Nigerian Cinemas Record N8bn Revenue Loss during Lockdown

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With the prolonged shutdown of cinemas, revenues continue to dip for Nigerian cinema exhibitors but there is optimism that reopening of cinemas will be a good step to recovery, reports Vanessa Obioha

In March, when cinemas were shut down to curtail the spread of COVID-19, there was a hint of hope that the mysterious virus would vanish and business return to normal. But with cinemas inoperative in the past five months, that silver lining is getting blurrier. The estimated total cinema revenue loss during the shutdown period is now N8 billion, according to one of the co-founders of FilmOne Entertainment, Moses Babatope.

The estimated loss accrues from box-office, concession, advertising revenues, and miscellaneous sources of revenue. In March, Babatope estimated box-office loss to grow approximately to N1.5 billion if the cinemas remain shut in April. That figure has inflated significantly in the past few months. Box-office recorded a total of N4 billion revenue loss from April to August, followed by concession (Cinemas food and drink) which accounted for N2.5 billion. Advertising, which is a source of revenue to cinema operators equally diminished during the shutdown, resulting in N500 million revenue loss. Brand activations and other partnerships dipped revenues to the tune of N500 million.

In pre-COVID times, the summer months are usually peak periods for cinema exhibitors. It is when most blockbusters are released. But with the closure of cinemas, revenues from such critical releases, as well as public holidays are forgone. Some of the international and local films slated for this period have been shifted to the last quarter of the year, while Hollywood flicks such as ‘Fast and Furious 9’ are now billed for 2021 release.

The pandemic also halted expansion plans of Filmhouse cinemas. The group had plans to open more cinemas across the country before the pandemic struck. Now, the founders are limiting their expansion to one cinema before the year runs out while refurbishing existing locations.

“We may have to revisit expansion plans, in the face of a cap on the capacities we can allow into our auditoriums, and the increased cost of importing equipment that is key to cinema expansion, due to the fall in the value of the naira,” says Babatope, adding that: “We expect a degree of normalcy by the third quarter of 2021 and should open at least more location by year-end. 2022 looks set for the kind of growth and expansion we had hoped would have started in 2020.”

The way renowned filmmaker Femi Odugbemi sees it, cinemas need salvation from the government.

“Cinemas are badly hit by this global recession caused by COVID-19. They need help from the government but it is also an eyeopener to operators to diversify their distribution channels.”

Babatope made similar assertions.

“The pandemic has taught us that cinema operators have to consider the right-sizing of operations to keep costs realistic; building a contingency pandemic/crisis fund to better cope with future disruptions; investing in safety equipment and processes as part of the capital and operational expenditures, and developing a digital strategy is important.”

Odugbemi, who frowns on the concept of government giving filmmakers money, asserts that the government should look at infrastructure development in the film industry instead.

Echoing the filmmaker’s sentiments, Babatope considers “support from the advertising sector, in exchange for subsidised rates, barter deals and other incentives provided by our industry, provision of low-interest loans to incentivise cinema operators to expand their businesses and a vaccine for the virus,” as some of the immediate backing the sector needs. On their part, there must be a demonstration that audiences can watch films safely in cinema auditoriums. This will inadvertently lead to audiences turning up in large numbers to watch films in cinemas. Besides, he emphasises the need for continued improvement of the global box office, a strong and consistent run of high-quality local content and the best content kept exclusively for the theatrical window.

The closure of cinemas gave rise to streaming and Video-on-Demand (VOD) platforms such that some filmmakers like Kenim Obaigbena launched streaming platforms as well as other filmmakers pushing their content to streaming platforms like Netflix.

“The pandemic has taught filmmakers that there is no box,” notes filmmaker Ike Nnaebue, who will be launching a streaming platform later in the year. “Filmmakers need to be innovative and understand that it is no longer business as usual.”

For platforms like Netflix, the global pandemic raised their subscription numbers. In its first-quarter earnings report for 2020, the streamer announced that it added nearly 16 million subscribers and made a revenue of $5.77 billion. While it recorded an increase in second-quarter earnings ($6.15 billion), it only added 10.09 million subscribers.

Moreover, production budgets and technology are some of the issues raised by pundits analysing the competition between streaming and cinemas. While digital platforms are having a field day, a survey carried out by the Cinema Exhibitors Association of Nigeria (CEAN) in May, however, suggested that cinema-goers are longing to return to the empty halls. The survey carried out on 1,000 film lovers in 12 states showed that 95 per cent of film lovers miss going to cinemas, out of which 88 per cent emphasized that they specifically miss the cinematic experience.

Despite the financial strains on cinemas, Babatope emphatically says that the group has no intention to release movies simultaneously on theatres and streaming platforms.

“We have absolutely no plans for simultaneous launches. We believe that the cinema should have an exclusive window for the best films, after which other platforms can benefit from the film across various media. Anything less would do a disservice to genuine fans of cinema, as some films are uniquely suited to the scale and power of the big screen, and can be enhanced even further by advanced cinema technologies such as IMAX, MX4D, and D-Box,” he explains.

Notwithstanding, there are fears that people may seek the comfort of their home and mobile screen for safety reasons over cinemas, even as Lagos State plans to reopen cinemas in the state. Babatope points out that this is expected.

“​Initially, we believe some cinema-goers will be cautious about cinema safety but once cinemas demonstrate safety compliance, positive experiences will be spread by word-of-mouth and we will see increased growth. This will test cinema operators’ resolve to maintain safety protocols. Also, there will be increased demand by audiences for local content of higher quality. Once Lagos allows cinemas to open, this should speed up the decision by federal and state governments to open up cinemas around the country.”

Comedian and filmmaker Ayo Makun, expresses optimism over the reopening of cinemas. According to him, there are other factors to consider. “When it was announced that airlines will resume operations as well as other transportation channels, there were scepticisms if people would want to fly or move around as usual but we see that’s not the case. As long as there is compliance with the health guidelines and other safety measures recommended by the government, people will return to cinemas. The show must go on. And when people start returning to cinemas, it will be a big plus to our industry because we (filmmakers) will have a reason to go to locations and make blockbusters that will create another form of excitement that will make people forget COVID-19 ever happened.