Business

The lure of the silver screen looms ever larger

By Bao Chang (China Daily)
Updated: 2010-11-01 16:27

Audiences watch screens before choosing a film at Hengdian Movie Center, Henan province. [Sha Lang / For China Daily]

Takings to exceed 10 billion yuan in 2010, a 60 percent rise over 2009

BEIJING - Decorated with lanterns and colored ribbons, Shanghai's Xuyuan, or beautiful park, in the 1890s was the place to go to enjoy dancing, singing and other amusements at a time of peace and prosperity.

It was also the setting for the first Western film, or Xiyang Yingxi, shown in China, on a night in August 1896, and it started a craze that has got bigger just about every year since.

Now, Chinese filmgoers' appetite for Hollywood blockbusters and domestic films has pushed Chinese box office receipts to an all-time high.

According to the China Film Producers Association (CFPA), takings hit 8 billion yuan ($1.2 billion) for the first nine months of this year and are set to reach more than 10 billion yuan for the whole year, a 60 percent increase compared with 2009.

CFPA also predicted that Chinese receipts will reach 40 billion yuan by 2015, putting the country second only to the United States.

The cinema market has developed at an unprecedented speed, fueled by media companies establishing new cinemas to bring an increasing number of dramas to the silver screen.

Cinema building

Wanda Movie Theater, one of China's largest cinema chains, plans to build more than 70 cinemas by the end of this year and make it more than 120 by 2012, aiming to generate revenues of 3 billion yuan.

Wanda currently operates 52 movie theatres with 400 screens around the country. It achieved box receipts of 1 billion yuan for the first nine months this year, ranking it top within the industry.

"Looking into the future of China's cinema market, we see a vista of limitless promise," Ye Ning, general manager of Wanda said.

Poly Film Investment Co Ltd will open one cinema nearly every month in cities including Beijing and Guangzhou until June 2011 to expand its business in the world's second largest movie market.

Over the next three years, Poly plans to build 100 cinemas in China. "Poly is also considering a listing on the stock market in 2011 and it will succeed if nothing goes seriously wrong," said Liu Debin, general manager of Poly Film.

The Poly chain anticipates box office receipts of 200 million yuan this year, 70 percent higher than last year. Liu said he expected the company to earn as much as 700 million yuan in revenues over the next three years.

According to Liu, two of the most important factors in running cinemas are location and the internal environment. He plans to spend 30 percent of the investment on cinema decoration.

Jackie Chan Cinema, jointly owned by the film star and Beijing Sparkle Roll International Cinemas Management Co, has its own unique style of attracting customers.

"With several wax figures of Jackie Chan welcoming customers in the lobby of the cinema, I'm sure movie audiences will have a different but happy experience in our cinemas," said Zhao Rui, vice-president of Jackie Chan Cinema.

"We aim to make watching movies in cinemas more affordable," she added. Jackie Chan Cinema will open more movie theaters in second-tier cities in China next year, including Shenyang, Changzhou, Guangzhou and Taiyuan. The number of screens is forecast to almost triple from the current 4,500 to 12,000 at the end of 2016.

Despite the apparent enthusiasm for cinema construction, some are worried that it is becoming indiscriminate.

"Investors without any industry background and professional knowledge are increasingly streaming into cinema investment, creating haphazard competition within the industry," said Liu from Poly.

Bidding prices have shot up at good locations. Property owners inevitably choose the investor offering the highest price even though he or she doesn't have any experience in the market, he added.

"The fierce competition will create nothing but a big loss for those investors who are not familiar with the industry but invest a lot before taking wise counsel," Liu said.

At present, the rental for a property suitable to establish a cinema in Beijing is more than 10 million yuan a year, nearly 20 percent of a cinema's box office receipts.

Market potential

The high level of investment interest is being spurred by the industry's big potential. A survey by research firm EntGroup Inc shows that 30 times more people in the US go to the cinema than in China, a gap investors are keen to close.

However, Zhao from Sparkle Roll is suspicious of the findings. "Only a part of Chinese society is able to watch movies in cinemas and that doesn't include the rural population. So we have to consider the local conditions when predicting the potential of a market," she said.

She added that the gap between the US and China was not so big if only urban residents were counted.

There were 620 million people living in China's cities by the end of 2009, 46.6 percent of the nation's total population. This was an increase of 163 million from 2000, according to the 2010 City's Blue Book issued by the Chinese Academy of Social Sciences and the Social Sciences Academic Press. By 2015, it is estimated urban residents in China will make up about 52 percent of an even higher total population.

A survey by Wanda showed that only 9 percent of city residents watch movies in cinemas, while 70 percent prefer to watch films through the Internet and on DVD. Twenty percent of residents rarely watch movies.

"The 90 percent (of non-cinema-goers) are all our target customers so the potential is huge," Ye from Wanda said.

At present, revenues at cinemas come mainly from box office receipts, half of which is distributed to cinemas, 20 percent to distributors and 30 percent to the movie producer.

"We need to make more movies of different types and themes to attract audiences as much as possible," said Zhang Jiarui, director of Distant Thunder, one of the most popular films at the Hong Kong International Film Festival.

Zhang expects his film will make more than 10 million yuan this year. He is famous for directing low budget art house films. Distant Thunder cost 5 to 6 million yuan to produce.

Foreign blockbusters are also believed to be a catalyst for China's fast-growing box office receipts. James Cameron's Avatar accounted for 18 percent of China's total box office revenue for the first nine months of this year, according to the State Administration of Radio, Film and Television.

"To be more attractive when competing with foreign films, Chinese directors should draw a story tailored to the tastes of global audiences instead of just the Chinese," Zhang said.

China Daily