3D, digital conversion fuel optimism in Asia

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The Asian exhibition scene is a strong growth story with a few caveats mixed in, and though digital conversion and 3D are now stirring the mix, the concoction remains a familiar one.

The past decade has seen large numbers of multiplexes built across the region. This has helped increase absolute screen numbers, lift the number of films released and allowed ticket prices to rise as new facilities replace smaller, older premises.

While Korea and Singapore may now be approaching saturation point, the region as a whole is still under-screened, according to conventional measures like screens per head of population. China, India and Malaysia are notably low.

Similarly, cinema visits per head in many territories have plenty of room to grow to catch Korean, Singaporean and Australian levels.

Around the region, exhibitors will be keen to weigh the effect of "Avatar" in 3D. Capacity has been added rapidly in order to screen James Cameron's juggernaut, but it remains to be seen whether premium pricing and unique selling points can be maintained when more screens are 3D equipped. To date, not enough locally made, live-action films have been delivered to know whether the 3D adventure is a bubble or a long-term boon.

One thing a digital kit can do for exhibitors is allow more territories to effect day-and-date releases of Hollywood and regional blockbusters. That may become ever more a necessity as the MPA members, and Disney in particular, seem willing to shrink theatrical windows by bringing forward online and DVD launches.

"HD quality downloads, legally available via set-top boxes, are a clear and present danger for exhibitors," says Kurt Rieder, UIP's former head in the Asia region, who last month joined exhibition industry consultancy Artisan Gateway.

The following is a look at state of exhibition in five key Asian markets.
-- Patrick Frater


CHINA

Chinese 2009 real estate rebound saw prices, sales and construction rise alongside bank loans. By October, government data showed real estate investment up 18.9% on the year.

Add pent-up demand for new entertainment and a growing urban middle class willing to spend as much as 200 yuan ($29) for tickets and refreshments and you've got the makings of a movie exhibition boom.

As China's urbanization quickens, malls anchored by multiplex cinemas multiply. About 110 new theaters and 600 screens will, by New Year's Day, add to China's 2008 totals of 1,545 and 4,097, respectively.

While Beijing, Shanghai and Guangzhou cinemas struggle to fill every showing, second-tier markets are fierce new battlegrounds for at least 20 strong cinema circuits. And though the top 10 circuits command nearly 80% of the boxoffice, there's still plenty of room for newcomers.

Elsewhere, Jimmy Wu, chairman of startup Lumiere Pavilions, opened a 30 million yuan ($4.4 million), 11-screen, 15,000-seat cinema in September in Hangzhou. The biggest challenge, Wu says, isn't selecting a site or getting equipment but finding professional managers.

Another new player is Huayi Brothers Cinemas, a unit of Huayi Brothers Media, China's first listed movie company, whose October IPO on the new Nasdaq-style market in Shenzhen bolstered plans to build 15 theaters over five years.

Liu Yang, business development manager and a veteran of Taiwan's CMC Entertainment, says that HBC will invest 130 million yuan ($19 million) in new, full-experience, VIP cinemas across China. Operations director Eve Lai comes from Golden Village of Singapore.

"Huayi may not yet have street cred in this sector yet, but by choosing selective high-profile sites and tackling new markets, we'll grow fast," Liu says. In 2010, HBC plans to open two cinemas in Chongqing and one each in Shanghai, Beijing, Shenyang, Wuhan and Yangquan. Another site in Chengdu is set for a 2012-13. 
-- Jonathan Landreth


HONG KONG

The talk in the exhibition sector a year ago was that 3D would be the next big thing, and so far that appears to be true.

While the number of 3D screens in Hong Kong has been growing exponentially through the year, at press time no one is actually sure how many 3D screens there are in the territory, as the number seems to change by the day. Even Fox -- distributor of "Avatar," scheduled for a Dec. 17 release -- is at a loss as to how many 3D screens there exist. "We'll release it on all of the 3D screens" has been the line given by every distributor with a new 3D adventure out.

Eighteen months ago, when "Journey to the Center to the Earth," the first high-profile 3D release came out, there were 10 3D screens in the region. Now the latest 3D release, Disney's

"A Christmas Carol," is screening on the 30 3D screens the city has to offer, plus one Imax screen, which is owned by UA Cinemas.

"The competition in Hong Kong is fierce, the 3D market will soon be saturated," says Vicky Wong, UA Cinemas deputy GM and chairman of the Hong Kong Theatre Assn. "So to have Imax is both good for business and for branding."
-- Karen Chu


INDIA

The film business in India started off with a disastrous first quarter in which the sector lost an estimated $65 million as producers and exhibitors faced a standoff over revenue-sharing rights leading to a monthlong strike in May. When multiplexes finally opened with backlogged releases scrambling to make up for lost time, a string of boxoffice duds followed, like the big-budget caper "Damn Love," which couldn't be saved by a Bollywood-Hollywood cast that included Sylvester Stallone and Denise Richards. Similarly, the mega-budget underwater drama "Blue" tanked despite a cameo by Kylie Minogue.

But these hiccups didn't deter Mexican multiplex major Cinepolis from unveiling its India plans, for which the company says it will invest about $78.5 million to launch 110 screens across eight cities during the next three years. The first Cinepolis location opens in December in the North Indian town of Amritsar, while the company recently pacted with the distribution arm of veteran Mumbai-based Bollywood banner Mukta Arts to handle its Indian film sourcing. India is still considered an under-screened market with an estimated 11,000 screens serving an estimated 1.5 billion admissions annually.

The shift to digital is seen as a major evolution considering India already has a base of 2,785 digital screens, of which a majority of more than 2,500 are E-cinema systems, which are considered a low-quality (and hence cheaper) alternative to Hollywood's DCI (Digital Cinema Initiative) 2K image quality standards.

According to Mumbai-based Scrabble Entertainment, which markets DCI equipment here, India will have 200 DCI screens at 60 cinemas in time for the highly anticipated December release of "Avatar."

Not surprisingly, Hollywood studios have taken the lead in testing 3D versions of such recent releases as Disney's "Up," Fox's "Ice Age: Dawn of the Dinosaurs" and Warners' "The Final Destination."

"Digital is the way to go especially for 3D and 'Avatar' will be a major boost in this respect for which about 55 screens India-wide will also be 3D enabled," says Scrabble MD Ranjit Thakur. "Already some Indian films are also in the works which will have 3D versions."
-- Nyay Bhushan


JAPAN

With overall boxoffice takings likely to be around the ¥200 billion ($2.3 billion) mark again this year, the Japanese market remains the world's second largest, though prospects for growth are limited. Exhibitors have been feeling a prolonged, if gentle, squeeze from a gradual increase in screens combined with a steady decline in average ticket prices. Admissions have held steady at about 160 million for the past five years, but the population is both rapidly aging, and has already begun shrinking.

Toho, along with dominating distribution, is still the largest exhibitor with more than 550 screens, which are steadily being digitized. Along with digitization comes 3D, which is finally making its presence felt after a number of false starts. There are now about 150 3D-capable screens nationwide, and the first domestic, and Asian, 3D live-actioner, "The Shock Labyrinth," opened on nearly 100 of them in October. The horror flick from Takashi Shimizu ("The Grudge"), posted good per-screen averages according to distributor Asmik Ace.

"The per-screen figures are good in part because ticket prices are higher, at around ¥2,000 ($23)," says Asmik's Joe Ikeda. Average admission for regular films is closer to ¥1,200 ($14). The December release of "Avatar" should spread the 3D gospel wider, and more domestic productions are likely, Ikeda believes.
-- Gavin Blair


SOUTH KOREA

The rise of ticket prices at Korean multiplexes combined with the success of local blockbusters has led to an overall rise in theater revenue this year.

A report by the Korea Film Council, the country's government-supported film body, shows that local theaters took in 328.7 billion won ($281 million) in sales, their highest-ever earnings in the third quarter, largely thanks to the increase of ticket prices in June at most multiplexes here. The two summer blockbusters hits -- "Haeundae" and "Take Off" -- have also helped to hike up the overall theater revenue.

The continuing challenge within the Korean film industry appears to be the online piracy of films. In July, Korea became the first country to adopt the controversial three-strike law, which is aimed at punishing service providers and heavy uploaders who circulate unlicensed films on the Web.

Despite the tightened law and a committed effort of the movie industry as a whole, grim incidents of online piracy continue to distract the healthy circulation of the local ancillary market.

Months after the hit disaster film "Haeundae" had been leaked online, CJ Entertainment, one of the country's largest distributors, announced that "Thirst," director Park Chan-wook's latest vampire flick, is also floating around on file-sharing sites, spoiling the sales of the film's DVD release.
-- Park Soo-mee
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