Movie magic

Customers at a Zhengzhou cineplex wait for their turn to watch a movie. Sha Lang / CFP

Nation's theater business is booming as more Chinese take to the cinemas. Liu Wei reports.

Twenty-nine-year-old Shao Yan's earliest memory of a cinema is a hall filled with hundreds of people. In 1980s China, a cinema had just one auditorium. Sitting on wooden chairs, viewers would talk and laugh and leave a thick layer of sunflower seed hulls on the ground.

Now Shao works in Beijing, a city with more than 80 cineplexes, often located in big shopping malls. Popcorn and cola have replaced sunflower seeds even as the auditoriums have become smaller and more comfortable. Going to the cinema is now just part of the whole shopping and eating-out experience, with two hours in a theater rounding off a day's outing.

What has grown rapidly in recent years in China is not only the comfort levels in cinema theaters, but also their number and scale.

A total of 313 new theaters were built in 2010, with 4.2 new screens opening every day. The country now has 6,200 screens, as against just 1,581 in 2002.

Investors are making a beeline for a slice of this booming business. Real estate giant Wanda has built 66 theaters around the country in six years, while film studio/distributor Bona Films has increased the number of its cinemas to 21 in three years. Huayi Brothers, a studio with such smash hits as Aftershock and If You are the One under its belt, has also jumped on the bandwagon, building three theaters in 2010.

Driving this momentum is the soaring box office. According to the State Administration of Radio, Film and TV (SARFT), the country's top regulator of the industry, China's box office revenue reached a record 10.17 billion yuan ($1.5 billion) in 2010, a 63.9 percent increase over the previous year.

Since 2003, China's box office earnings have been growing at an average annual rate of 35 percent. Blockbusters such as Avatar and Aftershock have become the talk of the town. Among the 260 local films and about 20 foreign productions screened in 2010, Avatar grossed 1.3 billion yuan, while Aftershock raked in 670 million yuan.

"Such films work as free advertisements for the cinemas," says Huang Qunfei, general manager of Beijing-based theater chain New Film Association Company. "Many people, especially the older ones who seldom go to the cinemas, have picked up the habit again."

Huang and his fellow cinema managers are thrilled at the surging revenues. At present, nearly 50 percent of a film's box office gross goes to the cinemas, with the production company taking 40 percent and the distributor, 10 percent.

"I expect more than 10,000 screens by the end of 2011," Huang says.

Even so, this lags way behind the United States, which has 40,000 screens.

"We still need more cinemas, especially in the small cities and rural areas. I think 30,000 screens would be adequate to meet the needs in urban areas."

The government shares these projections. In a press conference in January, director Tong Gang of the State Film Bureau said, "We still do not have enough modern cinemas and screens, especially in the middle and small-sized cities".

The boom in theaters is also attracting foreign capital.

China allows foreign investors to set up theaters in the country only through joint ventures with local companies. Before 2004, foreign investors were allowed a 49 percent stake in the joint venture. In 2004 the government eased the rules to allow as much as a 75 percent stake in selected cities. But in 2005 it reimposed the upper limit of 49 percent, and that stands to this day.

Warner Brothers, which planned to set up 30 cinemas in China, quit the country's theater business the very next year the government resumed the 49 percent limit, but some have chosen to stay.

According to the Financial Times, IMAX has raised the number of cinemas planned in China by 15 to 96, and Lotte Cinemas of South Korea is planning to build 30 theaters in the country in 2011. South Korea's Orion Group, which owns two cinemas in Beijing, will build one more theater in Shenyang in Northeast China in 2011.

"The Chinese film industry experienced a slow season around 2003, but people always need access to entertainment," says Han Chunhui, a senior executive of Orion's theater business in China. "Watching films has proven popular around the world. And we have seen a strong rebound here."

Some remain unmoved, however.

Wang Changtian, president of film and TV studio/distributor Enlight Media, is one of those who has kept his distance from the theater business.

"Competitors are many, while the rent is surging," he was quoted as saying in a recent interview. "It is becoming more difficult to choose the right locations. And bigger construction costs mean a longer time to break even."

Huang Qunfei of New Film Association agrees.

"The biggest risk lies in the rent," he says. "In good locations in Beijing the rent can account for 25 percent of a cinema's cost. Food and products sales contribute only a small part of the revenues."

The competition is fierce, with almost all theaters screening the same films.

Han's Megabox theaters are trying to stand out with better service. The two Megabox theaters in Beijing offer to refund viewers' money if they decide not to watch a film at least half an hour before its screening. The theaters also allow viewers to bring their own snacks and soft drinks.

"We hope our hospitality will attract more people," Han says.

Hong Kong Edko Films has taken a different tack, setting up an art house in Beijing. Regular screenings of auteur directors' works have made it a frequent destination of art film lovers.

Bona Films' theaters, backed by the mother company, a successful film producer and distributor, often host film premieres attended by A-listers to attract more viewers.

"Competition is good," says New Film Association's Huang. "Only by intense competition will the quality stand out. This is something the Chinese theater business, which has just started to thrive, has to experience."

Blockbusters such as Avatar have helped boost audiences. Hui Zi / CFP