Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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To be fair, I haven’t seen many cinemas packed out for quite some time but they still manage to make a healthy profit. It’s for this reason that I genuinely think Cine could apply social distancing measure / restrictions on access and still come out with a healthy margin. Plus, it’s not even the ‘experience’ of the film itself, the cinema is an easy way of getting out of the house for the evening. Cinemas could do very soon once they’re open as many bars and restaurants will struggle with the social distancing restrictions, so people will likely flock to cinemas when they would have usually gone to a bar.
Either way, the likelihood of doubling your money within 12 months (or less) if you bought in at these prices is very high.
The chances of huge blockbusters going straight to Netflix or the like isn't likely to happen, even with social distancing in place in cinemas. There are several reasons for this but a few I can think of include:
1. Cinema is the pinacle of the movie entertainment experience. It simply cannot be replicated at home, period. I have an LG C9 OLED TV with a Q90R Dolby Atmos sound system and I would never give up a cinema experience to watch movies on my setup first. There is no comparison.
2. Streaming has so many disadvantages to consider alongside the advantages. You have to consider network bandwidth, video and sound compression issues, and finaly quality issues of home entertainment equipment. 4K isn't even ubiquous in homes yet. TVs are owned on average for 5-10 years per household. I certainly wouldn't want to watch a huge space opera like Interstellar or Avatar 2 for instance at home! The latter I want on IMAX 3D!
3. Studios make a killing through the big screen experiences as the cinema is the start of the value chain. It goes Cinema, Streaming, DvDs. Why cut out one big source of revenue to just two when you can have all three? By bypassing a theatrical release and going straight to a rental option, studios risk losing out on the combined revenue of having a theatrical release and a secondary digital rental window. Avengers Endgame made $2.8 Billion at the box office alone. Avatar 2 will likely beat it. Sure Trolls made $100m for Disney but how likely are Disney to replicate that with other releases. Also, its very likely that the numbers were helped by the fact everyone is stuck at home and have nothing better to do than stream stuff! It won't always be that way as lockdowns ease around the world.
4. Cinema viewership was increasing year on year for the last 4 years upto 2019, regardless of the popularity of streaming.
5. I remember reading somewhere that cinemas have on average a 15%-20% occupancy rate. It's very easy to make social distancing work with that.
6. Previous pandemics have shown that our love of theatre/cinema will never die.
Do I think social distancing will be damaging for cinema? - No.
Social distancing in cinemas when the average occupancy rate if 15-20% anyway shouldn't be difficult at all.
Plus social distancing is making other forms of entertainment less appealing. Holidays for instance are less attractive. Who wants to travel when your hotel spa and swimming pool is closed, when the buffet is closed. When the risk of illness or disease abroad is a a real risk. I think domestic enterainment such as the small pleasures of an amazing movie on the big screen are more attractive as a result. It's relatively cheap, relatively safe escapism and I for one cannot wait to watch Tenet as soon as the big screens are bag in business in a few weeks time.
GLA
It's a difficult one - great cinemas, very popular, loads of people on twitter saying how much they miss the place, nice popcorn, great evening out, reasonable prices...
Unfortunately can't do anything about social distancing. And nobody knows how long it'll go on for - weeks, months or years. I would have thought restrictions will almost certainly mean lower numbers - admissions, revenue, etc. Unless cinemas are somehow able to get the same amount of business through the door by getting people to visit on days and times they wouldn't normally. Which may be difficult once people go back to work and school. The way I see it, it's not just got to work financially for the cinemas, its also got to work financially for the movie studios. And I do worry others might follow Universal - loyalty is important but at the end of the day businesses are all about money and doing what's right for them, sadly loyalty doesn't always come into it. I'm confident we'll reopen and confident plenty of people will be wanting to come back. But i do think social distancing has the potential to be damaging unless the company can navigate around it without seeing any significant fall in the numbers that matter. We'll see how it pans out anyway. I'm just holding for now, not adding.
Hi GS. Yeah this was on the 5th May I think? The share price dropped to 52.80 that day and then went to 60 the next day. It’s not been that low since. Im sure they will come to some agreement on this. Perhaps we’ll get an update this week regarding moving forward? Quite scary if there is no agreement Though!
I guess you’ve been mulling this over for a while then? What are your thoughts now, bail, reduce your holding, average down?
nightyard, yeah looks like everything is going to plan. He said there would be more updates this week.
Hi Jai, imo it's really upto Cineworld (and AMC) to get back on friendly terms with Universal and come to some sort of agreement. It probably will happen, after all both sides need one another. But right now it seems like neither side are willing to compromise. Social distancing makes normal business difficult and now more than ever is not the time to be at odds with the biggest movie studio in the world. Yes they started it and in many ways I don't blame the response of Cineworld and AMC. But with all that's going on regards the virus, the challenges of reopening and making it work financially with social distancing in place, not to mention the planned acquisition of Cineplex.. it's really a time for companies and their partners to come together and support eachother, not be at odds. The way I see it, there will be no shortage of customers when we reopen. The issue is social distancing and how it'll affect the numbers - and most importantly, how movie studios might react to those numbers going forwards.
Hi Squid. Interesting way of looking at it, thanks. I guess my thoughts are that the trickier times for Cineworld are when a new blockbuster movie comes out. So instead of the cinemas being packed to the rafters at the beginning they will have to space the areas out and that will mean more showings going on for extra days/weeks so everyone has a chance to see it in the cinema. In some ways that might be more favourable for some people, not banging elbows with their neighbours, smaller food and entry queues etc. We know cinemas work on about 22% capacity overall so I see more people coming in the off peak times, weeks after a big movie is released, so these will become busier because of the restrictions in place when the movie is released. If they have pre bookings only they also have more of an idea how many people will be coming so they can prepare more accurately with staff too, possible cutting down on over staffing when the cinemas are emptier? I’ve sat in the cinema with 20 people watching a bond movie before, I personally prefer the quieter times. So basically the same amount of bums on seats but spread out over longer periods rather than mad rushes at the start and emptier seats a week or 2 later.
Anyone else got thoughts on this?
Corona update about to start. Not been watching much lately but Interested to see what is said about numbers and where this is going.
A very calm week with a low of 54.88 and a high of 62.20 so around 13% if you could have got in on those prices. So realistically you could have made 10%, not bad in a week I guess.
Be interesting to see if the swings reduce this week.