Covid-19 impacted the local film industry and local cinema market in a wide variety of sectors. One of the most shocking pieces of news about Hong Kong cinema in 2021 was the sudden voluntary liquidation of the UA Cinemas circuit, one of the major cinema chains in Hong Kong. The circuit closed on 8 March 2021 without any warning. While most commentators considered it a casualty of Covid-19, the actual reason for the closure is much more complicated.
The UA Cinemas circuit was established by Ira Kaye in 1985, with the opening of a cinema in Shatin. Within the first two decades of its establishment, UA successfully carved out a reputation among local moviegoers for quality services and hardware, including the introduction of telephone ticket booking, self-ticketing machines, premium concession bars and more flexible movie showing times. In the late 1990s, UA operated about 12 cinemas in Hong Kong, with a maximum of market share of up to 30%, which is identical to Broadway, another major cinema circuit.
Inside the industry, the Hong Kong government is being blamed for the liquidation of UA. Despite the pandemic being less severe in Hong Kong than elsewhere, cinemas were shut down three times in 2020, and the last shutdown lasted for almost three months. Despite cinemas having zero income during the days when they were not operating, they still needed to cover expenses, including maintenance, as well as pay the wages of essential staff who were needed to keep all the projectors and other machines operational. There were also restrictions after the shutdowns. Seat occupancy could only be up to 50% for most of the time, and no food or drink was allowed in the auditoria, as audiences had to wear face masks at all times. This impacted income from high-profit concessions.
Despite cinemas experiencing economic hardship from reduced income, landlords were unsympathetic. Very few landlords offered rent reductions. Out of the six UA cinemas operating before liquidation, half were operational for less than three years, and their leases were signed at a time when the malls in which they were operating were charging high rents.
Local industry insiders had expected the liquidation of UA Cinemas, albeit at a later date. The UA management used to perform effectively and inspire high morale under General Manager Vicky Wong, who started her career in front of house management. The situation changed in 2015 with a shake-up which resulted in top management who had no previous experience in showbusiness – in fact, they came from the telecom industry. The new management proceeded to cut operational costs at the expense of losing the long-term loyalty of their staff and audiences.
A change to the loyalty club membership scheme, which added different tiers according to customer spending, was heavily criticized by audiences, and resulted in a large number of customers choosing not to renew their memberships. The failure to keep several lucrative and popular venues operating had further hurt the business.
At the same time, the rise of Emperor Cinemas, headed by Vicky Wong after a one-year break from the cinema business, gained the edge by building a premium brand which won the high-end audience market from other cinema chains, including UA. Meanwhile, other cinema circuits increased investment and upgraded their services and hardware, contributing to the decline of UA.
The shrinkage of the distribution business highlighted the cracks in UA’s efforts to sustain itself. UA Cinemas had formed CineHub and UA Films to distribute independent non-local films, and these were slowly increasing their revenues. But the new UA management was far too conservative in acquiring films, and squandered potential opportunities. Meanwhile, staffing at UA had suffered since mid-2020, and the vacancy of operations manager stayed unfilled for months. The Covid-19 pandemic just served to amplify all the underlying issues and bring them to the surface.
The liquidation of UA Cinemas is sad, as at one point they were known for many innovative services, and some cinemagoers had stuck with the circuit for over 35 years. The closure has focused the industry on the issue of high rents. If the rent issue is not addressed, other cinema chains may start closing venues. This will make the distribution of films in Hong Kong more difficult than ever.
Ryan Law