The Asian movie exhibition landscape is surely one of the most diverse and contrasted anywhere in the world.
Selection ranges from a Japanese sector clogged by its own success through to the world-beating multiplex heaven of downtown Bangkok to the green-field territories of Indonesia and Vietnam. In between, the world’s two largest developing nations, China and India, are experiencing serious growth spurts of their own.
What they have in common is the potential to transform world box office takings and eventually reshape the thinking of Hollywood and local studios alike. There have been few people happier with the news that “Transformers” is to get a sequel than Asian exhibitors, who saw their turnstiles spinning this summer when that film hit the region. Quite simply, Asia is the area with more cinema upside than anywhere else.
“It is astonishing that in the 10 years since we built our first screen there, China has become our second-biggest territory, not just within Asia but anywhere in the world,” says Don Savant, Imax Corp. managing director, Asia Pacific.
Indeed, the Chinese market for the Imax breed of giant-screen cinemas is big enough that the Canadian-based company has two separate development deals: one with China’s Wanda Cinema for 10 screens and another with Hong Kong-based UA/Lark for a further five in the southern Chinese cities of Guangzhou, Shenzhen, Wuhan and Hangzhou.
Multiplex expansion is now propelling Chinese B.O. revenues ahead by some 30% a year from $250 million in 2005 to $400 million this year, according to data from official sources. Industry forecasters point to the total hitting $900 million by 2010 and almost $2 billion by 2015.
Much will depend on Chinese willingness to modernize not only the fabric of the industry but also its working practices. The Chinese government has quotas on the number of foreign films that can be imported, allows a near-monopoly in distribution, restricts local filmmaking to certain increasingly tired genres and each year imposes three or four blackouts in which only Chinese films can be preemed. This year, one of these embargo periods left theaters empty as no big Chinese pics were ready and only propaganda films got bows.
“Warner getting pushed out of China could, strangely, be one of the best things to happen to the Chinese film industry,” says a senior Asian exec with a U.S. distribution group. “When Chinese companies are raising the issues and saying that their bottom lines are being hurt, the authorities will no longer be able to dismiss the problems such as piracy or lack of a ratings system as simply being foreign-inspired.”
Warner Bros. had been a multiplex pioneer in China, but this year it sold its theaters after being frustrated in an attempt to gain majority control of its investments. Multiplexes are still being built by foreign companies — mostly by more patient Koreans such as CJ Entertainment, Mediaplex and MK Pictures — and by Hong Kong firms including Edko and Golden Harvest. But the shortage is in experience and know-how rather than coin.
Issues in India are similar. Though the country is notably less hostile to foreign involvement, India too has little need for foreign capital. With cinema the dominant form of entertainment, a dozen Indian firms have found stock market investors willing to back ambitious building plans that each call for hundreds of screens to be built in just a matter of years.
The Indian cinema revolution promises to be massive as traditional single-screens are replaced with multiplexes that are already driving up ticket prices, allowing better B.O. reporting and ushering in an era of viewer choice. It could even allow for more Hollywood movies, which now struggle to achieve a 10% share.
Development, however, is linked to the pace of change in India’s centuries-old retail environment. “A lot of (property) developers who promised multiplex shells have not delivered,” says Manmohan Shetty, head of the Adlabs group.
In India and China, transformation is starting in the biggest metropolises and is spreading to smaller cities. And in both territories, one of the ways forward is use of digital distribution. Low-cost e-cinema represents a step forward as it takes modern cinema into areas where ticket prices are lower and where, because of print circulation issues, piracy enjoys a large market share.
Although Asia looks like the B.O. future, issues vary elsewhere in the vast region, with Korea and Japan seeing digital as a savior of flexibility at a time when exhibs are wrestling with screen saturation and shrinkage of the legitimate home entertainment market.