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The business of show business

The cinema industry in Malta was tackled editorially by The Times (December 8) and I would like to address the comments made on the reduced attendance and the standards and pricing at the cinemas.

While I do not speak for all cinemas, I can speak for the Eden Cinemas, which includes 17 of the country’s 38 screens.

Firstly, The Times referred to a recent NSO report showing that cinema admissions were down 10 per cent in 2011 over the previous year. The Times appears to attribute this drop to falling standards and, in passing, mentioning “online film downloading and video on demand”.

Video on demand movies are rarely those being shown at the Eden Cinemas, which are films on current release. VOD are normally films past their theatrical dates and, therefore, would only partially create competition with movies shown in cinemas.

The biggest threat to cinema remains illegal downloads of current films from pirate sites on the internet. This is an area the authorities are unwilling or unable to tackle and regulate.

The drop reported by the NSO must not be taken in isolation. While the drop was not as high as 10 per cent, it is pertinent to point out that in this business numbers fluctuate over the years.

Often, it has to do with the line-up of films that are available in a particular year or whether events, such as the World Cup or the Euro Cup, take place during the year.

The Times omitted to mention however that, just a week earlier, it covered the NSO release showing that museums attendance was 10 per cent down and I do not think I read an editorial surmising that this was due to any standards issues.

Maybe people don’t want to go out as much as they did or, perhaps, the public’s financial situation is keeping people at home and all entertainment areas need to wait until such time as the financial situation improves and people return to these types of activities.

With regard to the point on cinema standards, it is unreasonable to expect an usher to be present in each screen. Regrettably, cost cutting is inevitable when costs continue to surge. Net of VAT and distributor cost, exhibitors end up with less than €3 per adult ticket, which starts to cover our operating expenses.

Our kiosk prices are what they are. We occasionally raise them when suppliers raise their prices. However, in recent years, we have been reticent to pass on cost increases onto customers. This year we introduced combos within our kiosks to try and reduce the price for those who want a number of items.

Peak adult tickets prices have increased from €5.82 to €7 since 1995, a mere 1.2 per cent annually or 20 per cent over the last 17 years, while the retail price index has increased by 53 per cent and the minimum wage was up 78 per cent over the same period. One can only imagine what the utility cost inc­rease over the last 17 years has been.

Recent legislation regarding the employment of part-time staff has also added a significant increase to our payroll. But all this pales with the capital investments cinemas have to make to stay in business.

Unbeknownst to most, cinemas have to replace standard 35mm projectors to digital, some costing €85,000 per projector and screen.

We are reliably informed that there will be very few 35mm prints available next year. Therefore, cinemas are either going to convert at enormous cost or start reducing the number of screens available, if not closing down altogether.

Return on investment is crucial in today’s cutthroat economic environment. You just cannot invest if there is no hope in a return. In the case of the projector conversion, cinemas will be not charge a higher price to cover this externally imposed massive cost.

This phenomenon has been assisted, internationally, either by state help utilising means such as lottery fund or through VPF intervention, an agreement reached between the studios and finance companies called Enablers who, through a financial mutual agreement, financed the bulk of the investment, spreading the cinemas’ burden. Unfortunately, this was not available to us in Malta due to our size.

Of course, I fully agree with the assessment made by The Times that standards must not decline.

Eden Cinemas continue to invest. In the last couple of years, our top three screens were converted to digital 3D to allow us to be able to present films in the best possible manner at a cumulative cost of €250,000. This month, we have invested in an upgrade of our projectors to enable 48 frames per second technology, especially to enhance the viewing of The Hobbit and, no doubt, future films.

It is unlikely that intermissions will be removed. Apart from making refreshments available, our research shows that many of our clients still wish to have a five-minute break outside. We will certainly look into making this break less intrusive.

It should be noted, however, that all theatrical performances, including those at the Manoel Theatre, and most sporting events, also have intermissions.

Ian De Cesare is chairman of the Eden Leisure Group

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