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2020-07-09 14:32:25 Voices

I’ve been in the theater industry for about a decade. For the past four years, I’ve worked as a regional manager for a national chain overseeing our four Shanghai locations, including day-to-day operations and sales.

Or perhaps it would be better to say that used to be my job. China ordered all movie theaters shut six months ago. Now, instead of counting summer blockbuster receipts and looking ahead to the fall releases, I’m watching as the theaters under my supervision sit empty, and spending two hours each day trying to figure out how to sell almost expired concession snacks.

Like almost everyone else, I only began to realize how bad the COVID-19 outbreak in China was around Lunar New Year. As the situation in the central city of Wuhan worsened, theaters around the country scrambled to keep up with a flurry of local government directives.

Shanghai officials got in touch with us pretty early. First they just wanted information like which theaters planned to open over the Lunar New Year holiday and what their hours would be. Then a new rule came down saying we could only open for peak hours. Finally, the axe fell. On Jan. 24 — Lunar New Year’s Eve — the city initiated a Level 1 emergency. We were told every theater in the city would have to close indefinitely.

At the time, we were optimistic all this would be over in half a year. Now it’s July, and we’re looking at eight or nine months without business — and preparing for longer.

Lost Sales

In my experience, Lunar New Year accounts for about 30% of a theater’s annual revenue, maybe a little less. In smaller cities, tickets sold during the holiday season might be enough to cover an entire year’s operating expenses. There’s a saying in the industry: “If you can’t make money then, when can you make it?”

Presales for this year’s slate — “Leap,” “Lost in Russia,” “Detective Chinatown 3” — had been good, though not great, and we scheduled several midnight showings on Lunar New Year’s Eve to get the jump on our competition. But as the day grew closer, news about the outbreak began to spread and reservations slowed. Eventually we refunded everything.

In my experience, Lunar New Year accounts for about 30% of a theater’s annual revenue, maybe a little less.

It was terrifying. Think about it: My company has 36 theaters. Conservatively, we probably made about 5 million yuan ($700,000) in presales. We had already prepared everything: scheduled screenings, shift schedules, publicity. Then we had to return that entire sum, no strings attached.

It reminds you of who your friends are. Take “Lost in Russia” star and director Xu Zheng, for example. The early reviews weren’t good, and theaters weren’t exactly giving him prime screening times. As soon as he saw theaters were going to be closed, he turned around and sold the film’s streaming rights to ByteDance.

That was an attack on my ability to feed my family. If you can watch new releases at home, what’s the point of a movie theater? Supposedly there are now plans in the works to limit digital releases, in part because it was a risk to everyone in the theater industry. I think Xu is a smart guy, but theater owners aren’t going to forgive him easily. The next film he directs, we’ll remember how he cut a deal with ByteDance. He’s going to face resistance.

Empty Rooms

COVID-19 economic support policies are different everywhere. If you look at smaller cities, you’d be hard-pressed to even get a rent break for a theater. As far as they’re concerned, if you’ve got a problem, leave. There’ll always be someone else willing to come in and rent the space you leave behind. No need to remodel; just buy some screening equipment, and you’re in business.

It’s a little better in bigger cities. They’ll typically have some kind of support, even if it’s small. In Shanghai, one of our landlords told us they won’t start calculating rent until officials let us reopen. Some of our other locations only need to pay half the usual rent. But full cancellation is rare. Malls have been hit hard, too. We’re all standing in the same firing line.

Malls have been hit hard, too. We’re all standing in the same firing line.

Nationally, there’ve been a few favorable policies, but at most these treat the symptoms, not the underlying disease. They’re letting us cash out of the state-run theater insurance program early, for example, and a few state-run enterprises have started buying theaters, but none of this is of any direct use. There are also policies offering favorable financing to theaters, but it’s not that easy. Lenders still want to see a healthy cash flow and a solid track record, all of which is nearly impossible for young businesses to show.

Just this week, Shanghai announced the details of a May plan to help support the industry: The city will distribute 18 million yuan in subsidies to 345 theaters. That’s an average of 50,000 yuan per theater. We pretty much have to rely on our own resources to get through this.

Think about how many theaters there are in China. After this is all over, a lot of those are going to be gone.

Technical Difficulties

Most businesses around the country began reopening in late February or March. In late March, it seemed like we’d be able to join them. About 500 theaters reopened nationwide around then, and Shanghai seemed set to let a few locations follow suit. Our headquarters decided to apply. The relevant bureau called and said we would need to fill out a form. I remember seeing a report saying hundreds of theaters in the city were taking part.

Then, on March 27, the day before we were set to open our doors, officials called and said everything was being put on hold. The next day they announced no theaters could reopen. We didn’t have much choice. All we could do was answer the nation’s call and keep our heads down.

You lose more open than closed.

It left us in a lurch. But to be honest, I didn’t really see the use in opening in the first place. You lose more open than closed. You need to buy masks, disinfectant, and thermometers. All that, and at best you might be able to show some old films to a half-empty theater. Plus you have to pay salaries, rent, and you’re liable if anything goes wrong.

Since then, the bosses seem to have decided it’s better to just stay closed. Talking about it with others in the industry, we aren’t the only ones to think so. I know a few theater managers making plans assuming the industry will stay shuttered for the rest of 2020.

But as with so much else, we might not have a choice. There’s a chance that, at some point, the country will reverse course and order us to reopen. I’m not sure they understand how expensive that will be, however, or how much risk we’d be taking on. Let’s say they allow us to operate at 30% capacity. There’s no way we could cover our operating expenses. It wouldn’t be enough even during peak season, much less now.

Extended Intermission

We’ve lost about a third of our workforce. Before April, the company had managed to keep paying people minimum wage, but eventually it ran out of options. Right now, it’s just making social security contributions.

Most employees — myself included — understand, but that doesn’t mean everyone can accept it. A lot of workers are from elsewhere. They need to pay rent. If they’re not getting paid, and their landlords won’t give them a break, then they need to find a new job.

With theaters closed, financers have been lenient about making payments, but all that money is still going to come due, sooner or later.

That’s not the only problem. A lot of theater operators take out loans to buy their projectors, then pay them back over several years. With theaters closed, financers have been lenient about making payments, but all that money is still going to be due, sooner or later. If theaters reopen but can’t manage enough business to meet their debt obligations, lenders have the power to remotely lock them out of their screening equipment.

But most concerning is the lack of films. During the outbreak, there was a period of time when the film industry shut down. We’re looking at maybe half a year with no new domestic films. And forget international films: They’re in even worse shape than we are.

At this point, if we had to quickly start back up, I’m not sure we could make it work. Ultimately, theaters are dependent on filmmakers. Our audiences aren’t coming for the decorations. So even if we wanted to reopen, we have few employees, no films, and probably no customers. What are we supposed to do?

As told to Wang Yuezhou.

Translator: Kilian O’Donnell; editors: Ding Yining and Kilian O’Donnell.

(Header image: Wang Zhenhao for Sixth Tone)