Regal Owner Cineworld Is “Very, Very Careful” With Movie Ticket Price Increases, CEO Says
Exhibition giant and Regal owner Cineworld is careful and conservative with ticket price increases as audiences continue to return to cinemas after the coronavirus pandemic, CEO Moshe “Mooky” Greidinger said Thursday.
Asked about rising costs amid inflation, including for energy and salaries, he told the company’s 2021 earnings conference call that higher ticket prices are part of the business, but “we are still the most affordable entertainment outside the home.”
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Admission prices are “meaningful” for results as, for example, a U.S. ticket price boost by $1 is “something like a 10 percent increase,” he said. “But we are not rushing with it,” the Cineworld boss emphasized. “We are very, very careful with it.”
With audiences still returning to cinemas, at this stage, in some cases the company has decided on increases “only on the big movies and only for a limited time, like the first two or three weekends,” he noted. “This was well received by the customers,” he said. “There were no complaints about it.… And prices are going up all around” amid high inflation. “We are very, very conservative with it, but we need to take care, of course, of the results and being realistic with the high cost. We need to, here and there, increase prices and, here and there, to increase prices only for a short period and for very special movies.”
Cineworld’s U.S. business posted a box office revenue jump of 124 percent in 2021 to $627.4 million in 2021 as admissions rose 87 percent and the average ticket price rose 20 percent, the company reported earlier Thursday. The average ticket price achieved in the United Kingdom and Ireland increased by 32.3 percent to $11.54 (2020: $8.72). It also noted a ticket price increase of 33 percent for its U.K. and Ireland unit, “largely driven by the types of releases.” Overall, the company posted a narrowed 2021 pre-tax loss of $708 million and a jump in annual revenue, helped by a rebound in admissions despite continued coronavirus pandemic challenges. Management highlighted such titles as No Time to Die and Spider-Man: No Way Home as key contributors.
Discussing recent business trends on Thursday’s call, Greidinger said audiences have been “eager” to return to cinemas this year, even though the Omicron variant of the coronavirus “slowed” business “a bit.” Now, however, there are hardly any restrictions in the company’s various markets, and people are showing an appetite for various types of films, he added, noting “a very strong lineup, which is coming as of April until the end of the year.”
In the exhibition industry, “the new normal window is around 45 days,” Greidinger said. The Cineworld CEO also reiterated past comments on the call. “The big movies, we already know from the studios, will have even a longer window. Some of the movies will have a shorter window. But in general, I think, the whole COVID experience taught us and taught the studios … that the best way to see income from the big movies … is first starting with the theatrical” window.
Addressing possible day-and-date releases from studios going forward, he mentioned that decisions on whether to screen those would depend on the agreements Cineworld has with the various studios. “Some of them might even go day-and-date. I am not sure that we will show them,” he said. “We are analyzing case-by-case. We have deals with all the studios, and some things are more flexible and some are less, but of course we can not go into the details.”
Cineworld’s base case scenario assumes “a continued recovery to pre-pandemic levels of admissions, with cinemas across all territories remaining open,” the company said in its Thursday earnings update. “In the U.S., admissions are forecast to return to levels representing 85 percent of comparable periods in 2019 during 2022, with corresponding levels for the U.K. and rest of the world at 90 percent and 95 percent, respectively. Admissions are then forecast to remain on average 5 percent below 2019 levels throughout 2023 and to recover to 2019 levels in 2024.”
During Thursday’s call, Greidinger said if there are no COVID surprises, the company may even exceed the U.S. admissions target of hitting 85 percent of 2019 levels this year.
