Culture changes, real estate boom cut into plex muscle

BEIJING — Hong Kong cinema is legendary the world over, famous for its depiction of gangsters, its gritty urban dramas, its tales of destiny and revenge, laced with chopsocky and humor.

But trying to watch Hong Kong’s finest movies is getting tougher in the city-state, where a rising real estate market has seen the number of cinemas fall by more than 60% in less than two decades, prompting some leading figures in the biz to express their concern that exhibition in Hong Kong is headed for a crisis in an economy more and more driven by tourists from the mainland.

Due to Hong Kong’s ongoing real estate boom, developers are turning away hardtop operators in favor of higher-paying tenants, usually high-end brands.

The end of January saw the closure of one of Hong Kong exhibitor UA Cinema’s main multiplexes in the Times Square shopping mall, in the Causeway Bay area, a district that regularly pops up on “most expensive real estate in the world” lists.

“As an industry, we are re-examining (ourselves),” says Albert Lee, chief executive of Emperor Motion Pictures. “In the early 1990s, we had 140,000 seats, now there are just over 40,000. All of this has a ripple effect.”

The statistics aren’t pretty. In 1993, there were 119 cinemas, with 188 screens and a total of 121,885 seats. By 2003, there were 57 cinemas with 188 screens and 52,440 seats. And by July, there were 47 cinemas with 204 screens and 39,674 seats.

Between 1993 and 2011, the number of cinemas has dropped by 60%, and seats by 67.4%. Only screen counts increased during the period, by 8.5%.

“Exhibition is a problem in Hong Kong right now,” Lee says. “The UA in Times Square has closed, probably because of real estate issues. Causeway Bay is a big area, but there are probably less than 1,000 seats in Causeway Bay right now.”

UA Times Square had been in the area for 18 years, and it had built a loyal following: shoppers held a candle-lit demonstration at the theater to say farewell.

The theater was one of the most high-profile cinemas in the city, and reportedly the operator, Lark Intl., was squeezed out by a luxury brand; such brands are thriving in Hong Kong because of the huge influx of tourists from the mainland, who are less likely to take in a movie than they are to spend in a high-priced boutique.

While the cinema may re-open elsewhere, probably on a higher floor of the Times Square mall, cinemas clearly are finding it hard to compete.

In the past, cinema-starved mainland tourists in Hong Kong might take in a film but in the last few year, China’s screen count has boomed. Lee notes that on the mainland, real estate companies like Wanda are building shopping malls that include film theaters because they bring in consumers.

The massive expansion in the number of cinemas has fueled a film boom, as the growing middle classes add going to the movies to their lifestyle options.

Last year, more than eight new cinema screens were added every day in mainland China. By the end of the year, the number of screens in cities nationwide had exceeded 9,200, up 33%, while the number of cinemas increased 29% to 2,800.

Orange Sky Golden Harvest Cinemas made an announcement recently that it was buying 200 digital cinema servers from GDC Technology, and the equipment was all bound for the company’s multiplexes on the mainland.

Imax has particularly benefited from the boom. The megascreen exhib has 74 screens in China, with 217 theaters open or contracted to open by the end of 2015.

“What we’re seeing is the upgrading of the Chinese moviegoing experience, and developers are really pushing for the Imax experience,” Imax CEO Richard Gelfond told Variety in February.

This exhibition surge on the mainland has been to Hong Kong’s benefit, since many of the films were made with Hong Kong money or expertise. Moreover, the mainland offers an exponentially larger audience pool.

“From a business point of view, there is no reason why we should not be looking at China,” Lee says.

Still, the diminishing number of local screens does not augur well for Hong Kong filmgoers. Until the early 1970s, the British government, which ran Hong Kong until 1997, considered cinema seats “essential recreational services” like swimming pools or libraries. There was a quota of one cinema seat for every 82 or 83 people.

“Many areas now do not have cinemas at all. This is very worrying,” says Nansun Shi, executive director of Film Workshop and widely recognized as a key player in the Hong Kong biz. “If Hong Kong claims to have creative industries, the engine of which is film as one of its major industries going forward, we would have to address the issue of diminishing cinemas.”

Film Workshop’s latest hit is “Flying Swords of Dragon Gate,” Tsui Hark’s first 3D film, has passed $80 million on the mainland, including $10 million in Imax sales.

But it’s not just about the numbers — it’s a sign of the changing nature of Hong Kong.

Helmer and actor Derek Tsang says a lot of people miss the old theaters with huge screens that could accommodate a large crowd.

“They are the collective memories of Hong Kong cinemagoers, with street-food vendors of all kinds outside the theater,” he says.

“Going to the movie was like a big event back then; but now, sad to say, it is just one of the many different kinds of entertainment fixes people choose to kill time.”

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