The beginning of the end for traditional cinema?
20 January 2015 London
Image: Shutterstock
The growth of alternative digital delivery platforms and the instant release of The Interview have forced traditional cinematic businesses to adapt in order to stay relevant to today’s consumers, according to Markit.
The Interview’s online release in late 2014 was due to malicious cyber-attacks on the company, but the debacle provided the first large scale test case for instant online or video on demand release and revealed that audiences are ready and waiting.
The Interview earned $18 million in its first weekend and 84.4 percent of this was via online channels. This release effectively cut out cinema chains, although most in this case actually opted out of screening the feature.
This episode demonstrates that content creators are now capable of launching a film globally, on their own or via partners, to millions of people instantly. It should come as no surprise that theatre owners have sounded the death of the cinema at the hands of Netflix and its peers.
The UK’s largest cinema operator Cineworld, released trading numbers earlier this year that at first glance suggest the chain is thriving, defying the rapid growth in delivery of content via online networks.
Analyst at Markit, Relte Schutte, commented: “Upon closer inspection, Cineworld’s numbers reveal admissions in the UK and Ireland were actually down 3.7 percent in 2014 and the good results were driven by M&A and business growth in Eastern Europe, where admissions grew by 4 percent.”
The stock is up 17 percent over the last 12 months with shares outstanding on loan at 1.7 percent.
In the US cinema market, Regal Entertainment and Cinemark Holdings are two names that have seen significant levels of shares outstanding on loan at 6.6 percent and 2.8 percent, respectively.
According to Markit, while Regal has seen short sellers retreat 41 percent since last year and a flat share price performance, Cinemark has seen short interest more than double and the share price increase by 14 percent.
The content creators themselves have performed better relative to cinema chains and distribution platforms over the last year. Time Warner, Sony Corp and Walt Disney shares are all up over 25 percent in a year, said Schutte.
Imax’s stock has consistently attracted short seller’s attention over the last five years, according to Markit. Its share price is up 7.4 percent over the last year, with short interest increasing by 10.9 percent to 11.8 percent of shares outstanding on loan.
Netflix, the subscription streaming service launched in 2002, has changed and grown dramatically over the last decade.
Short interest in Netflix peaked in September 2008 when 35.2 percent of shares outstanding were shorted.
Schutte commented: “Short sellers, sceptical of the business model, were subsequently sent covering as revenues and profits grew rapidly, seeing the stock price increase 970 percent (to date) since short interest peaked in 2008.”
The firm reported lower than expected subscriber growth numbers in October 2014 which sent the stock down over 25 percent in a day. While shares outstanding on loan currently are nowhere near 2008’s highs, they have increased by 209 percent over the last 12 months to 2.8 percent.
The Interview’s online release in late 2014 was due to malicious cyber-attacks on the company, but the debacle provided the first large scale test case for instant online or video on demand release and revealed that audiences are ready and waiting.
The Interview earned $18 million in its first weekend and 84.4 percent of this was via online channels. This release effectively cut out cinema chains, although most in this case actually opted out of screening the feature.
This episode demonstrates that content creators are now capable of launching a film globally, on their own or via partners, to millions of people instantly. It should come as no surprise that theatre owners have sounded the death of the cinema at the hands of Netflix and its peers.
The UK’s largest cinema operator Cineworld, released trading numbers earlier this year that at first glance suggest the chain is thriving, defying the rapid growth in delivery of content via online networks.
Analyst at Markit, Relte Schutte, commented: “Upon closer inspection, Cineworld’s numbers reveal admissions in the UK and Ireland were actually down 3.7 percent in 2014 and the good results were driven by M&A and business growth in Eastern Europe, where admissions grew by 4 percent.”
The stock is up 17 percent over the last 12 months with shares outstanding on loan at 1.7 percent.
In the US cinema market, Regal Entertainment and Cinemark Holdings are two names that have seen significant levels of shares outstanding on loan at 6.6 percent and 2.8 percent, respectively.
According to Markit, while Regal has seen short sellers retreat 41 percent since last year and a flat share price performance, Cinemark has seen short interest more than double and the share price increase by 14 percent.
The content creators themselves have performed better relative to cinema chains and distribution platforms over the last year. Time Warner, Sony Corp and Walt Disney shares are all up over 25 percent in a year, said Schutte.
Imax’s stock has consistently attracted short seller’s attention over the last five years, according to Markit. Its share price is up 7.4 percent over the last year, with short interest increasing by 10.9 percent to 11.8 percent of shares outstanding on loan.
Netflix, the subscription streaming service launched in 2002, has changed and grown dramatically over the last decade.
Short interest in Netflix peaked in September 2008 when 35.2 percent of shares outstanding were shorted.
Schutte commented: “Short sellers, sceptical of the business model, were subsequently sent covering as revenues and profits grew rapidly, seeing the stock price increase 970 percent (to date) since short interest peaked in 2008.”
The firm reported lower than expected subscriber growth numbers in October 2014 which sent the stock down over 25 percent in a day. While shares outstanding on loan currently are nowhere near 2008’s highs, they have increased by 209 percent over the last 12 months to 2.8 percent.
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