Tag Archives: China

Number of New Cinemas in China is Up – But so is Box-office Fraud

China box office fraud

Last week saw the publication of two reports, both of which pointed to upward trends in the Chinese exhibition industry. But while the first pointed to a growth in the number of new screens, the second pointed to an increase in the instances of box office fraud.

report by Yi En Consulting has shown that as of 30 November, the total number of cinemas and multiplexes in China amounted to 5,540 with a total of 23,349 screens. This has led to a lot of end-of-year analysis and prognostication, coming as it does also close to the re-filing of the Wanda Cinemas IPO prospectus.

The number of new cinemas in Mainland China doubled in January-November 2014 to 957 compared to 476 in the same period last year. Beijing Daily looks at the key players (Wanda, Poly, Bono, etc.) and the dynamics shaping this market, where more players are looking to follow Wanda’s IPO lead.

Beijing Daily reporter learned that this year, in addition to already listed Wanda Cinema, the other cinema companies are also in preparation or wait listed. The first is the original plan and Wanda Cinema accept China Securities Regulatory Commission reviewed the same day in Guangzhou Jinyi Film and Television Media Co., Ltd., but the presence of a false prospectus of the eligibility conditions have been canceled. At the same time, the industry ranked second in the Shanghai Film Co., previously disclosed on April 18 prospectus, to be listed on the Shanghai Stock Exchange, while China Film Corp. also announced June 16 the prospectus, and most raised Uses of funds are investment projects cinema. In addition, the industry said, ranked fourth in the Guangdong market, the earth also has the listing.

The role of 3D and Imax/PLF (premium large format) films has also been significant in 2014.

According to public information, as of the end of October this year, the country released 52 million at the box office over the movie, 26 movie for 3D movie, half of the total box office revenue, 3D movies have occupied half of China’s film market. With such a huge market demand, the theater in order to attract customers have increased construction of 3D auditoriums. A film industry insider talking to Beijing Daily, told reporters: “Look at the Beijing movie theaters, an average ticket 2D movie ticket is 50 yuan, and a 3D movie ticket fares usually more than 100 yuan, the theater in order to the difference will be considered to improve the middle by large screen IMAX auditorium box office. ”  LINK

In the second article, turning its attention to the future, the focus is on the growth in the Tier Two and Tier Four cities.

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China Cinema Digest – Wednesday 17 December 2014

Imax China 200 screens

Imax has crossed 200 screens in Mainland China following the latest deal announced with Wanda Cinemas.

IMAX and Wanda Cinema, announced today that the company, along with Wanda Plaza is located in Hangzhou Gongshu Wanda IMAX theater opened, IMAX theater in China’s total reached 200. Wanda Cinema is one of the first partners to IMAX theaters in China. Currently, Wanda Cinema has become the company’s largest IMAX cinema partners in the international market, the commitment to build a total of 210 IMAX theaters.

In 2001, China’s first IMAX theater opened in Shanghai Science and Education, which marks the formal entry into the Chinese market IMAX Corporation. In 2004, IMAX company opened its first commercial IMAX theater in China. At present, China has become the world’s second largest IMAX market, a total of more than 400 IMAX commercial theaters, 179 of which have been opened. After all screens installed, IMAX theater network will cover commercial 122 cities in 30 provinces of China.  LINK

Luxe RealD
RealD announced at CineAsia a three-screen deal with Broadway Cinema for its Luxe PLF brand. This is the first deal in China and heats up the competition with Imax, China Giant Screen and own-brand PLF operations.

Global 3D and visual technology company RealD Inc. (NYSE: RLD) and leading Hong Kong and Chinese theatrical exhibitor Broadway Circuit announced today an agreement to install 3 “LUXE: A RealD Experience” (LUXE) auditoriums in Broadway’s cinema locations in mainland China. Introduced by RealD in 2013 as a new Premium Large Format (PLF) initiative, LUXE auditoriums will be installed at Broadway locations in Tianjing, Chengdu and Guangzhou, with the Tianjin location expected to open in May 2015. All 3 LUXE auditoriums opened at Broadway locations will feature RealD 3D projection and a RealD Precision White Screen.

“As a leading circuit in the rapidly growing and highly competitive China market, we have been looking for the best possible cinema setting for our moviegoers,” said Tessa Lau, CEO of Broadway Circuit. “We find LUXE a perfect match. We see it as an initiative to define our 2D and 3D premium offering. We are pleased to partner with RealD to jointly provide our audiences a unique, fully immersive experience.”  LINK

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China Cinema Digest – Thursday 27 November 2014

Despicable Me 2 poster China

Universal has set up an office in Beijing, joining the other Hollywood majors to want a permanent foothold in the Chinese market, not least as it has also just opened the Universal Studios project just outside of Beijing.

Universal Pictures set up China office in Beijing this week. So far, there is Hollywood “six,” said the film company Disney, Warner, Twentieth Century Fox, Paramount, Sony and Universal have set up offices in mainland China. Together with the recent strength of the limelight large IMAX Corporation and DreamWorks, Legendary Pictures, etc., with the Chinese film market emerged as the world’s second largest film market, Hollywood hand of cooperation with China is more and more tightly grip.

A special trip to Beijing, President of Universal Pictures International release Duncan Clarke interview with reporters, said the establishment of the China office of Universal Pictures is an important page in the history of 102 years. And he was so feeling, partly because the Chinese film market has great potential, on the other hand is the North American market is nearing saturation, forcing Hollywood film overseas strategy implementation. Universal produced before the “Fast and Furious 6″ and “Despicable Me 2″ in China were made at the box office success of 413 million yuan and 324 million yuan, “Despicable Me 2″ is so popular in China small yellow people [sic! Presumably meaning Minions].  LINK

China ticket software

Sina Entertainment has a long and good article about automation replacing manual labour in Chinese cinemas. Ticketing is the first instance, but taking the Beijing Financial Street theater as its showcase, looks at how other areas such as concessions sales are also being automated. Interestingly it is not primarily labour costs that are the main motivator for this push. Worth reading in full.

It is reported that large quantities of multiplex cinemas are equipped with TMS and the effect is obvious. Information, such as TMS Beijing Chen Xing Technology in theaters such as the earth has been applied, Guangdong Branch Technology and Digital Film Development Corporation has been jointly developed by TMS’s Zhejiang Time Cinema theater uses, Film holy Bo’s TM S is also some domestic theater equipment.

Concerned that, TM S and ticketing, food gifts, broadcasting and other aspects of theater control system combined audience viewing experience can be improved, together constitute the automated, unmanned theater system package. TMS and ticketing system docking, co-managed theater operators can make theater “unattended” concept can be further realized.

Currently, TM S with automatic ticket sale items, recount, radio ads and other management systems to cooperate fully with the theater concept, although not perfect, but it aimed at “one-stop” theater automation management, no doubt so that everyone hopes for the future of cinema.  LINK

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How Smartphones Rule Cinema Ticketing in China

China mobile ticketing WeChat

The boom in China’s box office is mainly attributed to the growth in the number of modern multiplexes catering to a growing middle class. Yet an equally important role has been played by convenience of mobile ticketing, which enables flexibility, impulse buying and seat selection that is valued by the 80, 90 and 00 generations (i.e. born in those decades), who are the main drivers of China’s cinema growth.

Just how big this is and how fast the trend is growing was highlighted in an article by Chinese entertainment consulting firm Entgroup last month:

During this year’s summer profile, market share of online ticketing business accounted for more than 30%. As of the third quarter, the total box office mainland film market beyond 2013 full-year results of 21.7 billion, is expected to reach 30 billion annual box office revenue, and online ticketing service will reach 50%, micro-channel movie tickets will use its unique “ripple communication “vibration entire online ticketing market, and root out the 3-4 line market, in response to consolidation and mergers and acquisitions in the context of the total forest hot market making the message is “no one can integrate me, I do not accept integration. “

Financial website Tiger Sniffing Network (!) profiles the rapidly evolving market and interviews people from three of the leading Mainland mobile ticketing providers: Pull Movies founder Kai, a Cat Movie insiders (interviewed anonymously) and Micro-Channel Movie Tickets founder Lin Ning.

Mobile ticketing in China is considered an O2O (Online-to-Offline) business, which is described by Wikipedia (Chinese) in the following terms:

O2O (Online To Offline) mode, also known as the offline business model refers to the purchase of consumer online marketing online and offline operations driving under the wire. O2O through promotions, discounts, information, service book, etc., the next line of the message store pushed to Internet users, which will convert them to customers under their own line, which is particularly suitable for the goods and services necessary to store the consumer, such as dining, fitness, movies and shows, beauty salons, and department stores such as photography.

In understanding Chinese consumers, particularly 80/90/00, it is important to appreciate the mobile-first, as well as savvy bargain, discount and special deals mentality that underpins consumer behaviour.

Added to this there is a strong element of social networking, using WeChat (messaging), Weibo (Twitter-type ‘micro-blog’) and other social apps, whereby peer influences and decision guided purchasing decisions for both goods and services/experiences.

Mobile Enablers Create Win-Win Situation

The article begins by pointing out that mobile movie ticketing vendors are in a unique position in terms of being enablers, rather than just middle-men between cinemas and their potential audience.

Online seat selection is typical of the O2O industry, where they provide cash flow from online and complete the import line. A mobile phone app will be able to direct the attention of online marketing to generate transformed into the purchasing power of the line at the box office, it is probable that all the movie marketing companies currently can not match the “creativity.” They are closer to the audience than the cinema, so they have amazing box office pulling power to entice the film side more and more to cooperate with them.

There is thus a power that rests with mobile movie ticket companies that is stronger than in most other parts of the world. This change has not come about overnight and the article does a good job of providing a chronology of how ticketing software systems have evolved in China over the past two decades.

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China Cinema Digest – Friday 21 November 2014

Interstellar poster China

“Interstellar” had a good week at the Chinese box office, boosted by Imax showings and holding off competition from both domestic comedies and Madagascar penguins.

Interstellar took $42.33 million in its first five days in China, dominating a week in which Christopher Nolan’s sci-fi epic went head-to-head with Johnnie To’s romantic comedy Don’t Go Breaking My Heart 2 and DreamWorks Animations’ Penguins of Madagascar in the world’s second largest movie market.

Starring Matthew McConaughey and Anne Hathaway as astronauts trying to save the human race, with an ensemble cast that also includes Jessica Chastain and Michael Caine, Interstellar racked up 7.14 million admissions from 149,316 screenings, according to the research outfit Entgroup.

That was fewer screenings than the second-place movie in the week to Nov. 16, Don’t Go Breaking My Heart 2, but the space film also showed on 170 Imax screens in China, which gave box office a major lift.  LINK

You might also be interested in this article about advance online ticketing sale for “Interstellar”, which set a new record.

China Imax

The success of Imax and Premium Large Format films in China prompts Broadcast HC 360 to look at the technology behind Digital PLF, both Imax and its domestic Chinese competitors.

Relative to the IMAX “silent like gold,” the theater construction market is more lively. Cinema operators to invest and build its own brand for use in its own theater, the movie started issuing investment Poly Films, is the development of a domestic IMAX DMR system POLYMAX Poly; Wanda independent development of the giant screen projection system “X-Land “; and in digital cinema technology research-based science and technology enterprises Chen Xing Digital technology introduced in 2013 Cinelab laser IMAX screenings of high-quality solutions. These domestic IMAX brand is undoubtedly herald the birth of the modern multiplex cinema building, will move towards high-quality IMAX hall main trends.

And particularly worth mentioning is Cinelab IMAX innovative laser from the light source to the electro-acoustic to build sound, IMAX is a qualitative leap in technological development milestones. IMAX movies the same environment and needs two Barco 2K projectors can only support up to 2K mode with a resolution of 2048 x 1080 pixels, a contrast ratio of 2000: 1, Cinelab laser IMAX system simply uses a laser IMAX Simply using a Christie 4K projector with a resolution up to 4096 * 2160 pixels, with a 2100: 1 contrast ratio, while the same effect, it is easy to see, Cinelab laser relative to the giant screen IMAX giant screen, the screen resolution increases four times, four times the clarity also increased. Given the high brightness laser light source in the screening process 2D center maximum brightness of up 40FL, and IMAX is 15FL, IMAX 2D laser brightness increased 2.67 times, and further optimize the viewers 2D viewing experience.  LINK

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Does Hangzhou Point to Bubble in China’s Cinema Market?

Broadway Hangzhou IMAX

Broadway Cinemas (IMAX) in Hangzhou

Talk about China overtaking United States’ cinema box office within a few years is predicated on the growth rate of the past couple of years continuing in an unbroken upward line. Yet too little attention has been paid to whether growth in multiplexes, screens and seats is outstripping demand for tickets.

Tier 2 City Focus

On-the-ground reports from markets outside of China’s half a dozen Tier 1 cities (Beijing, Shanghai, etc.) are starting to suggest that overbuild has resulted in blockbusters increasingly playing to empty auditoriums. Hangzhou is one such market.

According to Wikipedia, “Hangzhou is classified as a sub-provincial city and forms the core of the Hangzhou Metropolitan Area, the fourth-largest metropolitan area in China,” with Hangzhou prefecture having a registered population of 8.7 million inhabitants. It is considered a Tier 2 City, a group of around three dozen Mainland metropolitan areas increasingly targeted by investors, developers and multinationals in recent years. And as WSJ put it:

When it comes to China, the commonly used term “second-tier cities” is a misnomer, says Robert Lawrence Kuhn, an investment banker and author of How China’s Leaders Think. The so-called “second-tier” cities should actually be called “first-class opportunities,” given that these cities have been growth engines of the Chinese economy, boosted by huge amounts of investment, new infrastructure and an influx of new talent.

Multiplexes are at the forefront of these developments in Tier 2 cities, in some ways epitomising it as they combine entertainment, real estate and retail in one location.

Yet after several years of intensive development and investment, worrying signs of over-supply are starting to emerge, as indicated in the article quoted in Sina.com.cn from Qianjiang Evening News, headlined, “Hangzhou total of 49 cinemas, average of one theater added monthly.”

Hangzhou Cinemas: “Too Dense” – But Still Growing

The article points out that just in the last two months of this year will see the opening of a Jin Yi multiplex, a Wanda multiplex and a Shi Xiang Road multiplex – and this on top of an already saturated market.

The article then points out that in a five kilometer (3.5 miles) area there are five multiplexes, and that with 10 more multiplexes slated for 2015 it will be “too dense” and that next year many cinemas will “barely” get by.

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China Cinema Digest – Thursday 13 november 2014

China Film Group La Paking

Hollywood is looking to make more money out of China than the import-restricted and revenue split-skewed arrangements currently allow. So why not expand merchandising? Just check the Fast & Furious Experience in last week’s China Cinema Digest to appreciate the opportunities.

The head of China’s powerful state-run movie enterprise that supervises film imports wants to strengthen ties with Hollywood by selling merchandise in that country’s theaters.

La Peikang, chairman of China Film Group, has launched a new initiative aimed at spurring consumer product sales at theaters in China’s fast-growing exhibition sector.

To test the project, the group has already selected 1,500 top-ranked theaters in China that will have their own shops selling movie-themed merchandise, such as toys, clothing, games and DVDs, La said in an interview with The [LA] Times.  LINK

China youth

An editorial in The Workers Daily asks whether blockbusters pandering to “small town youth” is detrimental to Chinese cinema. In doing so it also highlights that “domestic movie box office increase is largely thanks to the gift of theater expansion, rather than to improvement in their quality.” The piece asks some very pertinent questions about demographic and geographical realities will undermine continuous cinema expansion as it goes beyond Tier 1 and Tier 2 cities in more rural markets. Worth reading in full.

In fact, it seems gratifying box office figures have confirmed the doubts. Foreign films in China last year, 41% of the box office take football, though not more than half, but to enter the mainland theaters are only 60 foreign films of last year, and the year of production of 638 feature films into theaters have 245. There are 60 foreign films at the box office over 27 million, and 245 domestic movie box office over billion were only 33.

Faced with such a market, a lot of film industry practitioners to second and third tier cities moviegoers that “small town youth” as the future of the film industry’s main viewing groups, because in the second and third tier cities cinema showing growth spurt. When in 2012, the national new screen 3832, 60% of the distribution in the second and third tier cities and county-level cities, four cinemas in 2013 reached a new three-digit number of theater tier cities, many in a two-tier cities years, it has gone through several screens from the single digits to double-digit upheaval.

Small city into the “theater of the times”, making the share of the domestic film industry has changed, northward four first-tier cities of Guangzhou-Shenzhen country’s total box office share has dropped from 32.8 percent in 2008 to 25.8 percent in 2012. Economic development so that “idle rich” and “small town youth” willing to purchase movies, videos and many second and third tier cities will also be used as pre-marketing focus.  LINK

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Questions Raised About Wanda Cinema’s IPO

Wang Jianglin, chairman and founder of Dalian Wanda Group

Sina Finance carries a long and excellent analysis of Wanda Cinema’s re-submitted IPO document, written by Enterprise Observer newspaper reporter Zhu Lin. The article raises several pertinent question about the IPO of the world’ largest cinema chain, which also controls AMC in the US.

The article is in Chinese, but is worth reading in full in the Google translation (or read the original here) to better understand this important listing and company.

There is too much covered in the article to regurgitate everything in this piece, but a few interesting nuggets are worth highlighting, not least the family connections underpinning the ownership and control of the company, as well as future challenges that it is likely to face.

The initial application for listing on the Shenzhen Stock Exchange in July this year was refused on account of “insufficient information” in the IPO prospectus document. Wanda has thus had to submit additional information, some of which makes for very interesting reading.

According to the document the Wang family, headed by Wang Jianlin, controls 71.4% of Wanda Cinema’s total equity, meaning that they exercise complete control over the company, and will continue to do so even after the IPO of no more than 60 million shares.

The article provides a breakdown of the family stake(s):

Prospectus shows Wanda Wanda Cinema controlling shareholder investment, holding 68% stake in Wanda Cinema. Wang Jianlin, Hop Hing Investment Limited by Dalian Wanda Group and the Cultural Industry Group Holdings Wanda indirect investment, the actual controller Wanda cinema. And Wang Jianlin, Wanda Cinema son Wang Sicong currently holds 500 million shares, accounting for 1% of the total share capital, Wang Jianzhong Wang Jianlin brother, Wang can, WANG Jian-chun and ??? each hold 0.6% stake in Wanda Cinema.

Wang’s son Wang Sicong four brothers plus five people, accounting for 3.4% of total share capital before the issue Wanda Cinema, plus the 68% stake controlled by Wang Jianlin, Wang’s family holding up to 71.4%, the realization of Wanda Cinema’s absolute control.

It is clear that the listing will thus make Wang Jianlin even more of a billionaire while also making his close family very wealthy.

At an IPO price of 33.33 yuan per share, the market value of Wanda Cinema would be around 18.7 billion yuan (USD 3 billion), giving the Wang Jianlin family a stake of 13.35 billion yuan (USD $2.18 billion) with Wang’s four brothers earning around a billion yuan each  (USD $160 million). So the IPO is a profitable family affair.

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China Cinema Digest – Wednesday 5 November 20

Transformers China

Not a month seems to go by without China breaking a new box office record. The Mainland box office is now on course to hit USD $5 billion (30 billion yuan) by the end of this year according to the Chinese Film Producer’s Association (CFPA).

The CFPA’s vice president Wang Fenglin told an film industry expo in Wuhan that China’s box office had reached $3.59 billion (22 billion yuan) for the January-to-September period, topping the $3.55 billion (21.8 billion) for the same period last year.

Wang also said that domestic films accounted for 51.4 percent of the market while imported films were 48.6 percent and that a total of 230 films were shown in mainstream cinemas in the first nine months of 2014.

Although the CFPA touted the $4.9 billion figure, the $5 billion mark looks within reach. A slew of big releases are set to hit theaters in the last two months of the year, and key moviegoing dates such as Singles’ Day (Nov. 11) and Christmas are still to come.  LINK

Danzish cinema Chonqing

Danzish Cinema – rated No. 1 on Chongqing

The Chinese central government is subsidising the building of cinemas in Tier-2 and Tier-3 cities as a means of improving and speeding up urbanisation, though this can have the unintended consequence of inflating the exhibition bubble if the market cannot sustain these cinemas.

National Film Development Office recently allocated special funds for the cause of the second batch of county-level city theater construction subsidies totaling 14.2 million yuan [USD $2.3 million] 2012-13 . Reporters today (28) days from the Chongqing Municipal Culture Committee was informed that this subsidized a total of 25 theaters, including 11 in 2012 did not apply for a full refund in 2013 and 14 between the new theater.

Chongqing Municipal Committee of the person in charge of culture, the city had about 20 theaters will not enjoy subsidies. In order to reduce agriculture-related areas and remote counties film screenings main operating pressure and the cost burden of investment, the city actively seek the State Press and Publication Administration of Radio and national experts and Resources Committee, together with the municipal finance, and other multi-national digital management center to coordinate the efforts of last year National Resources Committee research group dedicated field visits to understand the actual situation in Chongqing.  LINK

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China Cinema Digest – Tuesday 28 October 2014

 

China online ticketing

Beginning in November, China will start reporting box office number and info using social media in an effort to improve transparency. The move is good news for Hollywood studios, but will also provide a better picture of the exhibition market in the world’s second largest cinema territory.

In July, the State General Administration of Press, Publication, Radio, Film and Television introduced an updated ticketing system, which gives better real-time information.

This week, Li Dong, head of a special unit of SAPPRFT which looks at ticketing and box office issues, said the watchdog was planning to release the information through popular social media, such as Weibo, which is similar to Twitter, and WeChat, which has parallels with WhatsApp. It wasn’t immediately clear at what frequency the data would be reported.  LINK

Wanda Cinemas Logo

The re-submission of their IPO prospectus has lead to plenty of coverage of Wanda Cinemas, including the astonishing revelation that the operator can manage the construction of an entire multiplex in just 105 days from start to finish. Lots of data, number and statistics in this article on China’s largest cinema operator, which still “only” accounts for less than 15% of total Mainland BO takings.

Coupling that is pure theater assets invested directly by theaters, cinemas and theaters all assets owned by relying on the model, capital and Wanda Cinema mode as a link for the film, its unified management, unified row theater piece. Since its inception in 2005, grossing Wanda Cinema faster growth each year, in 2011 box office revenue reached 1.785 billion yuan, accounting for the proportion of the movie grossed 13.61%; 2012 box office revenue reached 2.456 billion yuan, accounting for the movie box office income ratio was 14.39%; 2013, box office revenue reached 3.161 billion yuan, accounting for the proportion of the national film grossed 14.52%; 2014 January to June, the box office revenue reached 1.988 billion yuan, accounting for the proportion of movie box office revenue was 14.46%, continue to maintain the country’s first cinema box office revenue.

Wanda market share

Development of Wanda Wanda Plaza cinema into projects and tenant lease non Wanda commercial real estate development business projects, Wanda Cinema is the only strategic partner Wanda Plaza theater format, along with the rapid expansion of Wanda and other commercial real estate projects, Wanda cinema investment flourish, construction accelerated.

Wanda cinema investment and construction process is divided into the project site, theater design and theater construction, single Wanda cinema construction period is usually 105 days or so, in other words, after the completion of the siting and design of the theater, Wanda only three and a half months will be able to Wanda opened a theater. LINK

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