China’s Multiplexes Are Headed For a Crash – Statistics Show Why

Z Storm

Just 15%. Remember that figure as you listen to Hollywood representatives and trade press falling over themselves to laud the growth of Chinese cinemas.

At this year’s CinemaCon MPAA’s Chris Dodd marvelled at China’s USD $3.6 billion box office in 2013, representing a year-on-year growth of 27.5%, saying that “with China building 13 new screens every day more growth is coming.” The Hollywood Reporter breathlessly reported last week that  Chinese box office “first quarter revenues for 2014 have already exceeded the country’s full-year total for 2009,” and that it could surpass USD $4 billion for the whole year.

The opening of screens has also accelerated since Dodd quoted the 13 screens per day figure last month. “In the first quarter, there were 325 movie theaters built, for a total of 1,609 screens, which means an average of 18 new screens went up per day,” says THR. Thus, China presently has 20,007 cinema screens compared to the 40,000+ in North America.

There is just one problem with all this exuberance; if the rate of cinema openings outpaces Chinese box office growth, then it is not a boom but a bubble. Because we’ve been here before and it did not end well.

Gravity Defying No More?

Any news and analysis about China has taken place against the wider economic landscape of the mainland. Last week Reuters reported that ‘China economic growth slows to 18-month low in first-quarter‘ as China’s new leaders reign in credit and rule out major stimulus “to fight short-term dips in growth.” It is noted that “even three or fours years ago, growth of less than 8 per cent would have alarmed Chinese officials,” who have been used to double digit figures, but in January-March the economy grew just 7.4%. The housing market in particular was a source of worry. Keep that in mind.

Of course, there were plenty of pundits saying, “this time/one is different.” Yu Yongding, former President of the China Society of World Economics, wrote in the article ‘Fears of a Chinese crash are unfounded‘ that “the market is always in search of a story, and investors, it seems think they have found a new one this year in China,” noting that dire predictions about China’s economy have “abounded for the past 30 years.” He admits that “China’s real-estate price bubble is often named as a likely catalyst for a crisis,” but tries to assuage fears by pointing out that China does not have sub-prime mortgages.

Whether China’s economy as a whole is headed for a crash/slowdown/correction is beyond the scope of this article. But it should be noted that the property market is identified even by defenders of the economy as the weak point. Commercial real estate is more exposed than private housing and multiplexes balance most precariously on top of the countless, recently constructed, shopping malls.

But surely the Chinese middle class’ insatiable appetite for domestic hits, Hollywood blockbusters in 3D, giant Imax screens and popcorn ‘dyed in all colors of the rainbow’ and ‘coated with sticky sweet syrup’ (thanks Joel) will keep cinemas going? Statistics say ‘no’. Here is why.

The Worrying Piece of Data – 15%

While you wouldn’t pick up the worry about a Chinese cinema sector bubble from western media and trade press, the issue is debated fairly openly in the Mainland’s Chinese-language press. In an article originally titled ‘Perspective Hidden Behind the 20,000 Screens‘ [a reference to the total Chinese screen count] on CE.cn (source: Beijing Daily) author Lu Yang quotes:

“From the status of the overall development of the market, the growth rate of the domestic box office this stage and movie theater attendance is nowhere near the speed of construction, an increase of the ratio between the two is in an unbalanced state, which means that the national theater attendance is actually not ideal. “critic Liu Chang says.

Cultural Industry Research Institute of Peking University, the Beijing Daily reporter Chen Shaofeng pointed out, “statistics show that the average attendance was only 15% of the national theater. Oversupply in the market [means] the theater’s income will be diluted further. “

These are shocking and worrying admissions that should set alarm bells ringing. The 15% occupancy rate might be the norm for western multiplexes, but just like China needs a growth rate of above 7.5% to 8%, so too it cannot sustain its cinema sector with what passes for normal in the US and Europe. Consider the fact that IHS stated last year that in the UK “The average cinema has an occupancy rate of 20-25 per cent across the week.” So Chinese occupancy rate is way below a mature market like the UK that has gone through extensive consolidation.

Read More »

Daily Cinema Digest – Tuesday 22 April 2014 (post-Easter Bumper Issue)

ABC Brussels cinema

Belgium: Save the Brussels ABC! One of the last 35mm adult film cinemas in the world closed last year when the ABC in Brussels shut its doors.  There is now a campaign to save it and turn it into an art-house cinema with exotic flare.  You can donate by PayPal. The campaign is 47% towards its target.

For over 40 years the ABC cinema screened adult films from 35mm – one of the last such cinemas not to have converted to digital – but in 2013 it shut its doors for the final time.

Earlier this year, a group from three of Belgium’s leading film and heritage organisations – independent cinema and archive Cinema Nova, festival organiser and programmer Offscreen/vzw Marcel and movie theatre heritage specialist La re?tine de Plateau – devised an ambitious plan to rescue the ABC for a life after porn.

Drawing on their experience, they believe that the ABC is the perfect size for repertory screenings and intimate-scale live events, and so they created the CINEACT Foundation, to raise €60,000 (approximately £50,000 / $83,000) to take out a year-long lease on the ABC.  LINK

Palace Theatre Orpheum Los Angeles

USA (CA): A great example of how to bring back a cinema from the dead and make it relevant for a new age and neighbourhood is provided by the former Orpheum (what an appropriate name) in Downtown Los Angeles, first opened in 1927 but in decline for a long time.

It stopped showing films 25 years ago, and then became the base for notorious television evangelist Gene Scott, who passed away in 2005. The entire building was sold in 2011 and earlier this year opened as the newest branch of the Ace Hotel. The upstairs offices were converted into bedrooms and the elaborate cinema at the core of the building was reopened with a Valentine’s Day show from Spiritualized.

As well as music, bringing movies back to the cinema was core to the brand’s rejuvenation of the building. The Ace got in touch with Cinespia, the Los Angeles-based classic movie screening organisation, to help. Cinespia founder John Wyatt had previously hosted one-off shows in the Downtown cinemas he calls “vintage jewels”, including La Dolce Vita at the ornate Los Angeles Theatre and Blade Runner at the Million Dollar Theatre, situated across from the Bradbury Building, which is featured heavily in the film. “I got really excited, one, because nobody was going to turn the building into loft apartments and two, because they were an interesting brand who might want to take some risks,” explains Wyatt.  LINK

Read More »

Wishing Our Readers a Happy Easter

Celluloid Junkie will be back next week with something MAJOR.

Ritzy staff strike for a Living Wage over Easter

Ritzy staff strike for a Living Wage over Easter

Daily Cinema Digest – Thursday 17 April 2014


Regal Summer Movie Express

USA (TN): Discount tickets was a hot topic at CinemaCon. No update on that, but Regal will be showing older films for just USD $1 this summer, as it has for the past 22 years. Parent rejoice.

Regal Entertainment Group (NYSE: RGC), a leading motion picture exhibitor owning and operating the largest theatre circuit in the United States, today announces that the Summer Movie Express is back for its 23rd year. The launch of this summer’s program brings family movies for only a dollar to more than 350 Regal Entertainment Group theatres across the country.

“Many families make this a summer tradition and look forward to our announcement of the long list of fun movies coming their way. And for Regal, this helps us instill that love of moviegoing in another generation,” said Ken Thewes, chief marketing officer at Regal Entertainment Group. “The titles this year appeal to a diverse group of tastes, and we know there is a little bit of something for everyone.”  LINK

 

Cineworld Witney

UK: Don’t make promises you can’t keep, Cineworld, is what this upset letter writer from Witney seems to be saying.

Well, before the cinema opened, a spokesman for the company announced that as well as the usual 3-D screens which come with Cineworld, there was going to be a screen for arthouse/world cinema. But this has not happened.

No disrespect to people who enjoy Hollywood blockbusters, but not everyone likes those types of films, and when I used to go to the Corn Exchange for films which were not Hollywood blockbusters, there was always a good crowd there.

So what has happened?

I’ve tried getting answers from Cineworld themselves but they have never responded to my inquiries.  LINK

(Checking Cineworld Witney’s listings confirms that the most ‘art-house’ film showing is Oscar-winner 12 Years a Slave. Not even The Grand Budapest Hotel is showing. He might have a point.)

Event Cinema

Driving Miss Daisy

UK: Driving Miss Daisy will be showing in cinemas, the play that is, not the surprise Best Film-Oscar winner.

Event screening for stage adaptation to screen at over 300 screens across the UK, followed by live Q&A with star Angela Lansbury.

As a result of strong demand for tickets at the BFI Southbank, Omniverse Vision has announced a special one-off screening of Driving Miss Daisy: The Play.

Starring Angela Lansbury and James Earl Jones, the stage adaptation will be broadcast via satellite to over 300 cinemas across the UK on May 25 and followed by a live Q&A with Lansbury, hosted at the BFI Southbank.  LINK

Read More »

Daily Cinema Digest – Wednesday 16 April 2014

Phil Knatchbull Curzon

London’s Evening standard does an in-depth piece on British art-house major Curzon Cinema and its visionary CEO Phil Knatchbull.

The Curzon Victoria is part of a £6 million London expansion by the company behind the boutique Curzon cinema chain as it almost doubles the number of screens in the capital from 12 to 20. Curzon World is using other designers to rejuvenate the Curzon Soho and the Renoir in Bloomsbury, and is expanding beyond the M25 into Canterbury. The long-term plan is to have 50 screens at 25 sites.

Chief executive Philip Knatchbull explains he wants the cinemas to grow in importance as a showcase for the upmarket Curzon brand, even as the company diversifies by generating more income from other sources. Film production, cinema distribution and the online streaming of films, with its own Curzon Home Cinema on-demand service, are other parts of Knatchbull’s multi-pronged growth strategy.  LINK

I can attest that Curzon is not just the leading art-house cinema chain in the UK but perhaps one of the top in the whole world. They don’t just kit out their cinemas with the precision of Apple Stores (but less minimalist), but also operate their own day-and-date VOD service, have distributed more Cannes Palm d’Or winning films than any other UK distributor (they say) and even produce their own films. Much like every UK town would like a Waitrose supermarket, so to most high streets there would welcome a Curzon cinema with open arms.

Licensing

Penthouse Cinema Brooklyn Wellington

New Zealand: An art-house cinema in Sir Peter Jackson’s hometown Wellington won’t be able to serve alcohol over the busy Easter period due to planning restrictions.

The boutique Brooklyn venue applied for the licence to serve alcohol on Good Friday and Easter Sunday, after discovering it was no longer exempt as an entertainment venue since the introduction of the Sale and Supply of Alcohol Act in December.

Operations manager Kate Larkindale said she was stunned when a letter from the district licensing authority arrived on March 19, telling her she would have to apply for a special licence.

Under the new law, alcohol can be served on “sacrosanct days” – Anzac Day morning, Good Friday, Easter Sunday and Christmas Day – only with a meal, unless an exemption is granted for an “event”.  LINK

(Would it be churlish to point out that Jesus had to make do with drinking vinegar from a sponge up on the cross over Easter?)

Read More »

China Embraces Event Cinema With ‘Turandot’ and 3D ‘Farewell My Concubine’ (CJ EXCLUSIVE)

NCPA Turandot

China’s two major opera houses are joining the ranks of distinguished institutions like the Met Opera and the Royal Opera House with the first recordings and screenings of their operas.

Beijing’s National Centre for the Performing Arts (NCPA) recording of Puccini’s Turandot opened this month’s Beijing International Film Festival (BJIFF), while the Shanghai Jingju Company will screen the 3D opera adaptation of Farewell My Concubine at the Dolby Theatre in Los Angeles later this year.

The decisive push shows that China is as ambitious in the field of event cinema as it is in conventional films for cinema, despite the lack of tradition of screening ‘alternative content’ in cinemas.

Yesterday the BJIFF hosts the screening of NCPA Opera House’s Turandot, which has been localised and given a Beijing-setting but sung in Italian. The event was captured in high definition in partnership with  Huaxia Film Distribution Co. and will also be shown at the upcoming 17th Shanghai Film Festival, which will have a special focus on opera movie screening.

Perhaps counterintuitively, the first screening of the event took place at the NCPA itself on Sunday 16 March, as part of the 2014 Opera Festival, where a special 6-meter-high and 16-meter-wide screen was erected on the stage for the HD projection, with the production crew, NCPA orchestra and choir members all present to see their work on the big screen.

Turandot cinema show

The BJIFF screening took place at the Xidan Joy City Capital cinema, which has 290 seats and recorded an attendance well over 70%. Much like western operas shown in cinemas, the audiences clapped and cheered ‘Bravo!’, despite the opera not even being shown live.

Interviewed afterwards by Xinhua news, the audience members were overwhelmingly positive to the new experience.

“The film version of the stage version of the opera and there are still differences.” Audience Li Wei said, “the stage version of the opera actor observed facial expressions, and the movie screen actor expression, subtle emotional changes have been enlarged, more have impact.” In his view, the film more fully meet the opera opera lovers’ visual enjoyment. When Princess Turandot tears appear on the screen, kneeling in prayer picture viewer Hu Fang Yankuangshirun. “I’ve seen the opera before,” Turandot “, but there is no sound in the cinema today feeling good, feeling listening to music today play exceptionally moving,” she said.

As in US and UK, the price is a major factor for the popularity, with tickets for regular screenings in cinemas across China starting from today, costing just 30-50 yuan (USD $4.80-8.00).

Read More »

Daily Cinema Digest – Tuesday 15 April 2014

Berwick cinema

The Wall Street Journal examines the plight of small-town single-screen cinemas that are unable to make the costly transition to digital in the article ‘Is Film the End of the Road for Small Cinemas?‘. It highlights one particular cinema near Scranton, Pennsylvania, facing imminent death-by-digital.

Hollywood’s major studios are in the final days of distributing movies on film reels and moving to digital distribution sent via hard drives or satellite, a method that is cheaper for studios but requires significant investment by theaters in new equipment. The conversion means theaters like Mrs. DiAugustine-Bower’s Berwick Theater could fade out for good.

The theater, about 50 miles southwest of Scranton, has raised only $6,000 so far, a difficult amount to earn by selling baked goods and old movie posters in an economically depressed town.

“I got a backlash from patrons when I mentioned raising ticket prices” to $5 from $4, said Mrs. DiAugustine-Bower.

But help has come for some from an unexpected quarter: Indian digital cinema integrator Scrabble.

About 87% of the 5,762 theaters in the U.S. are now digital, according to the National Association of Theatre Owners. The remaining 13% is mostly made up of one-screen independents, in rural communities with no multiplexes for miles.

More than half of the approximately 600 drive-in theater screens in the country have converted so far, according to the United Drive-In Theatre Owners Association.

Scrabble Ventures LLC has begun leasing digital projectors to small theaters that can’t afford a lump-sum payment. Chief Executive Ranjit Thakur said the company has converted 370 theaters so far with more than 400 scheduled over the next three months.

Kickstarter, the Colorado State program, Kiwanis International club, state department funding and local donations are ways that some of that other cinemas have managed to raise funds.

Business

LAemmle Santa monica 4

USA (CA): As we highlighted in our item on ArcLight coming to Santa Monica, existing cinemas there will have to shrink to compete.  Hence Laemmle’s 4 screen will ‘expand and contract’.

The Second Street cinema currently has four screens and about 1,100 seats but a proposed makeover would add two screens and drop the seat total to below 500, said Laemmle CEO Greg Laemmle.

The largest theater would hold about 150, which is about the capacity of the current smallest theater. Two mezzanine-level theaters would seat about 35, Laemmle said.

“The row spacing is better and we believe the sight lines will also be better,” Laemmle said. “The added screens provide flexibility to show more movies for longer.”  LINK

Read More »

America’s Greatest Cinema Export to China Is Under Threat (Not Movies, Popcorn)

Chinese and american cinema audiences

Could Chinese authorities be about restrict imports of the quintessential multiplex staple imported from the United States?

No, we are not talking about movies or Hollywood; the greatest American export success to Chinese cinemas does not come from California but from the fields in Nebraska.

Different Attitudes – Changing Habits

Nothing illustrates the difference between Chinese and American cinema goers more than the respective attitudes to 3D and popcorn. While American audiences are increasingly turning their back on 3D, their appetite for concessions appears undiminished, to the point of circuits like Marcus and Laemmle installing larger seats to accommodate the expanding backsides.

Meanwhile, the challenge for Chinese cinemas is how to get people to consume more concessions to match their seemingly insatiable appetite for 3D films and thus increase average revenue per cinema visit. But a change is already underway.

The importance of popcorn to the growing Chinese cinema sector was highlighted by the recent revelation by Dalian Wanda Group that nationwide popcorn sales for its Chinese cinemas totaled 390 million yuan (USD $62.8 million) last year.  This amounted to 72% of total concession sales and 9.5% of its total earnings of 4.1 billion yuan. (By way of comparison Wanda’s American chain AMC earned USD $1,847 million from ticket sales and USD $787 million from food and beverage in 2013, with concessions thus representing over 28% of total revenue.)

The push to pop in China is understandable because the ingredients for a bucket of popcorn cost just 3 yuan (US$0.48) while selling for 20 to 30 yuan (USD $3.22-$4.83). Huang Qunfei, general manager of the Chinese exhibitor Beijing New Film Association,  was quoted by Xinhua as saying, ”It is very common to have an 80-percent profit margin in selling popcorn due to its low costs. Although tickets sales make up the largest share of revenues, popcorn and snacks can sometimes contribute more to profits.”

Sales of popcorn accounted for as much as 20% of the total revenue of Chinese cinemas turnover in 2013. Wanda is the largest but not the only circuit benefitting from growing popcorn demand. Quoted in the Want China Times:

An executive at the Beijing UME Cineplex stated that popcorn and beverages were usually the only derivatives sold at domestic cinemas and that the complex’s popcorn sales accounted for 10% of its total revenue of at least 30 million yuan (US$4.8 million) last year.

However, the issue of concessions is complicated by the increasing tendency by Chinese cinemas to bundle cinema tickets, popcorn and sodas as one combo.

Read More »

Daily Cinema Digest – Monday 14 April 2014

4D_4DX_rumble_seat

The Wrap takes a look at the growth of ’4D’ offered by the likes of D-Box, CJ 4DPlex and MediaMation and whether there is a business case for it. Not if it shakes the popcorn out of the tub, it seems.

Indeed, some theater owners have experimented with the technology, only to decide that it is best served up in small doses. Rolando Rodriguez, president and CEO of Marcus Theaters, installed 30 motion seats in one of his fifty theaters. While the seats are popular features when paired with big-budget blockbusters, he has decided not to invest in the technology. The $8 surcharge the 4D seats carry limits their appeal, he said.

“We’re investing in other amenities that play better with our customers,” Rodriguez said. “We’re pleased with the performance, but from our perspective, investing in things like large screen theaters and in-theater dining is more important.”

But other exhibitors and manufacturers counter that this is more than just a novelty act.

“We’re finding that people turn into aficionados,” Michel Paquette, vice-president of marketing of the 4D manufacturer D-Box Technologies, said. “Once people try it, if they like it, they usually get hooked.”

Likewise, Heath Thomas regional manager of the Goodrich Quality Theaters, has placed 4D seats in 16 locations and reports they are a big hit with audiences between the ages of 18 to 30.  LINK

 Odeon logo

UK: UK/European cinema major Odeon-UCI saw its revenue and profit drop sharply in the past year, dragged down by the lack of a Skyfall-size hit and by its Spanish arm.

Odeon’s earnings before interest, tax and other charges dropped by 24 per cent to £69.2m while sales fell five per cent to £706.7m.

In Spain, where Odeon operates 43 cinemas, Odeon’s market volume fell 15 per cent last year.

“In 2014, there are some early signs that the economy may be turning: unemployment has started to fall slightly and retail sales have started to grow,” Odeon said, adding that it has now grown its Spanish market share to 21 per cent.  LINK

Odeon’s results do not include its property arm.

NCR logo

USA: Marcus Theatre is deploying the full range of services offered by NCR Cinema software.

NCR Corporation (NYSE: NCR), the global leader in consumer transaction technologies, today announced that Marcus Theatres®, a division of The Marcus Corporation (NYSE:MCS), has now deployed NCR’s full suite of cinema and restaurant solutions to improve its business operations and enhance its customers’ movie experience. Marcus Theatres has been a long-time customer, using NCR’s mobile and fixed point-of-sale (POS) systems, indoor kiosks, takeout and delivery software and NCR MovieTime mobile application.  LINK

Read More »