Number of screens
The future of Europe's cinemas is linked to changes in the balance of openings and closures of theatres. The preceding analyses have indicated that the capacities of the exhibition industry are still going to be limited, despite the upsurge in admissions in several countries.
The extent of the decline will depend on the number of factors:
· Factors exogenous to the exhibition industry
The economic context
The maintenance of high rates of interest will penalise the exhibition sector, both in terms of their ability to invest and in terms of their capacity to meet crucial financial obligations. The stagnation of disposable income and unemployment particularly affect young Europeans, who are the heart of the cinema's target audience in numerous countries. Slow, sustained economic growth, provoked by the maintenance of high interest rates, could well hamper, or even damage, the plans of the American groups, who have announced they will build around 120 multiplexes throughout Europe, and the projects of European operators, who have a less strong financial base. The small, single-screen operators will feel the full force of these economic conditions. This pessimistic scenario will accentuate the decline in the number and quality of cinemas.
The technological context
At the technological level, the next ten years will bring a considerable diversification of the various methods of access to audiovisual products and film in particular. "Pay per view" services are going to be put in place in countries where cable has achieved a sufficient level of penetration (cf Germany in particular). The advances in digital compression will make it possible from 1998 to offer commercial services described by the Americans as "near video on demand", with a wider catalogue for pay per view. These technological innovations will profoundly alter the competitive position of the cinema, and cinemas will have to define their competitive advantages vis-à-vis the home-based services.
Numerous indicators lead one to think that these innovations are likely first to hurt the video market more than the cinema-going one. But as their commercial position grows stronger, negative influences on cinema admissions may ensue in the countries which are well cabled (the Netherlands, Belgium, Germany). Everything will depend on the way US distributors leverage the various different channels for achieving a film's value.
· Factors endogenous to exhibition:
As well as factors external to the cinema industry, the industry's prospects will depend on trends within each country. To enable an understanding of these, the best variable for anticipating the magnitudes of changes is undoubtedly the occupancy rate of seats. Four countries show a substantial deviation from the average in a negative direction: Spain, Portugal, Italy and Greece. The sector in those countries will experience more closures, often in significant proportions, amplified compared with those of the last ten years. It is precisely in these countries that the largest proportion of "single-screen cinemas" is found. Germany and France will probably see some decline in their exhibition sectors, lessened if the national or regional government implements ambitious policies for the infrastructure which, at the moment, seems unlikely. On the other hand, in the other countries in the EU the movement will be much slower, even if the closure of run-down theatres continues to occur in every country.
These tendencies towards closing cinemas will be compensated for by a regeneration of a part on the sector centred around the multiplex. We note that the only US investors, UCI and Warner, have announced the construction of nearly 1,200 extra screens in the next five years, that is about 120 multiplexes, which represents an investment of nearly $1 billion dollars. Already, in Great Britain, the major players (Warner, MGM, Odeon, National Amusements, UCI) have invested hundreds of millions of ECUs since 1985. (The trade association's figure is 850 million ECUs.)
As in the United Kingdom, Ireland and Belgium, the process of regenerating the sector in highly populated areas is well advanced (one or two supplementary complexes are still to be built in Belgium; UCI and Warner have some projects planned in the London suburbs), the investment to create new capacity will benefit: