The Film Distributors’ Association (FDA) in the UK launched its 2023 Yearbook last week. The launch included a keynote speech by David Puttnam (access it here) which makes several important observations about the filmed entertainment ‘ecology’ in the UK and worldwide. You can download the Yearbook from the link above. I found it a little tricky to do so but if you persevere you’ll find it. The importance of this year’s publication is simply that it covers the first full year of operation for cinemas in the UK and Ireland since the restrictions of lockdown during the pandemic.

In 2018 and 2019 the ‘film territory’ of the UK and Ireland saw annual admissions of 190 million. In 2020 that nosedived to just 48 million. In 2021 it began to rise again to 80 million and in 2022 reached 128 million. The trend seems to be firmly upwards  and the outlook for 2023 is positive. Yet over three years the industry has changed dramatically and though key indicators such as the average ticket price and the number of films released remain more or less unchanged, there are important changes elsewhere.

I’m not going to attempt to summarise the whole 152 page publication but I will pick out some of the findings that interest me the most and which might be the basis for a ‘conversation’. One small table gives an insight into ‘Box Office Trends’ over the last 20 years. This shows that between 2002 and 2022 there has been a significant change in the market. In 2022 there were 911 films officially ‘released’ in the UK and Ireland compared to just 369 in 2002. Not surprisingly perhaps the big increase was mainly in ‘small’ films, niche market films etc., few of which made much impact on the overall box office figures. More important, however, is the size of the three sectors of the market that I’ll here simply term, the niche, the middle and the blockbuster segments. Here is how they are presented in the Yearbook:

We see a clear shift in that the niche market has become a significantly bigger proportion of the whole, mainly at the expense of the middle market. The number of blockbuster titles  has not changed that much. What’s important is the drop in the middle – something that many commentators have noticed but I haven’t seen it documented as clearly as this before. What does this mean in reality? The chart above defines this segment as films earning between £1 million and £10 million in the UK and Ireland. What kinds of films are these? They actually represent quite a diverse selection. They might include horror/suspense films, the biggest films in the South Asian market (four titles in 2022) and the other foreign language films market (five titles in 2022) and the leading British films of the year (all of which will usually have some form of US financial input). The remainder will be the middle market Hollywood films – genre films, Hollywood arthouse etc. This diverse range of films was once the core of the cinema business and it is being squeezed. The process has been in train for many years, but it feels like it is accelerating. Dig a bit deeper into the figures and the niche sector becomes fairly alarming. 529 releases returned only between £1,000 an £50,000 and nearly 800 failed to go beyond £500,00.

At the other end of the scale, the opposite has happened. During the 2010s and up to 2019 the Top 20 films at the UK and Ireland box office constituted between 45 and 55% of all box office takings. In the last three years they have risen to 62%, 91% and 64%. Just to remind you, the top titles for the last three years were 1917 (2020), No Time to Die (2021) and Top Gun: Maverick (2022). Yes, the last three years have been an exceptional time for the industry but even so, the market trend seems to be strongly evident as smaller films making less money at the bottom and big films making more at the top – and the middle slowly disappearing. Faced with the success of the streamers such as Netflix and Amazon, the major studios have fought back by developing their own streaming services and ensuring that their biggest films attract audiences because of their extravagant ‘big screen’ effects. (It’s worth remembering too that the Chinese market has been perhaps the slowest to return after the pandemic and Hollywood blockbusters have traditionally made money in China despite the problems, so the box office for the top 20 films could be even bigger.)

What to make of this? I’m intrigued to correlate the increase in releases and the consequent fall in the number of ‘middle market’ films with the diminishing size of cinema auditoria, but I’m not sure how the economics works out. Cinemas have traditionally been run on the basis of the ‘house nut’ – the ticket income or the per cent of capacity filled – that is needed to cover the costs of showing the film (i.e. including the share that goes back to the distributor). The exhibitor needs a figure to aim for in order to ensure that the business remains viable. The way in which exhibitors actually make money from ticket sales (i.e. just from filling a seat, not counting concession sales, by which they make more profit) is quite complex and varies a great deal across different territories and for different kinds of films. In one sense it’s obvious that filling a 30 screen cinema ‘room’ is less expensive to heat, ventilate, clean etc. than to house the same 30 people in a 300 seat auditorium. One of the advantages of digital distribution and exhibition has been argued to be its flexibility and the ease in which screenings can be shifted between auditoria and also retained for single daily screenings over long periods. I haven’t visited a commercial multiplex since 2019 so I’m unaware of what is happening overall in the smaller screens of the chains but I have noticed some changes.

In Vue chain cinemas locally in West Yorkshire, there seems to be a more diverse selection of films during the periods when there is no major blockbuster. These might be previews of art films, a wider selection of South Asian films and perhaps repeat screenings of smaller titles that appear to have ‘legs’. Putting this last type of film into a smaller screen makes sense whereas the arthouse previews seem baffling to me. Diversity is always good but I do wonder if this is about desperation on behalf of the chains rather than a positive move to find new audiences. The two biggest chains in the UK, Cineworld and Odeon (AMC), both international operations, seem to be in trouble financially. My sense is that the new cinemas that are being opened are primarily multiple screen ‘bijou’ cinemas belonging to small circuits or acting as independents. There are exceptions with some new cinemas equipped with an IMAX or other big screen technology. New cinemas in Blackpool (‘Backlot’ multiplex) and Preston (Arc) come to mind.

There are many other avenues to explore in the FDA Report but we probably need to wait for next year’s publication to confirm trends. In the meantime I stick to my belief that cinema is now essentially two different markets at the top and bottom in budget/box office terms. I’m personally uninterested in the top but concerned about the bottom. Most of all, though, I’m concerned about the missing middle and I hold Netflix and Amazon at least partly responsible. But that’s an argument for another day.