has contributed to demand from this
market.
International Exports in this industry are Low and Steady

Trade
Imports in this industry are Low and Steady
There is low international trade in the industry as it is service-based. Although UK

films are exported and a significant proportion of US films are shown in UK
cinemas, these international transactions are not recorded as trade at this level.
At the upstream level of motion picture production there is a high level of

international trade. According to a report by the British Film Institute (BFI) in 2019,
films originating from the United States generated approximately 51.3% of box
office earnings, while films produced in the United Kingdom, including those that
28 IBISWorld.com
were co-produced with firms in other countries, accounted for 46.1% of box office
revenue. Films from countries outside the United Kingdom and United States
accounted for only 2.6% of the box office in 2017, according to the BFI.
Although the upstream Motion Picture Production industry (IBISWorld report

J59.111) has a high level of import competition, UK-produced films accounted for
22.8% of the global box office in 2018 according to the BFI, and is therefore a strong
exporter.
Business
Locations Business Concentration in United Kingdom
SCT
NE
NIR
NW
YKS
EMD
WMD
WAL UKH
LDN
SE
SW
Percentage of Establishments (%)
0 12 24 36
Cinemas in the UK
Source: IBISWorld
The distribution of cinemas in the United Kingdom is closely tied to population

density and average levels of disposable income because industry operators
depend exclusively on consumers for revenue.
London
London, the South East and the South West have the highest proportions of industry
establishments. London is estimated to be home to 19.3% of industry
29 IBISWorld.com
establishments and a higher share of total industry revenue, because average ticket
prices in London are approximately 20% higher than the UK average, according to
the BFI in 2018.
The South East
The South East contains the highest proportion of the population, and disposable
incomes in the region are also high on average, second only to London. As a result,
the region is home to approximately 14.7% of all industry establishments.
The South West
The South West is estimated to contain 10% of industry establishments. The region
also has a high population and fairly high disposable incomes. Therefore, the
number of establishments is high.
Other regions
The distribution of cinemas across the rest of the United Kingdom approximately
follows the distribution of the population. The distribution of total screens across
other regions is more evenly spread. Regions with lower establishment numbers,
especially the North East and Northern Ireland, tend to have a higher proportion of
multiplex establishments. The lowest shares of establishments are in regions with
particularly low average disposable income levels and low population.
30 IBISWorld.com
Competitive Landscape
Market Share Concentration in this industry is High
Concentration
The industry is dominated by four large
cinema chains, which together are
expected to account for 82.3% of industry
revenue in 2021-22. As a result, the
industry is considered to have a high level
of market concentration. Over the next five
years, these companies are expected to
maintain the size of their market shares
through the acquisition of existing
cinemas and the continued opening of
cinemas in both new regions and existing
markets. These larger companies tend to
have more screens per site and can show
a greater range of films and other content.
In 2020, 57.4% of enterprises employed

fewer than 10 people, according to figures from the Office for National Statistics.
Approximately 38.9% of companies were medium-size firms with between 10 and
99 employees. These companies can cover a larger geographic area than purely
local cinemas and attract more customers, but they generally lack the resources
required to compete with the major firms in highly desirable urban markets. Such
regional and specialist chains are typically the acquisition targets of major players,
which generally enter new markets by purchasing established cinema chains with
fewer than 10 establishments in desirable and prospective areas.
31 IBISWorld.com
Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this
Factors industry are:
Economies of scale: Cinemas that operate a large and increasing number of venues
across the United Kingdom can benefit from economies of scale and lower marginal costs
per customer.
Ability to raise revenue from additional sources: Cinemas that are able to increase
revenue per customer through concession stand sales and advertising can boost their
overall revenue and profitability.
Ensuring pricing policy is appropriate: Pricing decisions are a key factor in increasing
attendance and need to be tailored to different markets.
Ability to quickly adopt new technology: Technology has a significant influence on the
quality of service that cinemas offer, so investment in latest technology is important. Digital
and 3D screens improve the variety of films cinemas can offer and increase the prices
cinemas can charge.
Having a loyal customer base: Cinemas rely on frequent cinemagoers for a large share
of their revenue. Increasing loyalty and the frequency with which customers return is
important.
Adaptability of operations to comply with social distancing protocols: As a result of

the COVID-19 (coronavirus) pandemic, operators must ensure they abide by social
distancing protocols in order to open premises safely and support consumer confidence.
32 IBISWorld.com
Cost Structure
Benchmarks
Profit
The average industry profit margin is expected

to be 3% in 2021-22. This has decreased over
the past five years, from 8.9% in 2016-17.
Industry profitability had been fairly strong prior
to the COVID-19 (coronavirus) outbreak at the
tail end of 2019-20. The increasing share of
films made available in 3D, which commands
higher ticket prices, has aided average ticket
prices. However, according to the UK Cinema
Association, the average ticket price fell from
£7.21 in 2015 to £7.11 in 2019. Increased retail
offerings have also supported margins for the
majority of the period. Nevertheless, average
annual spending per head has fallen to £18.72 in
2019, from £19.17 in 2015. Rising film hire
costs, the introduction of the National Living
Wage in 2016-17 and increasing external
competition from video streaming services have
further weighed on margins.
33 IBISWorld.com
Over 2020-21, the significant slump in demand

due to the temporary forced closure of industry
establishments the delay of many blockbuster
films as a result of the coronavirus pandemic
have been severely detrimental to margins.
Operating costs such as insurance, rent and
debt repayments, as well as those relating to
health guidelines, increased over 2020-21,
weighing on margins. According to the UK
Cinema Association, the average ticket price in
2020 fell by 5.1% to £6.75, while the average
annual spending per head plunged to £4.37 in
2020. In 2021-22, profitability is expected to
improve as restrictions ease, allowing for
establishments to fully reopen, and pent-up
demand boosting spending on industry services.
Wages
Wage costs are estimated to account for 23.7%

of industry revenue in 2021-22. Labour duties
include ticket and concessions sales,
maintenance and cleaning. The majority of
labour in the industry is expected to be
accounted for by part-time employees. Using a
large number of part-time employees allows
operators to mitigate weak admissions, by
adjusting working hours during periods of low
demand. The large number of part-time workers
in the industry explains the low average wage,
but it has increased over the period due to rises
in the National Living Wage since 2016-17,
which has been set at £8.91 as of April 2021
and was also extended to 23- and 24-year-olds.
Wages are forecast to rise over the five years

through 2021-22, largely due to a spike during
the coronavirus pandemic when revenue
plummeted. The government has introduced the
Coronavirus Job Retention Scheme in order to
help businesses with inflated wage costs during
the pandemic and the scheme has been
extended until the end of September 2021.
Wage costs are expected to fall in the current
year, as establishments reopen and demand
surges, but to remain above pre-pandemic
levels.
34 IBISWorld.com
Purchases
Industry purchases include equipment for

projecting films, cleaning and maintenance
products, and food and beverage products for
re-sale. These costs are estimated to account
for 16.3% of industry revenue in 2021-22.
Purchases consistently absorbed more than
15% of revenue over the three years through
2019-20, as the industry suffered from inflated
prices due to the low value of the pound since
the EU referendum. However, over the pandemic,
the closure of industry establishments, reduced
food offerings and limited screenings, with new
blockbuster films due to come out this year
being postponed, hence reducing the share of
revenue absorbed by purchases. In the current
year, costs are expected to rise as
establishments reopen and operators re-stock
products.
Depreciation
The Cinemas industry has high depreciation

costs, at an estimated 10.2% of revenue in
2021-22. Depreciable assets that require capital
investment include specialist screens and
projection equipment. Over the past five years,
depreciation costs have increased as a result of
the switch to digital and 3D projection.
Marketing
Marketing costs are anticipated to absorb 1.2%

of industry revenue in the current year, with
operators mainly promoting offers and highly
anticipated upcoming films that are to be
projected at their cinemas. Advertising
expenses are expected to have fallen over the
past five years due to a significant decline in
2020-21 following the temporary closure of
cinemas and many films' releases being delayed
as a result of the coronavirus pandemic.
Rent
The industry's rent costs are high, estimated at

12.7% of revenue in 2021-22, due to the size of
cinema buildings and their location in prime real
estate areas. Establishments located in London
and the South East typically have higher rent
costs due to the higher prices in those regions.
These costs have increased due to rates rising
35 IBISWorld.com
at a faster rate than revenue over the past five

years.
Utilities
Utility costs, which include electricity and water,

are estimated to account for 2.6% of revenue in
2021-22, due to heating and cooling needs and
lighting and screening power requirements.
Operators that share premises with a larger
organisation, such as an arts centre, may benefit
from significantly lower utility costs. The share
of revenue absorbed by utility costs has
remained fairly steady over the past five years.
Other Costs
Film hire and rental costs are the largest

expense for the industry. These costs relate to
the amount paid to film distributors as a
licensing fee to show selected films. Hire and
rental costs vary depending on the number of
screens at the cinema, the length of time of a
film will be run for, the expected popularity of the
film and the level of bargaining power a
company has. Therefore, these costs typically
absorb a higher proportion of revenue for small
operators.
Other costs for industry operators include

general business expenses such as
administrative costs, taxes, legal fees and
commercial insurance premiums.
Basis of Competition in this industry is High and Increasing

Competition
36 IBISWorld.com
Internal competition
Cinemas compete on price and access to a continuous supply of

quality and first release film products that appeal to target
audiences.
Due to the similarity of the service provided, cinemas compete on brand image to
attract and retain customers. Membership schemes are often used to encourage
brand loyalty, for example ODEON's Premiere Club enables customers to
accumulate points, which they may use to redeem discounts on future tickets or
food from concession stands. The price of cinema tickets also has a major
influence on demand and how attractive a cinema is compared with its
competitors. Industry operators can attract customers by offering the most
competitive prices. Major cinema chains benefit from greater economies of scale,
which allows them to purchase the rights to screen first-run films at lower average
costs per screening. This then feeds into lower ticket prices at large-scale chains.
The ease and flexibility of booking also provides operators with a competitive edge.
During 2016, Cineworld invested in improving its app to provide customers with
greater visibility of the cinema line-up, and allow quick on-the-move bookings that
improves efficiency. Cineworld reported that 20% of online cinema bookings made
in 2017 were done on a mobile app.
Continuous improvement in the digital platforms used by customers is very

important in ensuring that the full customer experience is quick and easy.
Cineworld's chain brand Regal is incorporating food and beverage online ordering
on their mobile platform, which can add value to customers as they can order
ahead of their arrival and skip the queue. Improvement and variation in the food and
beverages offered to meet changing customer needs can also lead to higher
customer satisfaction and higher concessions revenue. As an example of this,
Everyman Cinemas has differentiated from the typical concessions by offering wine
and freshly made pizza that is served directly to the patron's seat.
Investment in technology and premium offerings is a very important factor for

cinema admissions. Customers usually go to the cinema for the unique experience
that the ‘big screen' offers in watching a film, from superior picture quality to an
impressive audio system. Therefore, using the latest technologies for projecting
films gives customers a more immersive experience. The use of IMAX laser
projectors, and 3D, 4DX and ScreenX screens is in increasing demand, hence
enterprises that adopt these and further technology advancements can compete
better than those unable to afford such investment.
The location of a cinema is also a competitive factor. Multiplexes located in

shopping centres offer consumers accessible car parking, giving such centres an
advantage over city-centre cinemas. The quality of cinema facilities and session
times for screenings are important for many cinema customers, especially for
multiplexes showing the same films. Aside from the release of newer major titles
and location, industry operators differentiate themselves by screening a wider range
of genres. Certain cinemas may specialise in screening foreign-language films or
independent features. Some industry players compete by offering patrons the
option of upgrading their movie-going experiences. For example, Cineworld offers a
VIP experience at certain sites, which includes a buffet prior to the film screening,
unlimited soft drinks, and a more intimate screening room fitted with luxury seats.
37 IBISWorld.com
External competition
While competition between the major operators is somewhat

limited, the industry is exposed to a high level of competition from
substitutes, such as digital pay TV, new release DVDs and Blu-ray
Discs, and expenditure on other forms of entertainment, sport and
leisure.
Digital pay TV (see IBISWorld report SP0.021) and subscription video-on-demand
(SVOD) service providers (see IBISWorld report SP0.017), such as Netflix, Amazon
Prime and Sky's Now TV, offer a range of film and TV content for consumers to
stream via an internet connection. Combined with the use of home theatre systems,
these have led to an increasing emphasis on in-home entertainment. As a result,
cinemas must compete to offer an experience that cannot be replicated in the
home. This has spurred an increase in IMAX and 4DX-enabled screens in recent
years. During the coronavirus pandemic, demand for SVOD services is expected to
have risen greatly as people have been confined to their homes for long periods of
time, increasing competition for the industry.
Internet film piracy has become a major external threat to industry operators.
According to statistics published by the government, 25% of internet users
accessed illegal film content in 2016. Furthermore, the highest level of infringement
recorded was found for music, TV programmes and films. In order to tackle this,
internet service providers have begun sending letters to customers who have been
using their internet connection to access media illegally, notifying them that their
broadband has been used to share copyrighted material, and encouraging them to
use legal alternatives. Sky and Virgin Media have announced that internet users will
be given a 20-day warning to stop illegally downloading content, although they have
not announced what will happen after the 20-day period if illegal downloading
continues. Cinemas are also vulnerable to piracy on their sites, with some people
recording during film screening, particularly high-profile titles, which is then likely to
be uploaded on the internet for illegal use, reducing cinema admission numbers.
Cinema admissions are affected by the film slate, so it is important for cinema
operators that film producers and distributors can bring popular and anticipated
films that appeal to customers. If for example, Hollywood performs poorly, it will
affect cinema admissions negatively. However, larger industry operators can
mitigate that risk by having operations elsewhere, for example in Europe, where
stronger local and non-Hollywood film demand helps hedge their exposure to the
US market and film reliance.
Barriers to Entry Barriers to entry in this industry are High and Increasing
38 IBISWorld.com
Barriers to entering the industry are high

due to expensive fit-out costs Barriers to entry checklist
associated with establishing a new Competition High
cinema or refurbishing an existing
Concentration High
venue. A new firm requires sufficient
funds to secure an appropriate location Life Cycle Stage Mature
for a new cinema or to acquire an
Technology Change Medium
existing complex. In addition to the
building or refurbishment expenses, it is Regulation & Policy Medium
costly to purchase and lease the
Industry Assistance Medium
required film projection equipment,
particularly the latest technology used in
the market, install fixed seating, fit-out food and beverage service areas and install
ticket-selling booths and equipment. Large chains benefit from economies of scale
and can renovate and re-equip theatres with new technology at a lower average
cost than small chains and keep costs down by sharing online booking systems
across the nationwide chain.
Cinema operators also need to develop strong relationships with film distributors to
secure a good and varied selection of films for public viewing. While this is not
usually a major problem due to distributors looking to get films shown in as many
locations as possible, new cinemas may face a pricing disadvantage until they
become more established.
Because the industry is dominated by four major companies, which have a

combined market share of approximately 82.3% in the current year, it can be
difficult for a new firm to compete within a specific geographic region, whether local
or national. However, as large chain cinemas mainly show popular films, smaller
cinemas are able to develop niche markets by showing alternative or art-house
films, or by offering products and services that are different and more appealing to
customers. For example, Everyman Media Group is a niche player in the industry as
the company provides a more personalised experience to customers, such as
serving wine and freshly made pizza to the customer's seat, and this has helped
increase their market share over the past five years and expand quickly in a market
dominated by global multiplex operators. Cinemas must be licensed to show films
and must also comply with film classifications as determined by the British Board
of Film Classification.
Industry Globalization in this industry Medium and Increasing

Globalization
The level of globalisation in the industry is influenced by the number of foreign-
owned firms operating in the United Kingdom and UK-owned firms with international
operations. The UK-based private-equity firm Terra Firma Capital Partners Limited
previously owned one of the industry's largest companies, ODEON & UCI Cinemas
Group, which operates over 100 cinemas in the United Kingdom. In November 2016,
ODEON & UCI was acquired by AMC Entertainment Holdings, Inc, a US-based
company. AMC Entertainment Holdings, Inc is the world's largest film exhibition
company, operating a total of 950 theatres and 10,543 screens globally, as of
December 2020.
39 IBISWorld.com
US-based National Amusements Inc operates 1,500 screens across the United
States, the United Kingdom and Latin America. Vue Entertainment operates
cinemas in nine countries, including Germany, Italy, Poland, Taiwan, and
Netherlands, operating 225 cinema sites. In June 2013, Vue Cinemas was bought
by Canadian investors for £935 million. Cineworld also followed its competitors and
began a European expansion in January 2014, currently having a presence in 8
European countries and in Israel. Furthermore, in 2018, Cineworld completed the
acquisition of larger US rival Regal Entertainment, giving Cineworld considerable
strength in the region. At the same time, there are many smaller operators that
operate only in the United Kingdom. As a result, the industry has a moderate and
rising level of globalisation.
40 IBISWorld.com
Major Companies
Major Players CINEWORLD GROUP PLC
Market Share: 31.8%

Cineworld Group plc was founded in 1995 with
the support of private equity funds. The
company was initially named Cine-UK and it
acquired and opened dozens of multiplex
cinemas over the following decade. The Blackstone Group, a multinational private
equity firm, acquired a controlling share in Cineworld in October 2004 but it sold its
entire shareholding in November 2010. Cineworld was publicly listed on the London
41 IBISWorld.com
Stock Exchange on May 2007 and has since expanded into even more new markets
and complexes. The group operates the Cineworld and Picturehouse cinemas in the
United Kingdom.
In December 2012, Cineworld acquired the Picturehouse chain of cinemas. In

January 2014, Cineworld expanded into Continental Europe by acquiring Poland-
based Cinema City International, which owned 100 multiplex cinemas across
Poland, Romania, Hungary, Czech Republic, Slovakia and Bulgaria. Through its Yes
Planet and Rav-Chen cinema chain brands, the company owns 11 sites in Israel. In
2018, Cineworld Group plc completed the acquisition of Regal Entertainment Group
with its 555 sites for £2.5 billion, thereby entering the US market, which is the
largest box office in the world. The acquisition boosted global revenue to £3.1
billion in 2018. As of December 2020, the combined group had 767 sites and 9,311
digital screens, with approximately 30,430 employees across 10 countries, making
Cineworld the second largest cinema chain in the world. The group had 134 IMAX
screens, 88 4DX screens, 125 PLF screens and 57 ScreenX screens in 2020. The
group last reported an overall revenue of US$852.3 million (£659.6 million) in 2020,
down from US$4.4 billion (£3.4 billion) in 2019, and 54.4 admissions, down from
275 million in the prior year. It also recorded an operating loss of US$2.3 billion
(£1.7 billion) in 2020, as a result of the COVID-19 (coronavirus) outbreak.
In 2016, eight sites were opened, four of which were in the United Kingdom and the
Republic of Ireland. In 2017, nine new sites were opened, with four of these in the
United Kingdom and Ireland. In 2018, six sites were opened and four were
refurbished in the United Kingdom. In 2019, the group opened five new sites in the
United Kingdom and completed eight refurbishments. This brought the total
number of cinemas in the United Kingdom and Ireland to 128, 127 of which are in
the United Kingdom, and 1,180 screens. Across its cinema chain, the company
exhibits a range of specialist screenings including Bollywood, Polish and other
alternative content. Online booking is becoming increasingly popular among the
firm's customers, and as a result the firm developed a mobile app in 2016 to provide
greater visibility of the cinema line-up, and increase the ease of bookings. In 2017,
Cineworld recorded that 20% of online bookings were made on a mobile app.
The coronavirus pandemic has devastated Cineworld's performance over 2020. The
company closed all its UK cinemas from 23 March 2020 as a result of the initial
nationwide lockdown. All but six of Cineworld's UK cinemas reopened on 31 July,
with establishments screening classic films, including Goodfellas, The Shawshank
Redemption and Back To The Future, due to the lack of new films released. After
many anticipated films, including the new James Bond film, No Time To Die, had
their release date postponed, the company announced at the start of October that it
was temporarily suspending operations at all of its 127 Cineworld and Picturehouse
cinemas in the United Kingdom from 8 October 2020, as well as at all of its 536
Regal cinemas in the United States, affecting 45,000 workers, over 5,000 of which
are in the United Kingdom. On 23 November 2020, Cineworld announced a US$750
million (£562 million) package that includes an agreement from its banks to waive
covenants until June 2022, an extension of a US$111 million (£83 million) revolving
credit facility from December 2020 to May 2024, and US$450 million (£337 million)
of new debt. In June 2020, Cineworld decided to pull out of a US$2.1 billion (£1.6
billion) deal to acquire the Canadian cinema chain Cineplex. Due to the pandemic,
Cineworld closed one site in the United Kingdom over 2020, although it also
refurbished another four. As restrictions eased in the United Kingdom over the
42 IBISWorld.com
current year amid the fast rollout of the vaccination programme in the United
Kingdom, Cineworld reopened its cinemas from 19 May 2021.
Cineworld stated in March 2021 that it had signed a multi-year agreement with
Warner Bros. Pictures Group to an exclusive theatrical window of 45 days in the
United States and just 31 days in the United Kingdom before it goes to premium
video on-demand. There will be an extended window of 45 days for films that open
to an agreed upon box-office threshold.
Financial performance
Total company revenue is expected to grow at a compound annual rate of 17.1%

over the five years through December 2021 to £387.7 million. Revenue grew
strongly prior to the coronavirus outbreak, through both organic growth and many
acquisitions. Operating profit for the wider company also remained strong prior to
2020 owing to good operational efficiency, expansion and strong investment.
However, industry-related revenue is expected to fall at a compound annual rate of
4.7% over the five years through December 2021, with the coronavirus pandemic
and the measures implemented to contain it having a significant effect on UK
cinemas.
In 2016, the Group acquired five Empire cinemas from Cinema Holdings Ltd, which
operate in the United Kingdom. The results of their performance have been included
since mid-August 2016, when they were acquired. Revenue growth was then
boosted through 2017, as it was the first full year in which its financial performance
was included in group revenue. Also aiding growth in 2017 was the strong film slate
released in the year, which allowed the company to record cinema admissions
levels, with over 100 million people watching a movie with Cineworld.
A good film portfolio for 2018, including Solo: A Star Wars Story, Avengers: Infinity
War, Deadpool 2 and Black Panther, generated significant revenue for the firm. In
2019, the film slate was strong, with the release of blockbuster films such as
Avengers: Endgame, Aladdin, Toy Story 4, Spider-Man: Far from Home, The Lion
King and Star Wars: The Rise of Skywalker. However, the group's UK and Ireland
admissions numbers fell by 6.6% to 48.2 million in 2019 compared with the
previous year. Moreover, box office revenue and retail revenue declined by 10.5%
and 6.4% respectively over the year. As a result, UK revenue is expected to have
fallen to £504.2 million in 2019. The company reported a 76.3% decline in revenue
in the United Kingdom and Ireland in 2020, with admissions also falling by 76.3% to
11.4 million. The closure of venues and the poor film slate, due to film releases
being postponed, decimated demand. In 2021, revenue is expected to grow as
restrictions in the United Kingdom are removed and some highly anticipated films
are released. Pent-up demand from consumers for out-of-home leisure is expected
to support admissions and spending on industry services. However, the nationwide
lockdown restrictions from January 2021, which kept cinemas closed until May
2021, are expected to constrain revenue recovery over the year, with revenue
remaining below pre-pandemic levels.
Cineworld Group plc - financial performance*

Year** Revenue Growth Operating Profit
(£ million) (% change) (£ million)
2016 797.8 N/C 112.8
2017 890.7 11.6 128.2
2018 3084.4 246.3 369.1
43 IBISWorld.com
Cineworld Group plc - financial performance*

Year** Revenue Growth Operating Profit
2019 3424.5 11.0 567.9
2020 659.6 -80.7 -1747.4
2021*** 1753.1 165.8 125.5
Source: Annual report and IBISWorld
Note: *Converted from US dollars **Year end December ***Estimate
Cineworld Group plc (UK segment) - financial performance*

Year** Revenue Growth
(£ million) (% change)
2016 494.0 N/C
2017 524.5 6.2
2018 551.2 5.1
2019 504.2 -8.5
2020 118.2 -76.6
2021 387.7 228.0
Note: *Estimate **Year end December
VUE ENTERTAINMENT LTD
Market Share: 23%

Vue Entertainment Ltd is one of the largest
cinema operators in the United Kingdom in
terms of box office revenue and is one of the
largest cinema developers. The company
began by acquiring Warner Village Cinema's UK cinema sites in May 2003 and has
grown strongly ever since. It is a subsidiary of Vue Entertainment Holdings Ltd,
which was incorporated into Vue International Bidco plc (formerly Vougeot Bidco
plc) in May 2013. Vue International Bidco plc was formed to manage the European-
wide business following the acquisition of cinema chains in Germany and Poland.
For the year through November 2020, Vue International Bidco plc reported total
revenue of £352.9 million, a 58.4% fall on the prior year. Total Vue admissions were
38.6 million in 2020, down from 95.1 million in 2019.
As at 30 November 2020, Vue International Bidco plc operated 225 cinemas with a
combined total of 1,997 screens in nine countries. Of those sites, 87 were in the
United Kingdom and three in Ireland. Prior to the pandemic, there were 91 cinemas
in the United Kingdom and Ireland, with over 870 screens, including 271 3D screens,
11 Extreme screens, and three IMAX screens. Vue owns two of the top three
highest grossing cinemas in the United Kingdom, at the Westfield shopping centres
in Shepherd's Bush and Stratford in London.
In August 2013, Vue Entertainment was acquired by Canadian investors OMERS

Private Equity and Alberta Investment Management for £935 million. In October
2014, Vue agreed to a deal to acquire The Space Entertainment, the leading cinema
chain in Italy, and followed this up with a deal to buy the second largest chain in the
Netherlands, JT Bioscopen. In July 2018, Vue Entertainment acquired Showtime
Cinemas in the Republic of Ireland, and then acquired Cinema 3D in Poland in May
2019. The group also agreed to purchase CineStar in Germany in 2018, a merger
44 IBISWorld.com
that was cleared in 2020 subject to the condition that the cinema operators divest
cinemas to other operators at six different locations before implementing the
merger.
The forced closure of cinemas severely affected the company's operations.

Following the initial lockdown in March 2020, the cinema started reopening some
sites in early August 2020. However, rising restrictions later in the year and over the
first few months of 2021, as cases resurged, led to Vue closing sites yet again.
Establishments reopened on 17 May 2021, when the government eased some
restrictions.
IBISWorld expects Vue Entertainment's revenue to fall at a compound annual rate of

0.3% over the five years through November 2022 to £280.5 million. The company
reported a strong performance over 2017-18, when admission revenue increased
thanks to a strong line up of blockbuster films, which led to revenue growth of 9.7%.
Moreover, its market share increased in 2017-18, due to strong performance.
Operating profit grew sharply over the same year, due to the tight operational
efficiency employed by the company in addition to the successful implementation
of automated labour scheduling software, delivering faster responses to customer
demands and improving engagement and service. Performance has also been
strong over 2018-19, aided by rising admission revenue. The company's accounting
period ends in November, hence revenue has plummeted significantly over the year
through November 2020 as a result of the COVID-19 restrictions. The company
reported revenue of £115.4 million, a 63.7% fall on the prior year, as well as
operating loss of £78.1 million, highlighting the effect of the pandemic on its
business. Vue International Bidco plc reported that admissions UK and Ireland in
the 12 months through November 2020 were 67.5 million, down 64% on the
previous year. In the company's 2020-21 financial year, revenue is expected to be
constrained by further lockdowns and difficult market conditions, with cinemas
operating without restrictions only for a couple of months. However, in the current
year, revenue is expected to grow strongly, aided by a strong film slate and pent-up
consumer demand, with restrictions fully removed.
Vue Entertainment Ltd - financial performance

Year* Revenue Growth Operating Profit
2016-17 284.8 N/C 19.1
2017-18 312.4 9.7 51.9
2018-19 318.2 1.9 33.9
2019-20 115.4 -63.7 -78.1
2020-21** 83.8 -27.4 -3.1
2021-22** 280.5 234.7 18.9
Source: Companies House and IBISWorld
Note: *Year end November **Estimate
45 IBISWorld.com
ODEON CINEMAS GROUP LTD
Market Share: 21.1%

ODEON Cinemas Group, formally known as
ODEON & UCI Cinemas Group, is Europe's
largest cinema chain and is now owned by
AMC Entertainment Holdings Inc. The
company is a subsidiary of Dalian Hexing Investment Co Ltd. AMC is headquartered
in Kansas City, where it was founded in 1920. In November 2016, AMC acquired the
group from the UK-based private equity firm Terra Firma for approximately US$1.2
billion (£800 million). This acquisition made AMC the world's largest movie
exhibition company, operating 950 theatres and 10,543 screens globally, with 3,449
full-time and 21,570 part-time employees in 14 countries as of December 2020. As
a result of the pandemic, the number of full-time and part-time employees has
fallen strongly, by approximately 13,850. AMC's revenue was US$1.2 billion (£961.6
million) during 2020, plummeting due to the pandemic.
ODEON Cinemas Group is one of the largest UK cinema chains, with approximately
112 cinemas across the United Kingdom, with 904 screens at the end of 2019, and
a further 11 cinemas in Ireland. It accounts for an estimated one-quarter of all
cinema tickets sold in the United Kingdom. The first ODEON cinema was opened in
1930 in Birmingham. At the end of December 2015, the company operated 868
screens in the United Kingdom, of which over 100 were 3D format. ODEON Cinemas
Group operates in a number of European countries, having over 340 cinemas
throughout Europe with 2,700 screens, welcoming over 100 million visitors each
year, stating it is Europe's largest cinema operator. It has strong positions in Spain,
Italy and Germany.
In 2012, the group acquired the BFI Southbank in London and the AMC cinema in
Birmingham, helping to consolidate the UK cinema market. ODEON operates the
first Dolby Cinema in the United Kingdom, which is a premium cinema technology
for greater audio and visual experience. The company also completed its roll-out of
digital projectors, becoming the largest fully digital chain in the world in 2012.
Odeon formerly had the UK's biggest cinema loyalty scheme, called ODEON
Premiere Club, which had over two million members, but this was closed on 6 May
2020. The company launched trial 4D experiences in two UK cinemas and
introduced Costa Coffee shops in its UK cinemas. Costa franchises are currently in
operation in 62 ODEON cinemas across the United Kingdom.
During the coronavirus pandemic, once cinemas were allowed to reopen following
the initial lockdown, ODEON offered some deals to lure customers. These include a
Saver and SuperSaver Tickets, which offered tickets from £5, and 50% off tickets
for Cineworld Unlimited members when Cineworld cinemas shut in October. At the
start of October, the company stated that a quarter of its 120 cinemas would shut
from Monday to Thursday due to low admissions and a lack of new films. All
ODEON cinemas were closed during the subsequent nationwide lockdowns,
decimating demand.
IBISWorld expects ODEON's industry-related revenue to fall at a compound annual

rate of 7.6% over the five years through December 2021 to £256.91 million.
46 IBISWorld.com
Structural changes and high admission figures are likely to have supported revenue
growth over 2017. Over 2018, the company invested £62.4 million in existing sites,
other revenue-generating projects and capital maintenance of the estate. Over
2020, the measures introduced to limit the spread of the coronavirus are expected
to have weighed heavily on the company's performance, in line with the wider
industry. Its parent company, AMC Entertainment, reported a 77.3% decline in total
revenue in 2020, highlighting the significant implications brought on by the
pandemic. As restrictions ease and cinemas reopen, ODEON's revenue is expected
to rise in the current year, albeit remain below pre-pandemic levels, due to strict
restrictions at the start of the year.
ODEON Cinemas Group Ltd - industry-related performance*

Year** Revenue Growth
(£ million) (% change)
2016 380.7 N/C
2017 397.3 4.4
2018 386.2 -2.8
2019 389.7 0.9
2020 81.8 -79.0
2021 256.9 214.1
Note: *Estimate **Year end December
NATL AMUSEMENTS (UK) LTD
Market Share: 6.4%

Natl Amusements (UK) Ltd is the UK
subsidiary of National Amusements Inc, a US-
based global entertainment company that is
also the parent of both Viacom Inc and CBS
Corporation. Viacom Inc is a major TV network and film producer in the United
States. In 2019, Viacom and CBS merged into one firm called ViacomCBS, which is
controlled by National Amusements. The motion-picture exhibition division owns
more than 950 screens in the United States, the United Kingdom and Latin America.
Natl Amusements operates the Showcase Cinemas and Showcase Cinema de Lux
brands in the United Kingdom, employing over 1,300 people in 2019. It continues to
invest in digital and technological innovation such as IMAX, 3D and large screen
formats to enhance the customer experience.
As expected with the wider industry, the company has stated that the coronavirus
pandemic has caused business disruption through the mandated closure of all of
its cinemas. In turn, it implemented many cost saving measures during lockdown,
including furloughing most of its employees, temporarily reducing salaries for non-
furloughed essential staff, and working with landlords to delay or reduce lease
payments during the closure period. Additionally, the company suspended all non-
essential capital expenditure in order to preserve cash. Natl Amusements resumed
operations under reduced capacity restrictions on 4 July. However, there were no
new film products released to cinemas until the end of the third quarter of 2020,
negatively affecting demand. As a result, Showcase Cinemas screened modern
classics for £5 per ticket, as there were no new blockbuster films coming out.
Moreover, the company reported uncertainty in consumer demand once the
47 IBISWorld.com
business began to reopen, before being forced to close again due to a resurgence in
cases.
IBISWorld expects Natl Amusements' revenue to fall at a compound annual rate of

3.4% over the five years through 2021 to £78.2 million, mainly as a result of a sharp
drop in 2020 due to the coronavirus pandemic and subsequent restrictions. Over
the past five years, the company has invested in digital and technological
innovation, such as IMAX, 3D and large screen formats, to enhance the customer
experience. Additionally, it has continued to maintain the quality of its cinemas by
upgrading to luxury seating concepts and expansion of food and drink offerings.
The company's revenue growth strengthened in 2017, supported by a strong film

slate that boosted admissions and also due to the opening of a new cinema site at
Westquay shopping centre in Southampton. Over 2018, revenue increased due to
attendance rising by 2.1% compared with 2017, primarily attributable to a new
cinema and the expansion of an existing cinema. The company last reported
revenue of £105.8 million over 2019, representing a 3% decline on the previous year,
due to attendance falling by 3%. The challenging operating conditions created by
the pandemic are expected to have significantly lowered company revenue and
profit over 2020, with admissions falling by an significant level as venues were
closed for long periods of time. In 2021, revenue and profitability are expected to
pick up as cinemas are allowed to reopen from mid-May; however, the lockdown
restrictions prior to that, are expected to subdue performance and keep revenue
below pre-pandemic levels.
Natl Amusements (UK) Ltd - financial performance

Year* Revenue Growth Operating Profit
2016 92.9 N/C -3.1
2017 106.6 14.7 0.3
2018 109.0 2.3 3.2
2019 105.8 -2.9 -2.6
2020** 24.3 -77.0 -13.1
2021** 78.2 221.8 1.4
Source: Companies House and IBISWorld
Note: *Year end December **Estimate
Other Players EVERYMAN MEDIA GROUP PLC
Market Share: 4.7%

Everyman Media Group plc is the owner of the Everyman cinemas, and independent
network of boutique cinemas across the United Kingdom. The company was
founded in 2000 with the purchase of the original Everyman Cinema in Hampstead.
In 2008, it purchased Screen Cinemas to expand its reach. The firm has continued
to expand and in November 2013 it debuted in the Alternative Investment Market, a
sub-market of the London Stock Exchange, as a public limited company.
48 IBISWorld.com
The company operated 35 venues with 117 screens as of December 2020, up from
33 venues and 110 screens as of March 2020. The company has a growing number
of staff, employing 889 people as at 31 December 2020. Everyman is the fifth
largest UK cinema as defined by gross box office revenue, according to ComScore.
In its latest annual report for the 12 months through December 2020, Everyman
reported revenue of £24.2 million, a 62.7% decrease on the previous year. This is
due to the coronavirus pandemic, which resulted in the closure of all venues for five
full months over the year, as well as capacity on operations once establishments
were allowed to open. Admissions over the year were down 63%, as a result of the
restrictions and the reduced film slate. Nevertheless, the company reported a 5%
rise year-on-year in the average ticket price to £11.90, largely due to the temporary
reduction in the VAT rate. Additionally, food and beverage spend in 2020 increased
by 11% to £7.89, mainly as a result of takeaway sales from a number of venues
during periods of closure. Over 2020, the company reported an operating loss of
£19.3 million, down from an operating profit of £4.7 million in 2019. Profit has been
heavily affected by the pandemic, including a £5.6 million charge for impairment of
goodwill, right-of-use assets and property, plant and equipment. Everyman Cinemas
has attempted to reduce capital expenditure and operating costs to a minimum
over the year to mitigate the effect of the pandemic as much as possible. This
included salary cuts and placing most of the staff on furlough.
The company has stated that it expects admissions to rise strongly once cinemas
are allowed to reopen and could even be above pre-pandemic levels over time. Prior
to the pandemic, the company has benefited from rising demand for independent
films and niche operations by providing a more personalised, high-end experience
that customers are increasingly looking for, which is expected to boost the
company's performance over the coming years as well. IBISWorld expects
Everyman Media Group to generate revenue of just £57.7 million in 2021, supported
by the reopening of venues and pent-up consumer demand. However, the lockdown
restrictions over the first few months of 2021 are expected to constrain revenue
recovery in the current year.
49 IBISWorld.com
Operating Conditions
50 IBISWorld.com
Capital Intensity The level of capital intensity is High
The industry has a high level of capital

intensity due to the significant costs
associated with building and fitting out a new
cinema and refurbishing or upgrading an
existing venue. It is also costly to purchase
film projection equipment and lighting, heating
and cooling systems. Additionally, industry
operators have increasingly been investing in
3D capable and IMAX screens, as well as 4DX.
High capital costs are reflected in the
industry's high depreciation costs, which are
expected to account for 10.2% of industry
revenue in 2021-22, a share that has risen over
the past five years.
Cinemas also usually require a large number

of workers to carry out a wide range of
activities. These staff include ticket-sellers,
ushers, projectionists, food and beverage
servers, cleaners, managers and office
administrators. However, the majority of staff
in the industry are part-time, so the average
wage is fairly low. Wages are estimated to
account for 23.7% of industry revenue in
2021-22.
Using depreciation as a proxy for capital and total wages as a proxy for labour, the
industry is estimated to have a capital-to-labour ratio of 1:2.32 in 2021-22. This
means that for every £1.00 invested in capital, the average operator is expected to
spends £2.32 on labour, indicating that the industry has a high level of capital
intensity.
Technology And Potential Disruptive Innovation: Factors Driving Threat of Change

Systems Level Factor Disruption Description
A ranked measure for the number of

Rate of patents assigned to an industry. A faster
Moderate Potential rate of new patent additions to the
Innovation industry increases the likelihood of a
disruptive innovation occurring.
A measure for the mix of patent classes

Innovation assigned to the industry. A greater
Moderate Potential concentration of patents in one area
Concentration increases the likelihood of technological
disruption of incumbent operators.
Annualized growth in the number of

enterprises in the industry, ranked against
Moderate Rate of Entry Potential all other industries. A greater intensity of
companies entering an industry increases
the pool of potential disruptors.
51 IBISWorld.com
Level Factor Disruption Description
A ranked measure of the largest core

Market market for the industry. Concentrated core
Moderate Potential markets present a low-end market or new
Concentration market entry point for disruptive
technologies to capture market share.
A qualitative measure of barriers to entry.

Fewer barriers to entry increases the
Very Low Ease of Entry Very Unlikely likelihood that new entrants can disrupt
incumbents by putting new technologies
to use.
Both the rate of new innovation and the concentration are in line with the average
across all industries.
The industry structure is not accommodative to new entrants succeeding, which

limits the incentive for new companies. This is accompanied by an average level of
new entrant operators. The combination provides a limited threat from disruptors.
The Cinemas industry is facing technology disruption from

Subscription Video on Demand (SVOD) service providers and
streaming services, such as Netflix, Amazon Prime Video and Now
TV (see IBISWorld report SP0.017).
These services are direct competition to industry operators, as they offer
consumers the ability to watch films, including rentals and fairly new releases. They
can also offer TV shows and live TV, whereas cinemas typically do not. On the other
hand, cinemas are protected by the theatrical window, which is a set period of time
in which new films are only available at cinemas until being released to DVD and
SVOD service providers. This provides industry operators with some protection
from external competitors. Recent talks of shortening the theatrical window, which
is the amount of time a film is shown exclusively in cinemas before becoming
available to rent on demand, present a threat to the industry, as DVD and SVOD
service providers would be able to show films soon after being released. For
example, in the United States, Universal Pictures struck a multiyear agreement with
Cinemark in November 2020 to shorten the theatrical window from 90 days to 17
days. Moreover, in its latest annual report, Cineworld stated in March 2021 that it
had signed a multi-year agreement with Warner Bros. Pictures Group to an
exclusive theatrical window of 45 days in the United States and just 31 days in the
United Kingdom before it goes to premium video on-demand. There will be an
extended window of 45 days for films that open to an agreed upon box-office
threshold; however, this is still far below the average window across all UK releases
in 2019, which was 109 days, as reported by Screen Daily.
Industry operators have had to adapt to this competition by improving cinemagoers'

experience and attempting to make it better than the at-home viewing experience.
Major industry players have added value to the cinema experience through
improved food and beverage offerings, as well as technology advancements to
achieve an enhanced audio and visual experience that cannot be replicated at
home.
52 IBISWorld.com
The level of technology change is Medium
There is a moderate level of technological change in the industry.

According to the Information Handling Services, by the end of 2015, all UK cinema
screens were equipped for digital projection, and by the end of 2020, 44.1% of the
digital screens in the UK were 3D capable digital screens. Digital formats allow for
film distribution to cinemas via online systems and by satellite. This technology
allows for encryption to occur, increasing the degree of copyright and piracy
protection. Digital systems involve significant cost savings for distributors,
particularly in terms of print, freight and storage space.
More screens are being converted to be able show 3D films, allowing cinemas to
charge higher prices to consumers. Although upgrading screens to allow 3D films
does entail significant expense, this is expected to have a fairly short pay-back
period, making it an attractive prospect for operators. Additionally, an increasing
number of cinemas are investing in IMAX with laser and 4DX technology. The result
is a premium audio and visual experience that cinemagoers pay higher ticket prices
for. 4DX is a more recent technological development, first opened by Cineworld in
London in 2018, and 4DX screening rooms are fitted with motion chairs that are
programmed to move in harmony with the action of the film.
Touchscreen cinema ticketing machines have been introduced to many cinemas.

These machines also provide scheduling and financial reporting components for
operators. Only limited training is required by staff to operate the systems, with
electronic funds transfer at point of sale systems and credit card facilities for
payment also becoming available. Self-service ticketing machines are also
becoming more common, with automated phone booking services and reserved
seating available for popular sessions. Internet booking and payment is available
from almost all major cinema groups, which is important as many customers now
prefer to book tickets online instead of at the cinema. Many operators also offer
these services through apps that can be used on smartphones. However, the
implementation of e-ticketing in the sector has been comparatively slow. All major
operators now provide information on films, sessions and previews on their
websites or via phone information lines. In addition, technology for accessibility and
digital signage has been growing in recent years.
53 IBISWorld.com
Revenue Volatility The level of volatility is Very high
Note: Revenue growth and decline reflective of 5-year annualized trend. Y-axis is in
logarithmic scale. Y-axis crosses at long-run GDP. X-axis crosses at high volatility
threshold.
Revenue volatility is very high, up from a moderate level earlier in

the past five-year period.
However, this is heavily skewed by the effects of the COVID-19 (coronavirus)
outbreak at the tail end of 2019-20. Typically, the industry exhibits moderate
revenue volatility, as cinema attendance fluctuates in line with the popularity of the
film slate offered by the upstream Motion Picture Production industry (IBISWorld
reports J59.111) and the Film, Video and TV Programme Distribution industry and
(IBISWorld report J59.130).
Demand for cinema viewing experiences has been tempered by high competition
from other leisure and entertainment substitutes, such as the internet, digital TV
and digital pay TV (see IBISWorld report SP0.021). Online subscription platforms
including Netflix and Amazon Prime (see IBISWorld report SP0.017) are expected to
have affected the industry, with some preferring to watch films at the comfort of
their own home. However, the developments made by the Cinemas industry in order
to improve customer experiences, including the buying of the ticket, the increased
range of food and beverages offered, and improved audio and visuals, has helped
maintain demand. Additionally, over the years prior to the pandemic, attendance
numbers have been supported by a series of blockbuster films, such as Star Wars:
The Rise of Skywalker and Marvel's Avengers: Endgame. According to the UK
Cinema Association (UKCA), admissions reached 176.1 million in 2019, up from
171.5 million in 2015.
54 IBISWorld.com
The increasing popularity of high-definition home theatre systems with plasma or

LED screens, and associated equipment for in-home entertainment is another
source of competition that can affect industry revenue volatility. However, the
release of blockbuster films can increase cinema attendance in the short term,
while the increased supply of, and demand for, 3D films supports industry revenue
over the period. Although TV manufacturers attempted to popularise 3D TV, the
majority of consumers were not enthusiastic. In 2017, the majority of large TV
manufacturers ceased producing TV's with 3D capabilities. This supports industry
demand somewhat, as 3D technology remains a unique selling point for cinemas.
However, the coronavirus outbreak has decimated industry revenue, as cinemas

have been closed for a significant amount of time due to numerous government-
imposed lockdowns. This has led to admissions plummeting to just 44 million in
2020, according to the UKCA. Additionally, a poor film slate due to new anticipated
films having been delayed provided a further blow to the industry. Moreover, low
consumer confidence and falling disposable income reduced spending on industry
services during times when cinemas were allowed to open, further constraining
revenue. UKCA data shows that average annual spending per head population was
just £4.37 in 2020, down from £18.72 in 2019. In 2021-22, the easing of restrictions,
allowing cinemas to reopen fully, and the release of highly anticipated films are
expected to boost revenue, with the industry benefiting from pent-up consumer
demand for the cinema experience. However, alternative forms of leisure and rising
competition from subscription video-on-demand service providers, exacerbated by
the pandemic, are expected to constrain revenue recovery.
Regulation & The level of regulation is Medium and is Steady

Policy
Local authorities grant licences to cinemas in their area.
Cinemas can screen films that have been certified by the British Board of Film
Classification (BBFC). If industry operators intend to screen films that have not
been certified they must submit these to the local authority for local certification.
Local authorities have the power to ignore the BBFC's decision at any time. From 31
March 2016, the BBFC has delegated the regulation of all cinema advertisements in
the United Kingdom to the Cinema Advertising Association (CAA). Where the BBFC
questions whether a film should be considered an advertisement, the film must also
be classified in accordance with the CAA. The BBFC also age-rates all films and
decides if some films are not appropriate for certain age groups. The United
Kingdom is also part of the main international treaties on copyright and related
rights.
Additionally, cinemas must obtain theatrical licence agreements from relevant

distributors for each film screened. A licence also needs to be granted from the
Performing Rights Society, in order to cover the film's soundtrack. The cost of this is
1% of the net box office revenue after VAT.
Industry The level of industry assistance is Medium and is Increasing

Assistance
55 IBISWorld.com
The government provides funding for the creative sector, but the
vast majority of this is directed towards production rather than
exhibition activities, with the largest sources of funding coming
from the UK film tax relief and the National Lottery.
Activities involving the distribution and exhibition of films benefit from the second
largest share of public spending. Public spending on distribution and exhibition has
been growing sharply over the past few years, from approximately £18.6 million in
2014-15, to £67.1 million in 2018-19, according to data published by the British Film
Institute's (BFI) Statistical Yearbook 2020.
The industry has benefited from Creative Europe funding, through the Europa
Cinemas scheme. The aim of this scheme is to increase European programming in
film theatres and to raise attendance, particularly of European non-national films, as
well as to promote diversity and support the transition to digital projection. Between
2007 and 2013, funding provided by this scheme averaged to over €103,000
(£87,000) per cinema involved in the scheme. In 2018, Creative Europe's MEDIA
sub-programme investment in film in the United Kingdom totalled £3.5 million, £2.5
million of which for Distribution and just £100,000 for Exhibition. Exiting the
European Union means that qualifying for Creative Europe funding is no longer
available to operators after 31 December 2020 when the transition period ended. In
the Spending Review from November 2020, the government has confirmed the
creation of a Global Screen Fund to offset funding lost from Creative Europe, with
£7 million of funding confirmed in the first year. Additionally, under the new trade
deal, the United Kingdom will participate in the EU's Horizon Europe 2021-2027
programme, which includes a strand supporting culture, creativity and inclusive
society.
During the COVID-19 (coronavirus) pandemic, the industry is expected to receive

assistance from the government through the Culture Recovery Fund (CRF), which is
directed operators in the culture, arts and heritage industry and is worth £1.6 billion.
The CRF for Independent Cinemas in England was allocated £30 million and is
administered by the BFI for the government. It was open to non-profit and
independent cinemas, including mixed artform venues, from 10 August to 30
October 2020. On 2 October, 42 cinemas across England were confirmed as the first
beneficiaries of the fund. Similar funds are available in devolved nations, run by
Screen Scotland, the Welsh Government and the Northern Irish Executive
respectively. For example, on 3 November, the Scottish government announced over
£3.5 million of funding to independent cinemas in Scotland, which will be
distributed to 27 companies and organisations. The Culture Recovery Fund also
includes £3 million for safety grants, up to £10,000 per cinema, to implement the
necessary measures in place to ensure the safety of employees and the public, as
well as £27 million business sustainability grants, up to £200,000 per organisation,
to support independent cinemas to operate viably under the restricted operating
conditions imposed by the pandemic. By the end of June 2021 when the final £300
million of funding was announced, CRF had provided £1.2 billion to over 5,000
organisations across the country, protecting an estimated 75,000 jobs and
supporting close to 100,000 freelancers, according to the government.
The industry has also benefited from a wide set of measures introduced by the
government to support businesses and employees across the economy. These
include deferred VAT payments, business rates holiday for 2020-21, the Bounce
56 IBISWorld.com
Back Loan Scheme and the Coronavirus Job Retention Scheme, which has been
extended to run through September 2021. At the start of July 2020, the Chancellor
unveiled a hospitality VAT cut from 20% to 5% from 15 July 2020 and has been
extended until 30 September 2021, then rising to 12.5% until 31 March 2022.
57 IBISWorld.com
Key Statistics
Industry Data
Demand
2013–14 1,525 449 747 222 17,933 N/A N/A 232 N/A
2014–15 1,596 486 743 223 18,293 N/A N/A 255 N/A
2015–16 1,829 598 771 248 18,534 N/A N/A 262 N/A
2016–17 1,738 602 788 253 18,601 N/A N/A 292 N/A
2017–18 1,787 630 801 273 18,916 N/A N/A 297 N/A
2018–19 1,890 662 811 271 19,129 N/A N/A 316 N/A
2019–20 1,798 628 840 262 19,199 N/A N/A 329 N/A
2020–21 319 -14.5 843 243 11,769 N/A N/A 131 N/A
2021–22 1,219 450 816 212 16,236 N/A N/A 288 N/A
2022–23 1,546 581 852 222 17,764 N/A N/A 328 N/A
2023–24 1,651 627 868 225 18,433 N/A N/A 347 N/A
2024–25 1,698 662 881 226 18,818 N/A N/A 355 N/A
2025–26 1,739 687 894 228 19,188 N/A N/A 363 N/A
2026–27 1,717 687 901 228 19,224 N/A N/A 364 N/A
Annual Change
Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2013–14 -3.70 -6.03 -0 5 -2 N/A N/A -5.11 N/A
2014–15 4.71 8.30 -1 0 2 N/A N/A 9.59 N/A
2015–16 14.6 23.1 4 11 1 N/A N/A 2.78 N/A
2016–17 -5.00 0.58 2 2 0 N/A N/A 11.7 N/A
2017–18 2.83 4.63 2 8 2 N/A N/A 1.67 N/A
2018–19 5.73 5.14 1 -1 1 N/A N/A 6.42 N/A
2019–20 -4.87 -5.16 4 -3 0 N/A N/A 4.10 N/A
2020–21 -82.3 N/A 0 -7 -39 N/A N/A -60.4 N/A
2021–22 282 N/A -3 -13 38 N/A N/A 121 N/A
2022–23 26.9 29.0 4 5 9 N/A N/A 13.9 N/A
2023–24 6.81 8.06 2 1 4 N/A N/A 5.60 N/A
2024–25 2.81 5.57 1 0 2 N/A N/A 2.50 N/A
2025–26 2.44 3.72 1 1 2 N/A N/A 2.25 N/A
2026–27 -1.30 0.05 1 0 0 N/A N/A 0.19 N/A
Key Ratios
Year IVA/Revenue Imports/Demand Exports/Revenue Revenue per Wages/Revenue Employees per Average Wage
Employee estab.
(%) (%) (%) (£'000) (%)
2013–14 29.4 N/A N/A 85.0 15.2 24.0 12,959
2014–15 30.5 N/A N/A 87.3 16.0 24.6 13,923
2015–16 32.7 N/A N/A 98.7 14.3 24.0 14,125
2016–17 34.6 N/A N/A 93.4 16.8 23.6 15,720
2017–18 35.2 N/A N/A 94.5 16.6 23.6 15,717
2018–19 35.0 N/A N/A 98.8 16.7 23.6 16,540
2019–20 34.9 N/A N/A 93.6 18.3 22.9 17,157
2020–21 -4.54 N/A N/A 27.1 40.9 14.0 11,088
2021–22 36.9 N/A N/A 75.1 23.7 19.9 17,751
2022–23 37.6 N/A N/A 87.0 21.2 20.8 18,481
2023–24 38.0 N/A N/A 89.6 21.0 21.2 18,809
2024–25 39.0 N/A N/A 90.2 20.9 21.4 18,886
2025–26 39.5 N/A N/A 90.6 20.9 21.5 18,939
2026–27 40.0 N/A N/A 89.3 21.2 21.3 18,940
58 IBISWorld.com
Additional Resources
Additional British Board of Film Classification
Resources http://www.bbfc.co.uk
British Film Institute

http://www.bfi.org.uk
Screen Daily
http://www.screendaily.com
UK Cinema Association
http://www.cinemauk.org.uk
Industry Jargon BOX OFFICE REVENUE

The value of cinema tickets sold to audiences.
IMAX
A screening technique that produces an image approximately 10 times larger than that from
standard 35 millimetre film
MULTIPLEX CINEMAS
Cinema sites that have five or more screens.
SLATE
The list of films scheduled to be released over a certain period.
Glossary Terms BARRIERS TO ENTRY

High barriers to entry mean that new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of depreciation to wages as a proxy for capital
intensity. High capital intensity is more than £0.333 of capital to £1 of labour; medium is
£0.125 to £0.333 of capital to £1 of labour; low is less than £0.125 of capital for every £1 of
labour.
59 IBISWorld.com
CONSTANT PRICES
The pound figures in the Key Statistics table, including forecasts, are adjusted for inflation
using the current year (i.e. year published) as the base year. This removes the impact of
changes in the purchasing power of the pound, leaving only the 'real' growth or decline in
industry metrics. The inflation adjustments in IBISWorld’s reports are made using the Office
for National Statistics' implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within the UK, regardless of their country of origin.
It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise
consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single
physical location where business is conducted or where services or industrial operations are
performed. Multiple establishments under common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by UK companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in
the UK.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is
considered high if the top players account for more than 70% of industry revenue. Medium
is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside the firm (such as commission
income, repair and service income, and rent, leasing and hiring income); and capital work
done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed
tangible assets are excluded.
60 IBISWorld.com
INDUSTRY VALUE ADDED (IVA)

The market value of goods and services produced by the industry minus the cost of goods
and services used in production. IVA is also described as the industry's contribution to GDP,
or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to
domestic demand. For exports/revenue: low is less than 5%; medium is 5% to 20%; and high
is more than 20%. Imports/domestic demand: low is less than 5%; medium is 5% to 35%;
and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an
industry's life cycle by considering its growth rate (measured by IVA) compared with GDP;
the growth rate of the number of establishments; the amount of change the industry's
products are undergoing; the rate of technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are
mostly set up by self-employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s
profitability. It is calculated as revenue minus expenses, excluding interest and tax.
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of
the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to
±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry. The cost of benefits is
also included in this figure
61 IBISWorld.com
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UK INDUSTRY (UK SIC) REPORT J59.

IBISWorld.com +44-20-7222-9898 info@IBISWorld.com

About This Industry...........................................5 Competitive Landscape...................................31

Industry Definition..........................................................5 Market Share Concentration....................................... 31

Industry at a Glance.......................................... 7 Major Companies............................................ 41

Executive Summary..................................................... 10 Major Players............................................................... 41

Products and Markets..................................... 22 Industry Data................................................................58

• When establishments were allowed to reopen during 2020-21, major cinema

About This Industry

Major Players Cineworld Group plc

Vue Entertainment Ltd

ODEON Cinemas Group Ltd

Natl Amusements (UK) Ltd

Main Activities The primary activities of this industry:

Operating open-air film projectors

Retailing drinks and snacks

The major products and services in this industry:

Box office - all other films

Food, beverages and merchandise

RELATED INTERNATIONAL INDUSTRIES

3.0% Life Cycle

Annual Growth Annual Growth Annual Growth

Annual Growth Annual Growth Annual Growth

Products & Services Segmentation

51.2% 25.2% 16.7% 6.9%

Major Players % = share of industry revenue SWOT

Key External Cinema admissions

Demand from television programming and broadcasting

Consumer confidence index

Real household disposable income

Demand from advertising agencies

Current The performance of the Cinemas industry is influenced by a number

Revenue fell by 5% at the base year of the period, as cinema

The closure of cinemas during nationwide lockdowns has been

Cinemas have been allowed to reopen May 2021 as part of the

Technology plays its role

To deal with rising external competition, operators have had to

IBISWorld estimates that profit will account for 3% of industry

Historical Performance Data

However, increased competition from substitutes, particularly from Subscription

Increased competition from SVOD services means that industry

window of between 31 and 45 days in the United Kingdom before it goes to

Increased and varied offering

Industry operators are seeking to improve their food and drink

The screening of alternative content is likely to be one of the biggest changes in

The industry previously benefited from Creative Europe funding

Performance Outlook Data

LIFE CYCLE REASONS

Despite the growth of new products, innovation, the application of newer

Products and Markets

Food, beverages and merchandise

The wider choice of offerings allows customers to customise their cinema

This segment includes screen advertising, online booking fee

Demand There are several factors that affect cinema attendance.

People aged between 7 and 14 years

People aged between 15 and 24 years

People aged between 25 and 34 years

People aged between 35 and 44 years

People aged between 45 and 54 years

People aged 55 years and over

International Exports in this industry are Low and Steady

There is low international trade in the industry as it is service-based. Although UK

At the upstream level of motion picture production there is a high level of