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Covid-19 and Netflix have teamed up to finish off cinemas for good

Audiences already found going to the cinema expensive and inconvenient. Now many consider it dangerous, too.

Even before the Covid-19 pandemic, cinemas were struggling. Fewer and fewer people were bothering to show up to the box office, a trend usually blamed on streaming platforms like Netflix, which offered people access to hundreds of films for a monthly fee that was generally cheaper than a single cinema ticket.

The pandemic and accompanying lockdown restrictions have made an already bad situation worse. Cinemas have been forced to close their doors or reduce their capacity at the same time as many people have become reluctant to sit in an enclosed space with a bunch of strangers. Noticing this, many film studios have decided it isn’t profitable to show their new blockbusters in cinemas right now and have pushed back release dates or debuted them on streaming platforms instead. Because seeing a hotly anticipated new release is one of the few things that can still draw people into a movie theatre, this is further adding to cinema’s woes.

If this is the end of going to the movies, should we care? Economists often say that our markets should be built around the principle of supply and demand, i.e. businesses should only sell things that people want to buy. Demand for cinemas has collapsed, so some would say that reducing the supply of them makes sense, especially as we can then deploy all the resources cinemas are currently using - from prime real estate to staff labour - elsewhere.

However, doing this sort of resource shift requires two things: extra demand elsewhere, and a decent overlap between old and new demands. Take all the people who currently work in cinemas. If their industry goes bust, they’ll all end up unemployed unless there are an equivalent number of new jobs available and these jobs require the sort of skills and experience that cinema workers already have.

Pre-Covid, this looked like it would be the case. People were going to cinemas less, but they were doing other leisure activities like going to restaurants and bars more, and there are plenty of similarities between a job serving customers popcorn and a job serving them margaritas. But these days, the entire entertainment and hospitality sector is struggling. That makes it more likely that a mass collapse of cinemas will have negative knock-on effects on the economy as a whole.

Read our explainer on: how economies change

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