CJ China Cinema News – Thursday 12 January 2017

By Patrick von Sychowski | January 11, 2017 11:07 pm PST
"Rogue One" China film poster (cropped)

CJ China Cinema News is BACK, with the coming Year of the Rooster promising to be an interesting one for the world’s second largest cinema market. We look at “stolen” BO, consolidation in 2017, staffing & training woes, a Trump year ahead, BBC goes Imax, Wanda opens 200th Imax screen, lost iPhones, private cinema prosecuted, China Intercom and Dadi, plus blind “see” cinema.

On the back of the poor 2016, China’s box office is off to an in-auspiciou start for 2017. The three-day New Year Day holiday was down 2% to CNY ¥662 million (USD $95.59 million) compared to a year ago. Not enough people were attracted to Imax and 3D screening and “no good content” was blamed (while niche films were squeezed out). That included “Rogue One,” which is only doing half the business “The Force Awakens” did the year before. There is a more worrying long-term trend here if Chinese audiences start to turn their backs on 3D and Imax/PLF screenings. (Also, this long read from Mtime of all that ailed Chinese cinemas in 2016 is worth the slog for the detailed stats). People’s Daily – 5 January 2017

99.3% of tickets sold over the counter. Bona Film thinks not. (image: Baidu News)
99.3% of tickets sold over the counter in this cinema? Bona Film thinks not. (image: Baidu News)

But, wait! Was China’s box office last year in fact over CNY ¥50 billion, with over 20% of cinema taking “stolen”? That is what has been put forward by Yu Dong, CEO of Bona Film Group, who claims that significant box office manipulation and piracy took place. With the rapid growth of theatres resulting in cut-throat competition and depressed takings, some cinemas are accused of siphoning off ticket revenue into a “black hole”. Hand-written tickets, fraudulent counting systems, unlicensed ‘private showings’ are called “cancers” on China’s cinema business by Yu.

Given that 70%-85% are tickets are sold online, it is strange for example when some cinemas claim that over-the-counter sales accounted for more than 99% of tickets sales (see above). The article then details other strange box office shenanigans. Baidu News – 7 January 2016

Growth of Top 10 China cinema operators' market share 2015-16 (chart: Baidu News)
Growth of Top 10 China cinema operators’ market share 2015-16 (chart: Baidu News)

Once Chinese cinema operator share prices recover, there will be more mergers and acquisitions. The top 10 exhibitors in PRC account for 66% of box office (40% for the top four), but in US the top four cinema chains have a market share of 60%, in South Korea 96% and even Australia has 50%. With Wanda screens earning on average CNY ¥2.97 million (USD $429,100), compared to the country average of just CNY ¥1.35 million (USD $195,000), it is the most likely beneficiary of future M&As. (Note that Wanda’s BO revenue was up 21% in 2016). Yet 2017 is unlikely to see the same level of merger mania as 2016, but expect it to pick up closer to 2018, particularly with BAT internet companies taking an even greater interest in the end-to-end film and cinema pipelines. Baidu News – 5 January 2017

Zhonghuan Movie Theme Cafe. (photo: TY360.com)
Zhonghuan Movie Theme Cafe. (photo: TY360.com)

Part of the problem China’s cinema sector is facing is the headlong rush in by investors who have focused on the hardware (physical infrastructure) but neglected the human element (staffing and training). It is easier to build multiplexes fast than to train new managers, resulting in cinemas underperforming due to inexperience in retail, compared to franchises like Starbucks. This led investor Wang Zheng to propose “4+4+4” Theatre management system focused on “goods, scheduling, training, marketing”, “ticket sales, sales, project management, screening” and “maintenance, manpower, safety and finance” that has shown improvements in the retail performance of his four cinemas in Mianyang, Sichuan. TY360 – 5 January 2017

"Passengers" in P.R. China. (image: Deadline Hollywood)
“Passengers” in P.R. China. (image: Deadline Hollywood)

Deadline Hollywood takes in in-depth look ahead to what 2017 has in store for China and Hollywood. With the Trump presidency, Congress decrying Wanda’s acquisitions of Legendary and AMC violating FARA, “The Great Wall” opening in the West, the film quota up for re-negotation and much more it is certainly going to be an interesting year. Deadline Hollywood – 5 January 2016

Several Hollywood titles have been given (rushed?) approval for release in China, including “XXX 2”, “Arrival”, “Sing”, “La La Land” and French-Canadian animation “Ballerina”, which will go out on 6,600 DCPs. Whether this will improve the struggling box office is a different matter. Variety – 10 January 2017

BBC "Tiny Giants 3D" in Imax in China. (poster: BBC Earth)
BBC “Tiny Giants 3D” in Imax in China. (poster: BBC Earth)

While Hollywood gets most of the attention, other content providers are also laying claims to screens in China. BBC is the latest, with an Imax outing for its “Tiny Giants 3D” from its BBC Worldwide’s Earth (natural history) channel. The 40 minute film is in the tradition of pre-blockbuster Imax documentaries and is an attempt to get school classes to fill Imax seats during the daytime in the week. (Eat your nuts out Alvin & Co.). South CN – 9 January 2017

Wanda Imax 2

Out of 397 Imax screen in Mainland China, 200 of them are with Wanda, across 128 cities. The first one opened almost ten years ago in May 2007 in Dongguan, South China Mall. “Avatar” in 2010 led to a surge in interest for the format, with Wanda and Imax announcing in 2011 that they would build 75 screens within three years – which they did. Going from 100 to 200 screens only took two years after that. 37 foreign and Chinese films were released on Imax screens in 2016, of which Chinese were a record 11. China News – 9 January 2017

A man lost his iPhone 6 (gold edition) at a Nanjing Imax screens and claims that the cinema staff returned the phone to another customer. There was no CCTV camera in the cinema and the iPhone was not password protected. So the man took the cinema to theNanjing Intermediate People’s Court, which decided that the cinema was 70% responsible for the mistake and loss, for which it was ordered to pay CNY ¥2,100 (USD $303), while the man had to shoulder 30% of the cost of a replacement phone. Consumer grievances are big in China. Yangtze Evening News – 8 January 2017

"Goodbye, Mr Loser" - shown illegally in private cinemas.
“Goodbye, Mr Loser” – shown illegally in private cinemas.

Two private cinemas (i.e. VIP video parlours) in Hangzhou (where BO declined in 2016) are in trouble for showing film content without respecting copyright. What is interesting is that it is two domestic Chinese distributors (Juggernaut Beijing and Firefly) who went after the cinemas, and got them prosecuted and fined CNY ¥25,000 (USD $3,611) and CNY ¥22,000 (USD $3,177) for losses of showing “Monster Hunt” and “Goodbye Mr Loser” illegally. Interesting to see if more private cinema will be forced to clean up their act. Hangzhou News – 8 January 2017

China Enterprise ICT Solutions Limited (China Entercom) announced the signing of a strategic cooperation agreement with Dadi Cinema Group (“Dadi”), a trendsetting company in China’s cinema industry. China Entercom will provide Dadi with a comprehensive network management solution including consultation, design, deployment and operations support.  Press Release – 21 December 2016

China film audio description

And finally, another example of volunteers helping blind Chinese people “see” a movie, by providing a real-time live audio description. I only wish that this was being done in a cinema with proper acoustics and seats, instead of a community hall. China News – 7 January 2017

Patrick von Sychowski
Follow me