Country will have 60,000 in 5 years

With China building more and more theaters, cinema chain operators reckon that in five years, the country will have 60,000 screens, turning the focus onto content to keep the biz simmering.

The strong rise in Chinese B.O. last year to $1.5 billion was driven by the surge in the number of cinemas, many of them housed in the glittering shopping malls springing up in first-tier cities like Beijing and Shanghai but also in second- and third-tier cities.

“This year, China will have 9,000 or 10,000 screens. But the development of cinema lines is faster than the development of content in the Chinese film market at this stage,” Qin Hong, chairman of SMI Corp., told a forum at the Shanghai Film Festival.

Not that long ago, China’s theaters were drafty, uncomfortable places where one could watch propaganda movies. Nowadays, cinemagoing is something the post-1980s generation does as a lifestyle option, and a reflection of this new habit is “Avatar’s” $200 million gross in China, second-highest in the world.

The rate of theater construction in China is phenomenal. Last year the country added 313 theaters and 1,533 screens for a total of just over 6,200 screens. Roughly three 450-seat theaters were being constructed every day, although three-quarters of Chinese cities still don’t have decent facilities. And the current number of screens translates into about one for every 200,000 people vs. one per 9,000 people in the U.S.

The usual forecast is that the screen count will more than double by 2015 to more than 16,000, but execs in Shanghai are more aggressive. In three years, there will be 30,000 screens and in five years 50,000-60,000 — approaching where the screen count should be, said Zhang Baoquan, prexy of Antaeus group. His group averaged 4.2 new screens a day last year.

A major factor in the rise of the market in China has been digital distribution. When “Founding of a Republic” was released two years ago, 35% of distribution was digital, but for the release of last year’s hit “Let the Bullets Fly,” 70% of the screens were digital.

“Digital screening has also lowered the investment threshold. Because of digital distribution, audiences from second- and third-tier cities are returning to the cinema because they can see the films at the same time as in big cities,” Zhang said.

The next step would be to shift revenue streams. While B.O. takings are the main revenue source now, other areas such as advertising need to be developed.The theater operators plans are aggressive. Liu Ming, GM of the Shimao Cinema Investment Co, said his company was linking up Dolby and Christie to build more modern and interactive i-cinemas around the country.

The group expects to have 60 multifunctional theaters and 500 screens within five years, with e-commerce facilities and a display area for product promotion, targeted at China’s cash-happy youth.

The increase in the number of cinemas will lead to greater attention paid to film production, said “Beijing Bicycle” helmer Wang Xiaoshuai.

“The needs of the audience are becoming more varied and the market will offer more choice. In three to five years when there are pretty much enough screens for the market, there will be a need to differentiate the audience and this gives huge space for film creators,” said Wang.

“Directors should start planning now so the new screens will have more variety and the audience has more ways to enjoy films,” he said.

The average ticket price was coming down to around 35 yuan to 40 yuan ($5.40 to $6.17) and auds were becoming more sophisticated, said Ye Ning, g.m. of Wanda Cinema Line.

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