The golden ticket

Delighted her film finally hit the big screen: Yang Caiyu stars in Youth

The end of 2017 may still be 30 days away but China’s media regulator seems keen to bring on the holiday cheer. Last week, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) announced that as of November 20, the country’s box office had topped Rmb50 billion ($7.5 billion), up 19% from the same period last year. And takings look set to rise further in the weeks ahead, with a slew of hot movies set to show.

First, filmmaker Feng Xiaogang will debut Youth, which got pushed back from October (it stars Yang Caiyu; see WiC382). John Woo and Chen Kaige will also premiere their new features Manhunt and Legend of the Demon Cat, respectively. With so many films hitting screens this month, the total box office take could reach Rmb55 billion by end of the year, up from Rmb45.7 billion a year ago.

Foreign film studios are less excited by the box office crush ahead, mind you. As many as 14 imports – including Pixar’s latest animation Coco and the Winston Churchill biopic Darkest Hour – will be showing until mid-December, according to Yiyu Guancha, an entertainment blog. Essentially, that’s one new film release per day.

“Clearly, along with the intense competition with domestic films, there is no way audiences can digest so many imported films in 15 days,” noted Yiyu Guancha. “There might be a handful that will surpass Rmb100 million at the box office, but realistically most of them will make a lot less.”

But that very same crowded schedule is good news for China’s online ticketing services, which now account for nearly 85% of cinema sales – a staggering growth compared with just 30% in 2013, says Big Data Research.

As the country’s box office continues to grow, China’s ticketing platforms have also reached heady valuations. Last week, internet giant Tencent invested Rmb1 billion in Maoyan, one of the ticketing platforms, valuing it at Rmb20 billion. The deal came after Maoyan and Tencent-backed Weiying struck a deal to merge in September, creating a film ticketing giant to take on Alibaba’s rival service Taopiaopiao. After the merger, Maoyan-Weiying controls 51.5% of cinema bookings, while Taopiaopiao has 30.9%, according to market research firm Analysys.

“Tencent continuing to increase its stake in Maoyan suggests that Maoyan and Weiying have completed their integration to create the ‘new Maoyan’. The combined entity will not only have absolute dominance in the online ticketing industry but it will also rapidly expand in film production and other areas,” predicts Wuhan Evening News.

Selling movie tickets is a less glamorous patch of the entertainment sector, but it’s a part of the business that is consumer-facing. Armed with large amounts of user data, online ticketing services have diversified upstream into film investment, marketing and distribution. Maoyan is already using artificial intelligence (AI) to determine which films look like being the biggest hits so that studios can determine how best to spend on promotion and help cinema operators to better plan screening schedules, says National Business Daily.

The ticketing companies also do their bit to drive box office sales. “Since September, Taopiaopiao [the Alibaba platform] has launched many events and activities to get audiences to go to the cinema. It has also offered a lot of its Big Data to cinema operators and studios so the marketing process, which was not standardised, could become more technical. Overall, it could vastly improve the efficiency in selling tickets,” says 36Kr, a tech news portal.

One of Taopiaopiao’s biggest successes was patriotic drama Wolf Warrior 2, which went on to become China’s highest-grossing film ever. The online platform not only accounted for more than 40% of the film’s sales, it also acted as one of its distributors. Maoyan, too, produced and distributed Never Say Die (see WiC384), the biggest box office winner during the National Day holiday in October.

Of course, Tencent and Alibaba have businesses that stretch far beyond the film sector. “The two tech giants are not satisfied with using their online ticketing platforms for access to the film industry. What they are trying to do is to incorporate them into their ecosystems and as building blocks for their pan-entertainment industry,” says National Business Daily.

The ‘pan-entertainment’ concept – currently a buzzword in China tech circles – refers to multiple levels of ‘offerings’ based around entertainment brands in online games, television dramas and films. Tencent can adapt an online game into a film, for instance, and then merchandise it and even build an amusement park around it.

According to the Ministry of Industry and Information Technology, China’s pan-entertainment industry was worth about Rmb415 billion in 2016 and it grew 15% to reach Rmb480 billion by the end of this year.

That also explains why neither firm is too bothered by the fact that the online ticketing business is yet to generate a profit. According to the financial statements of Alibaba’s film subsidiary Alibaba Pictures, internet marketing – where Taopiaopiao’s income is booked – lost Rmb363 million in the first half of this year. Although Maoyan doesn’t disclose its financial results, industry insiders think it is heavily lossmaking too.

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