Cineworld has been repeatedly touted as one of the must-have global stocks to have in an investing portfolio post-Covid. The stock traded above 120p in March as the world looked set to come out of lockdown. Six months later, with big blockbuster releases delayed and viewing numbers in the U.S. still low, the share price has fallen over 40% from its March high.

H1 2021 numbers revealed net debt had reached $4.6bn, which may not worry some investors as it had $452m cash in the bank. However, headlines about Covid cases rising and the fact Cineworld is burning through $45m a month should be enough to ring alarm bells.

Crowded marketplace

U.K. audiences watched an average of 36 films in 2020, according to the British Film Industry Research and Statistics Unit (May 2021), the same number as in 2019. Driven by Covid restrictions, film viewing on digital platforms was twice as popular as seeing a movie in the cinema, and this trend looks set to continue.

Film companies such as Disney have found ways to adapt from being solely reliant upon cinematic releases by showing new films such as Black Widow on its streaming platform. The Disney+ streaming platform thrived during the pandemic, with revenue up 45%, helping Disney compete with the likes of Netflix. Last year, Amazon spent $8.5bn on film and television content. This year it has spent $8.45bn to acquire MGM Studios, which is undoubtedly an attempt to compete more aggressively with Disney.

Next-generation content-hungry

Chains such as Cineworld and AMC are also fighting for attention in a very crowded market. Cinema appeals less to Gen Z content-hungry teens who prefer to binge-watch from multi-devices. The popularity of content-driven apps like TikTok has exploded during the pandemic and has replaced their need for a trip to the cinema.

However, a night out at the movies is still a popular pastime for many, and with restrictions ending, Autumn’s exciting blockbuster releases will get audience numbers up. In a drive to increase sales and support local cinemas, AMC announced that it is to spend $25m on a multimedia campaign for the first time. Despite improvements in the home viewing experience, nothing can beat the cinematic experience.

However, with ongoing improvements in streaming services, it is questionable whether audiences will pay to see a film at the cinema. A 10% uplift in box office sales from Autumn’s long-awaited releases is hardly going to change Cineworld’s balance sheet. And, with recent rises in ticket prices, higher cleaning costs, and staff wages, plus a massive debt of over $4bn that needs servicing, I do not feel it can compete. For these reasons I would not rush in to buy Cineworld shares, even down here, and won’t be adding it to my Stocks and Shares ISA.

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Gemma Blackwell has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.