Cheap seats

“I declare this cinema open”

Back in 2010, action film star Jackie Chan decided to launch a cinema chain. Co-funded by luxury group Sparkle Roll, his flagship cinema made a splash when it opened in Beijing. It became China’s single largest theatre with 17 screens and 3,500 seats. Chan said at the opening ceremony that he hoped the venue would offer “screens for non-commercial films and productions by young directors”.

Perhaps screening too many art-house films was to blame for the cinema’s early struggles (on most days it was empty, says Xinhua). So to lure moviegoers, the theatre started to work with group-buying websites by offering vouchers that could be used to redeem tickets at a discounted price. The strategy worked. Hundreds of thousands of vouchers were bought online and redeemed at the Jackie Chan multiplex, which saw sales reach Rmb80 million ($13 million), the best performing theatre in the country.

Group-buying is not a new concept in China – the model pioneered by Groupon in the US has become popular. It works likes this: once a certain number of people have purchased a deal online, critical mass is reached. The website then collects the money from members and sends out the applicable voucher. It takes a small commission and writes a cheque for the balance to the vendor (see WiC83 for our first mention of the phenomenon).

In China, the sale of bargain movie tickets has surged past spas and restaurants to become the most important revenue generator for group-buying sites. According to aggregator and deals analysts DaTaoTuan, online shoppers paid Rmb2.7 billion for bargain movie tickets last year, accounting for 13.4% of all revenue in China’s group-buying sector. That trend continued this year, with group-buying sites selling more than 16 million tickets – or Rmb445 million worth – in the first two months of the year, says TechWeb.

For cinemagoers, buying tickets on deal sites makes economic sense. The cost of a movie ticket can range from Rmb60 to Rmb100 depending on location. But on group-buying sites it can go for as little as Rmb21, even in prime locations in Beijing. Moreover, the bigger discounts on tickets also narrow the gap on purchasing a pirated DVD, which usually costs about Rmb10 a disc, making it more attractive to go to the cinema instead.

“In the past two years, China’s box office market has maintained a growth rate of 30-40% per year. So people are going to the cinema more frequently, especially in the first- and second tier cities. But from an experience perspective, as long as you choose the right film, which cinema you choose is not the biggest factor. The same can’t be said about restaurants. So that explains why buying movie tickets on group-buying sites has become increasingly popular,” one industry analyst told Business Value, a magazine.

Small wonder, then, that group-buying companies are setting up automated terminals near cinemas, where moviegoers go to pick up their tickets. Meituan, China’s largest group-buying site by market share, says that it expects movie tickets to make up a much bigger part of its business. The site, which saw sales reach Rmb5.5 billion in 2012, says revenues from cinema tickets alone could reach Rmb12 billion in three years.

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