Wednesday, February 27, 2008

Boom times for Chinese film?

Danwei / Sanlian Life Week : Boom times for Chinese film, but what comes next?

  • 3,527 screens worth 5.1 billion RMB
  • Of the 5.1bn: 1.801bn from box office of domestic made movies, 1.379bn on movie channel shown on TV (i.e. older movies), and 2.02bn export (revenue from overseas) -- in the calculation there is no derivative product income such as DVD (though small due to piracy, should still be something)
  • For box office: 2007 total was 3.327bn (compared with 2.62bn in 2006 and 2.046bn in 2005 -- a growth of over 20% p.a.), for 5 consecutive years domestic films have surpassed import in box office - i.e. over 50% (1.801/3.327), but I don't know whether "Lust, Caution" is counted as domestic or 'foreign/HK/Taiwan" in the above stats
  • 18.01亿元,这是2007年国产电影全年票房收入。如果加上国产电影海外收入20.2亿元以及电影频道播出收入13.79亿元,2007年国产电影的总产值应该是51.82亿元(不含音像制品)。去年,电影总票房是33.27亿元,国产电影已经连续5年在总票房上超过进口大片。2006年电影票房 26.2亿元,2005年是20.46亿元,电影票房平均每年以20%的速度递增。
  • 目前城市主流院线一共有34条,2006年只有“上海联”这一条院线年票房达到3亿元,2007年有5条院线年票房超过了3亿元,过亿元的院线一共8条。去年影院建设方面,新增银幕493块,新增影院102家,目前一共有 1527家影院,3527块银幕。去年国产电影的产量是402部(全部是故事片),这还不包括专门为电影频道拍摄的100多部数字电影,如果加在一起,一共有500多部故事片。从这几年国产电影的增长趋势和占有的市场份额可以得出一个结论:国产电影市场形势一片大好,这些数字无疑让从事电影的业内人士感到踏实。由于国产电影市场化起步晚、底子薄,它的上升空间巨大。中国电影发行放映协会副秘书长耿西林女士预计,未来5年内,中国的电影票房将突破100亿元,成为继电视剧之后又一个获得市场成功的娱乐产业。

What does this mean?

3.327bn/3527 = 943k/screen = 2584 /screen/night

In Beijing, e.g., the movie ticket cost 50-70 Yuan (!!! yes, that is right, almost as much as that in HK). But it is cheaper in other cities and other cinemas (eg, 20-30 for Kunming). Therefore 2584/day means 100 people/screen per day (assuming 25/ticket), which is very small considering there are more than one show per day on average.

My personal experience:
1) Had been to a 1030pm movie on Sunday night in Oriental Mall in Beijing, we are the only audience there and had the whole screen for ourselves. The movie title was "CJ-7"
2) It seems the cinema was only clos to sold out during prime hours (600-830) on Tuesdays (when there is 50% discount promo)

Therefore, my observation and inference has been that something is wrong in the pricing. When you price a goods so high that the mass market cannot afford, there will be significant growth at income rises. Therefore, the 20%+ growth in the past 3 years, I venture to speculate, is largely due to more people crossed the income thresold and the ticket begin to become affordable to them, rather than "the movies were better made", as the reporter suggested.

I also dare to speculate, if the price has been cut by, e.g. 30%, the box office could have a growth much faster than the 20%+ p.a. However, price elasticity is a very tricky game. One really needs to try it out to find out the answer. The Tuesday sales boost could mean the inflexion point if somewhere under 50% but this may not be true, because the Tuesday audience could come from those who would otherwise go on Monday/Wednesday.

What the movie industry in China could do is to experiment a 'promotion' in a medium size city, to test the impact of different discount rates to the total box office income. (Here I assume that (non-pirate) DVD income is minimal such that there is no significant impact due to larger box office audience). An alternative is to experience with an "auction" to certain movie, but this is hard to implement technically.

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