Category Archives: Analysis

Cinema Audiences Getting Older, German Study Finds

FFA logo

The German Federal Film Board (FFA - Filmförderungsanstalt) has published its annual reports on cinema attendance and Top 75 films for Germany in 2013.

Noting successes for German titles last year, the two reports also record a significant decline in cinema attendance by young people but also a marked increase by older patrons. The findings are in line and emphasise trends in other developed markets, highlighting the needs to promote youth cinema attendance, while at the same time anchoring older audiences.

Demonstrating the customary German thoroughness and attention to detail, the reports were produced on the basis of the Media*Scope project from the Gesellschaft für Konsumforschung (GfK), whose film-related data FFA has exclusive use of, with the panel including no less than 25,000 participants and representatives of the German population over the age of 10.

The first report ‘Auswertung der Top 75-Filmtitel des Jahres 2013 nach soziodemografischen sowie kino- u. filmspezifischen Informationen’ (Evaluation of the Top 75 Movie Titles of 2013 by socio-demographic and cinema-and film-specific information)(PDF link) looks at the box office performance of German cinemas of the past year. While German box office as a whole declined from euro 1,033 million to euro 1,023 million (down one per cent) and attendance fell by 4% from 135.1 million to 129.7 million, as highlighted in the European Audiovisual Observatory 2013 annual report’s findings, the FFA report accentuates the positive by focusing on the success of German films.

Germany Top 75 Cinema attendance

Of the 75 most popular film of 2013 no less than 22 were German productions, which achieved an attendance record of 25.2 million tickets sold. This is more than twice as much as the 13 German productions that broke into the Top 75 in 2012 and only achieved attendance figures of 11.3 million ticket buyers. Local production “Fack Ju Göthe” is also the first German film since 2008′s “Keinohrhasen” to be the most successful film of the year, whether German or Hollywood. However, total attendance for both the Top 75 and all film were down on 2012. Even if they were up on the prior two years, the recent high-water mark is still 2009 (Avatar).

Germany cinema attendance age group

The report does an excellent job of breaking down cinema attendance for each Top 75 film by age (above), gender, income group, employment status, educational level, household size, day-of-the-week attendance, awareness of film’s genre and enough other categories to make even Nate Silver cry uncle!

It is the second report, however, that makes for more troubling reading: ‘Kinobesucher 2013 – Strukturen und Entwicklungen’ (‘Moviegoers 2013 – structures and trends’) (PDF link).

Read More »

Premium VoD Just Killed the Cinema Release Window

100,000 viewings DSK movie

One single tweet was the final nail in the coffin of the cinema exclusivity window, given added poignancy by being in French; “100 000 locations en une semaine, rien ne sera plus comme avant” (’100,000 viewings in a week, nothing will be as it was’).  This was the message from Vincent Maraval, Co-Founder of Wild Bunch, the French production and distribution outfit behind the controversial “Welcome to New York”, which was released on video-on-demand without first screening in French cinemas.

In a country (France) that counts cinema admissions rather than box office takings for a film (something that sets most of Continental Europe apart from Anglo-Saxon markets like the United States and United Kingdom), this tweet added insult to injury for what was truly a milestone for the industry in slaughtering its last sacred cow.

The day-and-date release of films in cinemas and on-line is nothing new, but we have now reached a point where the sacrosanctity of the exclusive theatrical window is well and truly dead for the vast majority of films. The recent Cannes Film Festival and the release of the report “Circulation of European Films in the Digital Era” (funded by the European Parliament and European Commission) has thrown this into sharp focus, yet there are many other factors to consider.

Fighting Day-and-Date for Years

“It’s the biggest threat to the viability of the cinema industry today,” is how John Fithian, president of the National Association of Theatre Owners (NATO), put it in 2006 in response to the day-and-date release of the Steven Soderbergh directed “Bubble”, which was released simultaneously on DVD, pay-per-view and in cinemas. Or rather, in a handful of cinemas. In Landmark Theatres alone, to be precise, the sister company of Magnolia Pictures, which produced and distributed the film, both owned by Mark Cuban.

Commenting on the experiment six years later, Steven Soderbergh opined:

On “Bubble” and “The Girlfriend Experience”, we really weren’t able to find out if the experiment worked because frankly, we were blackballed by all the chains. We couldn’t get any screens outside of Landmark, even though we offered to cut them in on some of the VOD and video revenue. They just blackballed us. Part of the point of going day-and-date is that somebody who lives in a place where that kind of movie wouldn’t typically open could watch it through VOD because they’ve read about it, because this whole thing of having to sell a movie multiple times is really f–king boring. We never got to find out if that worked or not because what does Landmark have, 75 screens or something? The movie was not allowed to be shown outside that group of theaters so I don’t know how day-and-date works.

Fithian was skilled in rallying his members to boycott the film, even though he knew that releasing a small independent film with no stars on DVD the same day as it plays in a few art-house screens was not the same existential threat as, say, releasing “Oceans 12″ (also directed by Soderbergh) on all platforms on the same day. But what it did represent was the thin end of the wedge, which is why Fithian was willing to risk coming up with a Jack Valenti-VCR-Boston-Strangler-type of quote.

Soderbergh Bubble

Bubble: “the biggest threat to the viability of the cinema industry today”

The key word in the Fithian quote is ‘today’ and where his greatest success lies was in killing off the discussion and experimentation for another half decade. Fithian is neither a technophobe nor is NATO blind to the direction in which the industry is heading. In response to Soderbergh’s interview, Fithian wrote, “Over the past two years NATO and our members have stated publicly that distributors should sit down privately with their exhibitor partners and their creative partners in dialogue about how the industry moves forward together.” But everything changed in early 2014.

The most serious threat wasn’t “Bubble” in 2006 but the MPAA-FCC exchange in 2009, known by the exhibitor-baiting headline, “MPAA Seeks FCC Okay For Transmission of First Run Movies Directly To Consumers”. While seemingly about day-and-date, we wrote at the time that “the MPAA may simply be hiding behind the concept of protecting content during shortened release windows as camouflage for their true motive; securing high definition digital content as it is distributed into the electronic ether of the home by controlling which devices can playback and display the content.”

Read More »

Is It Time To Go Short on AMC’s Shares?

AMC logo

It has been close to six months since the initial public offering (IPO) of AMC Entertainment, meaning that senior management will soon be allowed to start selling shares that they hold in the company. Seeking Alpha therefor asks if the time is right to go short on AMC.

The question of whether AMC managers and officers will start selling shares from 15th of June onwards is an interesting one, because it partly points towards the belief in the company and its future value by those closes to it that know it best, as well as to a larger extent about the prospects for the industry as a whole.

The article ‘AMC: June 15th Lockup Expiration From IPO Could Be A Preview To A Larger Short Play In December‘ summarizes the situation as follows:

  • AMC’s 180-day lockup period will come to an end on June 15th, freeing up 361,348 shares, held by the firm’s directors and officers.
  • An additional 77.8 million shares of AMC stock held by Wanda America will remain bound by lockup agreements until December 17, 2014.
  • While the larger short opportunity for AMC could be in December, the impending June lockup expiration could provide a small window for a short play as well.

While the article says that AMC shares have experienced ‘Unsteady Gains After Disappointing IPO’, the facts are that the shares were priced at USD $18 for the IPO on 17 December 2013. This many have been on the low end of expectations, but the shares have climbed to USD $23 in less than six months, peaking at $25.47 on 7 March.

While this may not be outperforming meteoric shares like Tesla, it is in line with the solid growth of the stock market as a whole this year.

More importantly, it should be remembered that the exhibition sector’s stock market performance was significantly better than the box office itself, as we noted in our February article ‘2013 – Bad Year for Film; Great Year for Exhibitor Share Price.’

Last year was also the first year that cinemas could not count on 3D films’ ticket price hike to boost admissions takings, but had to rely more on advertising, concessions, premium large format (notably Imax) and luxury dining and seating to improve the bottom line.

Seeking Alpha acknowledges that AMC has done a particularly good job of extracting more spending from cinema goers.

Solid First Quarter Results

AMC’s report for the quarter ended March 31 indicated a number of hopeful metrics for the venerable firm. Total revenues grew 7.8% on a year-over-year basis, and admissions revenues-considered amongst the most important metrics for movie theater chains-were up 6.8%. Food and beverage revenues also grew and impressive 8.2%.

AMC also benefits from the significant degree of consolidation in the US exhibition market that has seen the share of box office revenue taken by the four largest exhibitors increase from 35% in 2000 to 62% in 2012. This consolidation process is still underway and we are likely to see the Big Four cinema chains collect two out of every three dollars spent at the box office within the next two years.

Read More »

Opera Screenings Do Not Drive Actual Opera Attendance, Study Finds

Sicilian Vespers ROH

A UK study just released has found that screening opera in cinemas is not boosting the interest to attend performances in actual opera venues. The research would seem to provide ammunition to those who claim that event cinema screenings of Met and Royal Opera House productions is cannibalizing audiences from regional opera productions and is not increasing interest in the art form as a whole. However, a careful reading of the findings and underlying numbers provides a more complex picture.

The study called “English Touring Opera – ‘Opera in Cinemas’ Report” (Dropbox .DOCX link) is a research project undertaken by English Touring Opera and the Guildhall School of Music & Drama, in partnership with the Barbican Cinema, and funded by CreativeWorks London. While the report does not make it explicit, the English Touring Opera has a particular interest in this issue. In the pre-digital age, people who did not live or or could travel to London or one of the few other major UK cities with its own opera house, had to make do with local amateur productions or the touring opera.

The research was conducted through both questionnaires and focus group discussions. There is much data and analysis from the former, while the latter provides insights into participants views and opinions, with plenty of direct quotes to back up specific findings. At 23 pages it is worth reading in full and even to go through all the statistics. We won’t try to summarize everything, but to highlight some of the interesting findings.

Finding: Opera in Cinema is not a ‘Gateway’ to Opera in Person

The study took a focused view in terms of audiences, productions and locations.

Participants came from 13 different cinemas (4 outside London), with the majority (46%) drawn from the Barbican as partner (see Fig. 2). Participants from outside London only numbered 13 (5.5%). Most (160; 68.4%) were subscribers or part of a loyalty scheme at the venue, and 79.1% were repeat attenders to the venue for opera screenings. In addition, 64.5% reported having attended a live opera relay elsewhere.

There were five opera screenings that were included, the response rates for which can be seen in the graph below.

Cinema Opera survey response rates

Those polled were turned out to be mostly frequent attendees of opera screenings, with a significant majority having attended 10 or more screenings in the last couple of years.

Read More »

What Wanda’s IPO Prospectus Tell Us About China’s Cinema Market

Wanda Cinemas

No less than 30 Chinese companies are looking to list on US stock exchanges this year, led by Internet giants such as JD.com and Alibaba. The reason for choosing the likes of Nasdaq is because unlike their Chinese counterparts they don’t require three years of profitability as well as US regulations that allow for different classes of voting stock. In total some USD $36.6 billion has been raised by 140 Chinese companies through U.S.-based initial public offerings (IPOs) since 2000. But one Chinese company that isn’t going down this route is Wanda Cinemas.

As we have already reported, Wanda is planning a two billion yuan (USD $321 million) IPO ahead of a listing on the Shenzhen Stock Exchange. This is likely to make it China’s biggest domestic IPO in 2014, even if it is overshadowed internationally by Alibaba’s U.S. listing. The smaller film distributor and exhibitor Shanghai Film Co. has also announced plans for a 969 million yuan (USD $145 million) IPO. But it is Wanda that we will focus on as it is more of a bellwether on the state of the Chinese exhibition industry.

It is important to remember that one of the reasons Wanda is not seeking a U.S.-based IPO is because it has already listed AMC Entertainment Holdings, which controls the second largest North American cinema chain. This listing raised USD $314 million, i.e. almost as much as the Wanda’s China IPO aims for. The stock done very well since being listed, with shares rising from USD $18.81 to $22.39, after reaching a high of $26.68 in the brief six-month time span in which it has been trading.

Wanda Cinema’s IPO: the Basics

By way of quick recap, WSJ tells us that:

Wanda Cinema Line is controlled by commercial-property conglomerate Dalian Wanda Group, which always installs cinemas in the shopping complexes it develops. With that support, Wanda Cinema has expanded into smaller Chinese cities. Dalian Wanda is controlled by its chairman, tycoon Wang Jianlin, who is the country’s richest man. Wanda Cinema Line owned 142 cinemas in 73 cities with 1,247 screens at the end of 2013, its preliminary prospectus said. Its net profit in 2013 rose 55% to 603 million yuan from 388 million yuan in 2012, while revenue rose to 4.02 billion yuan, up 33% from 3.03 billion yuan.

It is worth flagging again the concerns raised in the risk factors section of the prospectus, as highlighted by the WSJ:

China’s largest cinema chain takes a dim view of the domestic movie industry. In the risk factors section, the prospectus notes that “While Chinese films have achieved a certain volume, there are relatively few films of commercial value” and regulations limit foreign film imports. Therefore, Wanda faces risks resulting from the “lack of quality films in China that can really win good praise and reviews and completely satisfy market needs and the cultural demands of viewers.”

So while everyone is celebrating the success of “X-Men: Days of future Past” and “The Monkey King” in the first half of this year, local action epic “The Iceman 3D” underperformed and had to be split into two releases in order to get a decent return on its runaway budget.  Meanwhile, even Hollywood flops like “Transcendence” didn’t perform much better in China. We have also previously flagged up on this site the very real risk of a crash that the Chinese cinema business faces. Read More »

The Real Reason That Carmike Bought Digiplex

Bud Mayo opportunist

Is A. Dale (“Bud”) Mayo the savviest man in US exhibition? One thing is for sure, after Carmike’s acquisition of Digiplex he is one of the country’s richest cinema entrepreneurs, with a hat-trick of deals in the last 15 years. So what lies behind this merger and what were the true reasons for it?

The deal itself is relatively straightforward: Carmike Cinemas is acquiring Digital Cinema Destinations Corp. (“Digiplex”) in an all-shares deal that will see each of Digiplex’s 7.93 million shares exchanged for 0.1775 shares of Carmike common stock. The deal is valued at around USD $64 million, of which USD $45 million is in stock and USD $19 million in assumed debt and obligations. Mayo has thrown his 39.5% voting stock behind the deal and the FCC and other regulatory bodies are unlikely to raise any objections or even require any screen sell-off.

Digiplex currently operates 206 screens across 21 locations and is in the process of acquiring another 5 theatres with 53 screens, for a total of 26 cinemas with 259 screens. Once the deal goes through Carmike will have grown to 280 cinemas with 2,936 screens across 41 US states. Significantly Digiplex brings four new states to the Carmike fold where previously it had no presence: Arizona, Connecticut, Maryland and New Hampshire.

What’s In It For Carmike

There is a two-fold reason for Carmike to do this deal. Inorganic growth (i.e. mergers and acquisitions) was the only way that Carmike could achieve the goal announced by its head last year.

Carmike Cinemas President and Chief Executive Officer David Passman stated, ”Carmike continues actively expanding our growing circuit, on our way to 300 theatres and 3,000 screens through selective acquisitions and the addition of multiple new-build theatres in promising locations like Decatur, across `Hometown America.`

Carmike has already acquired Muvico Entertainment with its nine cinemas with 147 screens in Florida, California and Illinois  for around USD $31.8 million late last year. Prior to this it purchased 16 multiplexes from Rave Review Cinemas (including seven IMAX screens) and three multiplexes from Cinemark (one Imax theater) for a total of eight Imax screens. There was also two theaters with a total of 16 screens in Kentucky and Tennessee bought from Phoenix Big Cinemas in 2012.

Carmike Cinema logo

So the deal to buy Digiplex is only the latest but largest in a series of acquisitions that total 30 multiplexes even prior to Digiplex in the last couple of years. While there is consolidation in the cinema industry both in the US and beyond, there is thus a clear roadmap that Carmike is following.

But these numbers, either multiplexes, screens, dollars or shares don’t tell the full story for Carmike – whereas a single digit does: 4.

The Lonely #4

Carmike likes to describe itself as “one of the nation’s largest motion picture exhibitors” and as “America’s Hometown Theatre Chain” but no matter which way you look at it, the chain is only the fourth largest circuit and a lonely fourth at that.

Why ‘lonely’? Consider who the top three circuits are, as well as who is fifth.

Read More »

Local Films to Blame for Decline in European Box Office in 2013

European Cinema Statistics 2013

The European Audiovisual Observatory (EAO) has released its statistics on European cinema admissions in 2013 ahead of the Cannes Film Festival and they make for grim reading. We have already written about the preliminary figures (Europe’s Cinema Attendance Decline is Greatly Exaggerated), so we will not cover old ground.

It is worth, however, briefly recapping some of the key analysis that still hold true for this data:

  • Decline was mainly due to lack of any major local hits (Italy was an exception);
  • It was a tale of East and West, with former rising while latter fell significantly;
  • Russia overtaking the UK as Europe’s second biggest cinema market is big news;
  • There is a major question about ‘secular decline’.

So what is new about this data and what more can it teach us?

First Quarter Data Is Pointless

EAO makes much of the fact that Q1 of 2014 is an improvement on the first quarter of the year before.

Provisional Q1 figures from 11 EU markets indicate that admissions in the European Union increased in the first three months of this year, compared to Q1 2013. Quarterly admissions increased significantly in 3 out of the 5 big EU markets, namely in France (+18.9%), Italy (+13%) and Spain (+8.7%), outweighing smaller decreases in Germany and the UK. On a cumulative basis admissions in these five markets increased by 5.6%. As these markets represent around 75% of total EU admissions, it can be assumed that total EU admissions increased in the first quarter. This would also be backed up by data from six additional EU Member States which registered a growth in cinema attendance, including the Netherlands (+4.8%), Sweden (+17.9%), Greece (+8.9%) or Slowakia (+49.5%).

This is true but also largely irrelevant. Coming off a disastrous 2013, it would be shocking if this quarter saw even more steep decline. Oscar-contending films and The Lego Movie attracted customers but tell us nothing about the year as a whole will be an improvement on 2013 or not.

Read More »

NCM’s Acquisition of Screenvision Is Hard To Fathom

 Shark eating shark eating shark

To say the announcement of National CineMedia’s acquisition of arch-rival Screenvision stunned the cinema industry would be an understatement, even though the deal had been anticipated for some time.

Within the cozy confines of the cinema advertising industry this outranks deals like Dolby buying Doremi or even Omnicom and Publicis merging. Think Apple buying Samsung or Facebook acquiring Twitter and you get an inkling of the impact currently reverberating across every cinema screen in North America.

So how did this happen, what are the deal’s implications and will it actually go through? Most importantly, is the de-facto monopoly that this creates any good for the business?

The NCM-Screenvision Deal

The basic details of the deal are straightforward enough.

National CineMedia, Inc. (NCM Inc) has agreed to buy Screenvision for a total of USD $375 million, a combination of USD $225 million in cash and USD $150 million in stock. It is worth highlighting that NCM Inc. owns 45.8% of National CineMedia, LLC (NCM LLC), so it is not America’s largest cinema advertiser buying the industry’s second largest, but the largest shareholder in the largest cinema advertiser doing the buying.

The press release makes all of this quite clear:

Following the merger, NCM, Inc. will evaluate whether to contribute the Screenvision assets to NCM LLC. Although it is under no obligation to do so, NCM, Inc. expects that it will contribute the Screenvision assets and debt incurred to finance the acquisition to NCM LLC in exchange for approximately 9.9 million NCM LLC membership units and that the combined operation will result in an estimated $30 million of annual operating cost synergies. The merger will create a higher quality and more competitive video advertising network that will cover nearly all 210 Designated Market Areas across all 50 states and deliver to approximately 3,900 theatres with over 34,000 screens, reaching over 1.1 billion annual patrons.

A “kill fee” is attached to the deal.  Should NCM decide to pull out or if the deal is rejected by the FTC it will be liable to pay USD $28 million, while Screenvision in turn will have to pay between USD $10 million to $18 million if it has a change of heart. However, given the fact that the acquisition has already been unanimously approved by the boards of directors of both NCM Inc. and Screenvision, as well as Screenvison’s equity owners, that is unlikely to happen.

So the only thing that stands in the way of the acquisition is the approval of U.S. federal regulatory authorities, which could take up to six months. (More on this in a moment).

With NCM LLC having traditionally dominated in larger markets as Screenvision focused on smaller markets, this means that a merged NCM-Screenvision will dominate in EVERY market throughout the territory. Who does this leave as the remaining cinema advertising players? Effectively nobody. North of the border there is of course Cineplex Media, which represents 93% of Canadian box office, but in the US there isn’t even a significant No. 3. BeforetheMovie, Inc. or Spotlight Cinema Networks anyone? No, cinema advertising has been a two-horse race since the formation of NCM and everybody else was pygmies. Now they are smurfs by comparison – sorry, 1 Better LLC.

A Deal Long Anticipated

The NCM-Screenvision merger is a shock but not a surprise. As far back as five years ago we wrote about it here at Celluloid Junkie, following the industry rumours surfacing in a USA Today article.

Back in May of 2010 we wrote:

A merger between Screenvision and NCM seems unimaginable, if not impossible, given the two firms majority share of the North American cinema advertising business.  Surely there will be some regulatory group that will object to having only one company control most of the profitable advertising placement in the country’s leading movie theatres.

What ultimately made the current deal inevitable was Screenvision’s change of ownership in 2010 from ITV to Shamrock Capital Advisors, the investment vehicle set up by the late Roy Disney, for USD $160 million. On the same day it was announced that the ex-head of DCIP Travis Reid was coming onboard to head up the company. Shamrock held 61.2 percent of Screenvision’s stock, while Technicolor had an 18.8 percent stake and Carmike Cinemas 20 percent of the company, with which it had then close a 30-year exclusive deal.

It was clear that the company was to be streamlined and positioned for the near future when all cinemas would be digital, at which point Shamrock would sell. Just like the private equity firm that owned AMC before it was sold to Wanda, all such entities look for an exit at some point through a liquidation event (sale, IPO, merger, etc.).  Shamrock has less of an interest in whether such a deal is good for the market, and more as to whether its good for their balance sheets (ROI) and investors (i.e. getting the highest possible price for the company).  That is their fiduciary responsibility.

The key was thus for Shamrock to not steamroll the other stakeholders but to get unanimous support. So the price had to be right. Having sold on Screenvision to the only other obvious buyer for nearly twice what they initially paid for it, Shamrock has thus done very well out of the four year ownership of Screenvision and the minority shareholders are likely very happy too.

Read More »

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 »

Multiplexes Set to Feast on Television Leftovers

Son of God and Veronica Mars

“Son of God” (left) and “Veronica Mars” – two theatrical releases derived from television properties.

Two movies hitting North American cinemas over the next three weeks are primed to do blockbuster business. Unlike most blockbusters however, they aren’t being released with the support of multi-million dollar marketing campaigns. Both are derived from properties that originated from a source cinema owners’ have traditionally considered their biggest nemesis; television.

Despite their small screen provenance, if either or both titles perform as expected, it could set a new paradigm for how Hollywood goes about distributing certain films and we can expect to see the concept duplicated.

Son of God

The first of these films to hit multiplexes (in North America and Latin America) is “Son of God”. The movie is an abridged reworking of “The Bible”, a 10-hour mini-series that aired on the History Channel less than a year ago. The new theatrical adaptation whittles the television version down to 2 hours, 38 minutes and is recut to focus solely on the story of Jesus Christ.

The television mini-series was an all inclusive tale that included Bible stories from the Book of Genesis through the Book of Revelations. When it premiered last March on the History Channel to an audience of 13 million, it set the 2013 record for cable viewership and was the most watched program the network had ever produced. The Blu-Ray and DVD release of “The Bible” was just as successful going on to become the all time sales champ for mini-series on home video.

The mini-series was the first scripted program from Mark Burnett, a veteran of reality-TV producer of such shows as “Survivor” and “The Voice”. He produced “The Bible” with his wife, Roma Downey, and it was always their intention to extract a theatrical release out of the series. The only question was who would help them release the film. The answer was Twentieth Century Fox.

On the run up to the February 28th release of “Son of God” Burnett and Downey went on an extended publicity tour, showing excerpts of the film to various Catholic and Christian religious groups throughout North America and certain international markets. The gambit seems to have paid off, for much in the way pastors and clergymen promoted “The Bible” to their congregations, they have also used the pulpit to encourage their flocks to go see “Son of God” upon its release.

A week before its release numerous media outlets, starting with the Hollywood Reporter, began picking up on the escalating advance sales the film was generating. The trade publication discovered that a children’s charity, Compassion International, had purchased 225,000 tickets in 40 cities and gave them to local churches to disperse.

YouTube Preview Image

It was reported that at least 10 multiplexes around the United States were booked solid by church groups and organizations. Not just in a single auditorium, but in what was dubbed a “theater takeover” every single screen in these cinemas was scheduled to show “Son of God” the night of February 27th.

Read More »