Category Archives: Countries

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.

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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).

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Latin American VPF Deals Hide Regional Problems – UPDATED

Butch Cassidy and Sundance Kid

[Ed: We have received lots of feedback and updated info from readers fram and active in the region. ¡Muchas Gracias/Muito Obrigado! The article has been UPDATED THROUGHOUT as a result.]

Much like Butch Cassidy and the Sundance Kid headed to Bolivia after they had run out of banks in the Wild West to hold up, so too digital cinema integrators have moved on to Latin America, now that virtual print fee (VPF) coffers are empty in North America and Europe. Yet despite the flurry of Latin America-related VPF press releases at the recent CinemaCon, there are fundamental issues that will make it a challenge to migrate the continent to digital cinema.

We have already discussed the press releases from CinemaCon 2014, including those  related to Latin America, so for a full breakdown have a look HERE. We will not provide a full analysis or analyse each deal, but try to look at the context and outlook for the region, as it struggles to catch up with the rest of the world in going digital.

As we pointed out during ShowEast 2012 it was the last chance for Latin American countries to get a VPF deal and we are unlikely to see many more major deals after this one. Gary Johns from Sony Electronics commented then that their VPF deals for North America were available until 31 March 2013, i.e. almost exactly a year ago. While international deals do have a little longer to run, studios like Twentieth Century Fox have politely but firmly informed exhibitors, distributors and (perhaps most importantly) government representatives in Brazil and elsewhere in Asia that the end of 35mm prints is nigh.

GDC at the Forefront – of press release announcements

It is noteworthy that deployment entities like Scrabble and GDC have signed separate VPF deployment deals with Hollywood studios (here and here respectively), highlighting that the continent could not easily follow deployment patterns and terms even for non-US or EU territories such as India and China. Of these two entities GDC has been the more active, with no less than five announcements relating to Latin America, while Scrabble has been largely silent recently. So what’s the motivation to be aggressive on the VPF front in Latin America?

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In an Age of Automation, Sweden’s SF Bio Welcomes You to Each Screening in Person

YouTube Preview Image

I tend to travel to Sweden a few times each year, usually to visit family and/or on business. Even if I am there for just a few days I make an effort to visit the cinema and catch up on a Swedish film. Sure, I could buy them on DVD or even download them (though legal options are few), but I prefer my films in the cinema. In the last year I’ve seen Återträffen and Monica Z this way, both hugely enjoyable on the big screen.

Almost inevitably I end up seeing them at a cinema or multiplex owned by SF Bio (their catchy intro above), whether the large Filmstaden Sergel multiplex in the middle of Stockholm or the small three-screen Cinema 3 in Ystad, housed in a converted army barack (in the home town of TV detective Wallander).

What I have noticed is that SF Bio does something that hardly any other cinema anywhere else in the world does. They have a real live person introduce the film.

For every screening of every film (at least that I’ve been to in the last couple of years), someone from the local SF Bio staff walks in, stands in front of the screen and welcomes the audience. He or she takes the opportunity to tell us which film it is we are about to see and how long it is; points out which way the emergency exits are, asks us to please switch off our phones and finally wishes us an enjoyable film experience. Some crack a joke or two and none that I have seen ever just go through the motion or seem like they are reading off a sheet. They are not robotic like the average flight steward/ess going through the inflight safety demonstration. They provide a real human touch and a bit of showmanship.

SF Sergel

I have no idea how long this has been going on or how it became a formal policy. The only other exhibitor that I’ve heard does this is ArcLight Cinemas in Los Angeles.

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New Terrorist Attack in Pakistani Cinema Kills Dozen

Pakistan has again been hit by a deadly terrorist attack in a cinema, this time killing and injuring even more people than the one ten days ago.

“A deadly attack on a cinema came as Pakistani government and Taliban negotiators met for a second time in an effort to end the bloody seven-year rebellion. A triple grenade attack on a cinema showing pornography in northwest Pakistan killed 12 people as government and Taliban negotiators met for a second round of peace talks. It was the second such attack within two weeks on a cinema in the city of Peshawar, which has been on the front line of Pakistan’s home-grown Islamist insurgency. Scraps of human flesh, blood-soaked shoes, caps and condoms littered the floor of the hall after the blasts, an AFP reporter at the scene said.” (link)

The fact that it was a cinema showing pornogrophy should not detract from the cowardly brutality of the act, nor lessen our sympathy for the dead, injured and their relatives, not least as the standards for what is considered ‘pornographis’ in Pakistan can be less than you see in the average episode of ‘Game of Thrones’ on HBO.

“Reports said there was a specific threat against the cinema in the past few weeks, leading to increased security, but staff had only just returned to “normal” security levels when this attack occurred.” (link)

We are also told that “The Shama cinema in Peshawar was a place for bearded taxi drivers and off-duty soldiers to while away a weekday in a fug of cannabis smoke, watching pornographic films.” There was also a suicide bombing in the home of a local tribal elder who was a member of the local “peace committee” four days ago. (link)

The Telegraph has a detailed description of the cinema, desribed as ‘Peshawar’s last porn cinema’ from before the attack:

The moustachioed usher took the ticket, waved his torch and revealed a secret Pakistani world with a single, blunt question: “Sexy movie?”
They were the only words of English in his stream of Pashtu, the language of the north-west, a place where the Pakistan Taliban attack CD shops, as well as women who work outside the home, barbers and anyone else they accuse of promoting decadent Western values.

No-one inside the Shama Cinema cared. At 3pm on a weekday afternoon, its flip-up seats were full and a fug of hashish smoke swirled in front of the 15ft screen.
Pakistan may translate from Urdu as the “land of the pure”, where Sharia is incorporated into everyday law, where alcohol is banned and most women only appear in public with their faces covered, but Peshawar’s last porn cinema was doing a roaring trade.

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No Speak English? Cinema Show Noah In 3D Just For You.

Are you familiar with the Ramayana? Have you ever read Journey To The West? If not, then chances are that you will be watching the story of Noah in 2D at your local multiplex.

The Hollywood Reporter yesterday had an exclusive on Paramount’s decision to release Darron Aronofsky’s Old Testament epic in 3D only in select overseas territories. However, the article doesn’t seem to want to go too deeply into the reasons for this decision. Instead it notes that the 3D version will be released in “65 foreign countries, including Russia, all of South America and most of continental Europe,” of which 32 territories will also see it in IMAX. Meanwhile the film “will be released exclusively in 2D in the U.S, the U.K., Australia and France”, and while not mentioned by name, we assume that Canada is included in the US release territory, rather than getting to see the flood in 3D. The same might go for New Zealand with Australia and Ireland with the UK. So with the exception of France, the film is being released in 2D in all major English-speaking territories and – with the exception of France, for reasons we will get to – in 3D in all other languages.

It should be remembered that Noah was filmed in 2D and was intended to be released that way, until Paramount decided to spend $10m to post-convert the film from 2D to 3D. [Paramount isn't telling who did the conversion, but it is likely to be Legend3D, who did the work on Paramount's Top Gun, or Prime Focus, which recently won an award for its conversion work on Gravity.] Aronofsky is not opposed to 3D per-se, as he told MTV in this interview, back when he was scheduled to film the RoboCop re-boot, that “With the right project, I’m totally into 3D,. Scorsese’s working in 3-D [on Hugo]. I am very curious what that’s going to be. Like everyone, I thought Avatar was an incredible experience.” Though there were alleged struggles with the studio, according to CinemaBlend, over the final cut of the film, there is no word about Aronofsky’s feelings about the 3D conversion. While the film was conceived in 2D, the art of converting to 3D has come a long way since Clash of the Titans, though like that film’s director Aronofsky might feel free to vent his true feelings in a few years time. Leterrier last year came clean and called the Clash 3D conversion “a gimmick to steal money from audiences.

It is also no secret that Paramount is hoping for Noah to be a cross-over hit with Christian and Jewish audiences in North America. While The Passion of the Christ is often cited, a more recent indicator of the strength of the religious audience is not found in the cinema but on television. The Bible miniseries produced by Mark Burnett, better known as the men behind The Voice and Celebrity Apprentice, “brought 100 million viewers to the History Channel earlier this year. Shortly after, it became the top-selling DVD miniseries ever when 525,000 copies were sold in its first week of release,” (link). These were numbers that Hollywood could not fail to sit up and take notice off. The sequel from the New Testament, called Son of God, is slated for cinema release, according to Deadline, with “20th Century Fox picked up feature film rights to the theatrical version of History’s miniseries last month, and the movie now set for a February 28, 2014.”

So with Noah originally set for North America release on 8 March, it meant two biblical epics just one week apart! Son of God would have still been in cinemas when the old testament floods the multiplexes (if you pardon the pun) in a battle between not Old and New Testament, but Paramount Pictures against 20th Century Fox. (And if that wasn’t enough, there is also Heaven Is For Real on 16 April.) Paramount thus shifted the release date to 4 April (though IMDB lists it as 28 March and Google 8 March) in order to avoid the obvious clash. It would also be unseemly to emphasize the 3D spectacle aspect of the Noah film in a country in which three out of ten believe people in the bible literally and only 17 per cent consider it a book of fables and legends.

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Russia To Introduce Quotas for Local Films in Cinemas

Mossfilm Monument

Russia’s Minister of Culture has announced plans to introduce a 20 per cent quota for domestic film in cinemas. Interviewed by Interfax and reported in German media (such as this Focus article) Vladimir Medinski is quoted as saying that:

“Man muss die Quotierung für das russische Kino einführen, ohne dies ist dem russischen Kino nicht zu helfen”, and ”Zu Sowjetzeiten gab es eine Quote für amerikanisches Kino – sechs Filme pro Jahr. Und die sowjetischen Filme machten gute Kasse” and “Ich denke, 20 Prozent sind eine ordentliche Zahl.”

Which translates roughly as:

“One has to introduce a quota system for Russian cinema, otherwise there is no way to support Russian films,” and “During Soviet times there was a quota for American films of six per year. And the Soviet films did well at the box office,” and “I believe that 20 per cent is a good number.”

The quota is expected to become law shortly. Russia would be far from the first country to introduce quotas, with China (PRC) restricting the import of foreign films to just 20 per year, plus 14 more IMAX and 3D films, while South Korea also has a quota system in place to support local films. Wikipedia has a handy overview of the quota system in different countries, including France and Italy, as well as historical perspective for the likes of UK.

Russia under re-elected President Vladimir Putin has been pushing to promote the domestic film industry, with particular emphasis on historical and patriotic films. Screen reported last week that “Russia’s Culture Minister Vladimir Medinsky has announced plans to transform national support for the film industry into a revolving fund, increasing investment into film production by 100% by 2017.” This moves comes after the success of war epic Stalingrad, which has become the highest money making film in Russia of all time. Russia’s Culture Minister Medinski has been criticised for his conservative and hard-line stance that echoes Soviet times with pronouncements that screenwriters should be “told what’s good and what’s bad.”

Even with the success of Stalingrad, LA Biz noted last year that Hollywood films dominate the Russian cinemas:

The Cold War may be in the distant past, but the country is still concerned about Western influence — at the box office. Only one film from Russia’s top 20 at the box office this year actually hails from the country’s own national cinema. The rest of the top slots are made up of Hollywood product, with “Iron Man 3″ in the number one spot at $44.2 million.

With the recent rapid growth of multiplexes and IMAX screens in Russia the authorities are obviously keen for more of the roubles spent at the box office to stay in Russia.

Why China’s Box Office Growth Is Bad News For Hollywood

Hollywood Box Office In China

Spectacular figures showing a 27% year-over-year growth of the 2013 box office in China (PRC) hide several far more troubling numbers for Hollywood studios trying to maintain a hold on the world’s second biggest cinema market. Even before official box office data was confirmed by last year’s merged regulator, General Administration of Press, Publication, Radio, Film and Television, provisional numbers from local market researchers Ent Group, Artisan Gateway and movie website MTime had been reported and analyzed by Variety, Hollywood Reporter and Screen International.

Top-line figures for the Chinese movie market paint one of robust growth, which is particularly welcome to Hollywood at a time when box office takings in established markets such as the United Kingdom and France have not just slowed but gone into reverse. Takings increased from RMB 17.07bn (USD $2.74 billion) to RMB 21.6bn (USD 3.57 billion), representing a growth of 27%. This was partly driven by a growth in the number of screens increasing by over 5,000 to 18,200 representing a 38% year-over-year rise. (The figures have since been confirmed by SGAPRFT)

Yet this is where the good news ends for Hollywood studios and other foreign film distributors:

  • Only three of the Top 10 films this year were Hollywood releases (compared to six in 2012), with the highest grossing Hollywood film being Marvel/Disney’s “Iron Man 3″, earning RMB 753 million (USD $123 million), compared to last year’s top Hollywood title, the “Titanic 3D” re-release, which took RMB 944 million (USD $156.51 million).
  • Hollywood’s total share of PRC box office shrank to 41.3% in 2013 from 52% the year before as local titles dominated with 58.7% of the market.
  • Chinese films enjoyed a year-over-year growth of 54.3%, whereas Hollywood titles had negligible growth from RMB 8.8 billion (USD $1.45 billion) to RMB 8.92 billion (USD $1.47), despite the increasing number of multiplexes and screens.

Stop to consider that for a moment the spectacular rise of 27% was almost entirely down to local films getting more viewers. All those thousands of extra screens in brand new multiplexes did not garner more millions for Hollywood studios. On a comparative per-screen basis, Hollywood films thus declined in China during 2013. Yes, it really is almost as bad as in France and the UK. After the optimism of 2012, which was the first year that PRC allowed 14 additional ‘premium format’ (3D and IMAX) foreign titles to be released on top of the previous annual quota of 20 films, there were further blows for Hollywood this year.

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Homegrown Movies Help Asian Box Office Surge To Record Levels

China, Japan and South Korea

I wonder if senior management at the big three Detroit automakers during the late 1970s and early 1980s experienced the same sense of pending anxiety that many Hollywood studio executives must presently feel. You see, as the media and certain members of the industry spent this past summer lamenting over a string of underperforming blockbusters like “After Earth”, “The Lone Ranger” and “White House Down”, a threat to Hollywood’s long dominance of the worldwide movie market continued its steady growth. What’s more, this threat comes from the very international territory Hollywood has recently courted as an emerging market; a region which has already proven how effective it is at disrupting American industrial supremacy.

This time however, the ongoing business success of one country may not have to suffer as other countries gain market share in the same industry. Bear with me for a moment while I use an arguably exaggerated analogy to detail the current surging Asian box office.

Starting in 1890 and running all the way through the 1960s, the United States was the largest automobile producer in the world. By the 1970s the U.S. automotive industry was ruled by GM, Ford and Chrysler, a group of companies that came to be known as The Big Three. However, after a series of setbacks in the 1970s starting with the 1973 oil crisis, U.S. automakers began to see their market share decline as car buyers shifted to smaller, cheaper and better engineered vehicles built overseas, mostly in Japan and South Korea.

Offerings from companies such as Toyota, Honda, Nissan and eventually Hyundai outsold those from The Big Three to such an extent that by 1981 Japanese automakers were sending cars to the U.S. under a voluntary restraint agreement.

China, which has recently become Hollywood’s new best friend, didn’t export cars to the U.S. so much as they did… well, just about everything else. I’ll spare you the details of what foreign imports did to the U.S. textile industry. Can anyone even remember the last time they wore a piece of clothing with “Made In U.S.A.” on the label?

When we correlate such recent historical cases with the motion picture industry the similarities are easy to spot. Releases from six Hollywood studios earn a lion’s share of the worldwide box office. However, most of the movies Hollywood has been manufacturing lately are big, expensive retreads of previous versions of the same product. For decades, only Hollywood entities could churn out slick and shiny movies with a high production value. The advent of digital technology though, has lowered the cost of film production and distribution to such an extent that producers all over the globe can manufacture product that equals what is being made in Hollywood. These new movies are smaller, less expensive and offer fresh narratives.

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Cannes Film Festival Brings China Into Focus

2013 Cannes Film Festival Marquee

Maybe the Hollywood trade papers were in need of something to write about in the first few days of this year’s Cannes Film Festival. Possibly they were just looking for a way to mention China in story, since the country, now the world’s second largest box office generator, seems to be the new black. Whatever the reason, if one felt that the Chinese had sworn off Cannes, as one article suggested, they will have likely changed their mind now that the festival is drawing to a close.

Sure, buyers and sellers from Chinese companies may be “conspicuously absent” as the Hollywood Reporter declared, though this would be too narrow a view of Cannes, taking only the market into account. Taking a census of the country’s presence in Cannes by counting such attendees may be misleading, especially since China has a quota on distributing films from outside the territory.

At the festival itself, China is represented rather well by at least three films, one of which is in the official competition. That entry, “A Touch Of Sin” by filmmaker Jia Zhang-Ke, has been one of the buzz worthy films since it screened in Cannes early in the festival. Whether it will walk off with the Palm d’Or, the top prize in Cannes, remains to be seen, though it wouldn’t come as a huge surprise.

“A Touch of Sin” is just the type of movie past Cannes juries would have lauded with laurels; a well made film with interweaving story lines filled with political criticism of the directors home territory. What more could a Cannes festivalgoer ask for?

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