Unless European cinema operators, particularly those in Germany, scale back their multiplex building ambitions then admissions per screen will reach dangerously low levels, a leading analyst has warned exhibitors attending the Cinema Expo convention in Amsterdam.
Speaking at Monday's European Exhibition seminar, Karsten-Peter Grummitt of Dodona Research, the UK-based outfit normally given to issuing rosy outlooks on the state of worldwide cinema-going, claimed that unrealistic attendance predictions has put the European theatrical circuit in a perilous position financially.
"Despite the general upward trend of admissions, the continental European industry is not really in an optimistic mood. And unless the industry changes its behaviour, it will end up in the situation of the American industry today - of having to invest huge sums of money in order to reduce profits to zero," said Grummit
Part of the reason that European exhibitors continue to overbuild, he said, was that they have underestimated the competitive strength of the existing cinema infrastructure. "Do not assume a cinema will close because you have found what you think is a better site half a kilometre away. Not even if the landlord is offering a great rental deal. Just say no."
Germany, particularly in the West, has suffered particularly badly from overbuilding. Dodona's most optimistic forecast is that growth of admissons per head of population across the country will drop to 2.5% per annum from the 4.5% average rate of growth in 1992. Over the same period the growth rate in Germany's 'new laender' that comprised the former East Germany was 12%.
Furthermore, Dodona predicts that the country's screen count will level off at 4,750 screens - just 100 more than the number of screens currently in operation. "If exhibitors keep building through that limit, then there have to be closures. We think that they will be closures among traditional cinemas i.e. those that cannot live with less than 27,000 admissions per screen each year," warns Grummitt.
The good news, as far as German multiplexes are concerned, is that the slow-down may have bottomed out. Admissions per screen have been declining since 1993 and are now as low as 48,000. But, says Grummit, if exhibitors are truly realistic about competition and local consolidation continues at its current rate, the number of cinema-goers per multiplex screen will slowly increase to 50,000 over the next four years.