Make a movie about the power of cinema and you'd better be sure that the evidence supports your thesis. At best, you might wind up with something rich and personal like The Fabelmans, and at worst, well, you're stuck with Babylon, the kind of self-congratulatory ode to the dream factory that makes a pretty good case for watching TV on a smartphone (if not burning down your local multiplex altogether).

For British filmmaker Sam Mendes, the Oscar-winning director of American Beauty, Skyfall and, more recently, the WWI drama 1917, the movies still matter – as an art form that can generate empathy, inspire emotion, and maybe even transcend a reality that's confusing and sometimes hostile.

He stages his latest drama, Empire of Light, in and around a cinema, a grand, old Art Deco structure clinging to existence in a dreary seaside town in the south of England. In the film's opening moments, it seems to come back to life before our eyes, regenerating from faded relic to warm, twinkling monument to a more romantic era.

It's a little bit of an illusion. The film is set in the dying, not especially glamorous days of 1980, and the cinema is run by a small staff servicing what seems to be a relatively sparse clientele.

When she's not tearing 1-pound-50 tickets and placating irascible customers, the Empire Cinema's middle-aged duty manager Hilary (Oscar winner Olivia Colman, The Favourite) is performing tawdry, back-office sexual favours for her unhappily married boss (a stuffy and officious Colin Firth, surely dispatching any remaining traces of affection for his erstwhile Mr Darcy).

The lonely, knitwear-clad Hilary isn't much of a stretch for Colman – coming off the complex, unravelling figure at the centre of Maggie Gyllenhaal's Elena Ferrante adaptation The Lost Daughter – but there's more to the character than it seems. Hilary has also recently returned from a spell in the local mental hospital, where she was prescribed lithium for what appears to be bipolar disorder.

Things begin to look up with the arrival of Stephen (Micheal Ward, Small Axe: Lovers Rock), a young usher who's handsome, cool (he's into two-tone), and knows how to tend to a pigeon's broken wing – just imagine what he can do for a forlorn middle-aged lady!

One rooftop kiss later and Hilary's swapping out her Joni Mitchell records for The Specials and experiencing a sexual awakening in the abandoned upper floor of the cinema – a romantic tryst that, because Stephen is Black, plays out in secret against a Thatcherite Britain curdled with renewed race hate.

Empire of Light isn't strictly autobiographical, at least not in the mode of Spielberg's The Fabelmans or Kenneth Branagh's Belfast, but Mendes does tap into his teenage memories of the time, and he draws upon his mother – who suffered from bipolar disorder – in crafting Hilary, a woman clearly misunderstood, and often patronised, by doctors and social workers alike.

Hilary's precarious state is the emotional centre of the film, and – in Colman's committed, sometimes tender performance – the source of its most affecting moments, but the strangely lethargic drama often feels like it's labouring under its own fog of lithium-induced torpor. (The listless, kneading piano score by Trent Reznor and Atticus Ross doesn't help the film's energy.)

For all of Colman's determination, Mendes often leaves her performance hanging. In one scene, Hilary has a breakdown in front of a chalkboard scrawled with crude epithets that make her apartment look more like a serial killer's lair; despite Colman's best efforts to wring pathos from the moment, it tilts toward the comedic — a parody of 'crazy' that undermines the supposed humanity of the scene.

Empire of Light lurches uneasily between these passages of psychological breakdown and the sort of well-intentioned but broad-stroke social drama intended to highlight racial prejudice, never really cohering as an effective exploration of either.