Although the Covid-19 pandemic has been over for more than two years, the recovery of Hong Kong’ s economy has shown disappointingly slow progress. That’s certainly true of the movie business. While two Hong Kong movies – Soi Cheang’s Twilight of the Warriors: Walled In and Anselm Chan’s The Last Dance – each grossed over HK$100 million, the overall box office revenue in Hong Kong dropped by 6.25%, returning to the level of 2011. Over the year, a total of nine cinemas closed, with only one reopening under a new operator. That accounts for about 15% of all the cinemas in Hong Kong.
Cinemas primarily rely on revenue from ticket sales, which is shared with distributors. Non-ticket revenue mainly comes from concessions, offering various types of food and beverages, as well as advertisements on show in the cinema concourse. On the expenses side, operational costs include staff wages, rent, electricity and water fees, maintenance of assets such as seats and equipment, as well as the cost of food for the concessions.
Compared with those in other parts of the world, cinemas in Hong Kong suffer from high rental costs. Rents have risen over the past two decades alongside increasing property prices, making Hong Kong one of the most expensive cities in the world for renters. Most cinemas signed lease agreements with landlords in the late 2010s for at least five years. Despite a more than 10% drop in property prices over the past two years, cinemas continue to struggle with high rental costs. While landlords provided some rent allowances during the pandemic, when cinemas were forced to close for months by the government, these allowances ended with the pandemic’s conclusion in 2023. This has placed a heavy financial burden on cinemas.
Regarding manpower, the emigration of Hong Kong citizens since 2019 due to social movements, combined with the layoffs of cinema staff during the pandemic, led to a labour shortage after the resumption of normal operations. Cinema operators had to raise salaries for frontline staff to maintain service levels, or instead reduce cinema operating hours, both of which inevitably impact revenue.
The slow economic recovery has made moviegoers less likely to spend money on entertainment. With the rise of streaming platforms, some moviegoers prefer to wait for a film’s release on a streaming or rental platform to save money. To attract audiences, cinemas need to offer more incentives, such as discounts and bundled pre-sale coupons. While this has led to an increase in admissions, it has also resulted in a decline in overall box office revenue. So sustaining cinemas has become increasingly challenging.
Of the cinemas that closed without a replacement operator, one was due to the demolition of the venue for redevelopment, while the remaining six closed due to the termination or expiration of their contracts with the landlord. These six cinemas gave little notice to both audiences and landlords. The three cinemas that closed in November and December 2024 did so without any prior warning. While they initially claimed to be undergoing renovations, all tools and equipment were removed, and some even started the liquidation process.
One of the cinemas that closed had opened during the Covid-19 pandemic, with the landlord waiving the rental costs for two years to maintain the cinema as an attraction for the shopping mall. However, the cinema closed immediately after the waiver period ended, indicating that it was unable to survive once required to pay rent.
Cinema circuit owners seem concerned about the future. The President Cinema, a property owned by the Newport Cinema Circuit in Causeway Bay – one of the city’s commercial and entertainment hubs – closed in April after plans were made to redevelop the space into a commercial building, as had happened to Newport’s Dynasty Theatre. Is this a sign that Newport lacks confidence in the future of cinema operations and has chosen to exit the business?
The crisis of cinema closures became more critical in January 2025 with the rumour that four cinemas on the Golden Harvest circuit would close in January. This followed the closure of two cinemas in 2024. Negotiations with the landlord led to the waiver of rent for a few months, and all four cinemas remain in operation.
Rent is the major operational expense for cinemas. Landlords have to provide support to cinemas by decreasing rents or offering better terms if they want them in buildings like shopping malls, where they attract visitors to the mall. Cinema closures will affect the people flow and lead to empty shops, ultimately impacting the rental income of the entire mall. Landlords have an incentive to lend a hand.
Exhibitors are also exploring different ways to increase their revenue. Due to a relatively low occupancy rate for new films, they are attempting to show restored classics to develop a new audience base. This approach has proven effective, as seen with screenings of the Harry Potter series and some Golden Harvest classics.
Cinemas are also looking to utilise their auditoriums for non-movie purposes, such as broadcasting live concert shows and hosting press conferences.
For non-auditorium initiatives, cinemas are putting in a lot of effort into developing their concession sales by offering a wider variety of food and drinks. Some cinemas also provide additional services, such as external battery rentals or the sale of toys, even if they are not movie-related. Increasing the advertisement space within cinemas is another strategy, although this is limited by the small size of the area.
With box office grosses returning to 2011 levels and the economy still waiting for a full recovery, it will remain a difficult time for cinemas. Support from the community, including landlords and the government, will be crucial for cinemas to weather this challenging period, which is the most difficult since SARS in 2003.
Ryan Law