UA Cinema expands further in China as box office rises

Blockbusters, booming box office drive cinema business in China, Hong Kong

PUBLISHED : Friday, 16 October, 2015, 8:52am
UPDATED : Friday, 16 October, 2015, 12:22pm

Despite competition from DVDs and the internet, UA Cinema remains in expansion mode in mainland China where booming box office receipts means the country is on the track to overtake the US in 2017 to become the world’s largest movie market worldwide in 2017.

Ivan Wong Chi-fai, managing director of UA Cinema and Lark International Multimedia, said the cinema business outlook remains positive as the box office in both Hong Kong and mainland China are on a rising trend the past five years and the trend will continue shooting higher.

Credit Suisse analyst David Hao predicts China will overtake the US as the No.1 movie market worldwide in 2017 in terms of box office

“People could watch movies via their computer or mobile phone nowadays but the experience of sounds and visuals could not compare with watching the movie in the cinema. This is particularly the case for the 3D movie and Imax cinema,” he said.

UA Cinema, the largest cinema firm in Hong Kong which has been operating for 30 years, has 10 cinemas with multiple screens and a total of 7,832 seats in the Hong Kong. This includes 4 Imax theatres.

In mainland China, UA Cinema has opened two new cinemas in the mainland this year, with one in Shanghai and one in Zhuhai, bringing its mainland cinema number to 10, including 4 with Imax screens. The total number of seats in China is 12,048.

Wong said UA plans to selectively open a small number of new cinemas in the mainland in prime locations and cutting edge technology.

“We plan to focus on the premium market so we compete with the best technology and high quality of services,” Wong said.

Credit Suisse analyst David Hao predicted China will overtake the US as the No.1 movie market worldwide in 2017 in terms of box office.

In China, the box office grew at a 40 per cent compound annual rate for the period of 2009 to 2014 to reach 29.6 billion yuan last year (HK$36.09 billion).

Credit Suisse expects the growth rate in the mainland would be at 20 per cent over the next five years and reached US$16.1 billion in 2020.

“Movie cinemas are the biggest beneficiaries in the box office boom,” Hao said in the research note. “In addition, as admission growth is the main driver of box office, the increase in human traffic presents tremendous non-box office opportunities for cinemas to monetise in the form of advertising, membership, concessions, and more.”

Hong Kong, though a much smaller market than the mainland, has also seen a rising box office number. There were HK$984 million tickets sold in the first half of this year, up 15 per cent than a year earlier, thanks to a slew of blockbusters such as Mission:Impossible – Rogue Nation, Minions, and Jurassic World.

With new movies like the latest James Bond and Star Wars 7 opening in November and December, Wong believe the box office in Hong Kong this year will hit HK$2 billion, up from HK$1.65 billion last year, HK$1.63 billion in 2013, HK$1.56 billion in 2012. The box office in 2011 was HK$1.39 billion and HK$1.34 billion in 2010.

“I am looking forward to Star Wars: The Force Awaken at the end of this year because Star Wars was the first movie I watched,” he said.

Even with a rising box office, the number of cinema in the city has declined. A report by the Theatres Association last year set out a stark fall in the number of cinemas. While there were 119 cinemas offering 121,885 seats in 1993, that figure had collapsed to 47 cinemas with 37,420 seats by last year.

High rent is a challenge that UA Cinema at Times Square in Causeway Bay moved from the ground floor to the 12th floor to make way for a Tiffany & Co store in 2012.

Wong said besides high rent, it is hard to find new shopping malls to open new cinemas in Hong Kong while there are more opportunities in mainland China where there were more new shopping malls opening up.

Wong became managing director of UA Cinema last year, taking the post from Bob Vallone who was the man who brought UA to Hong Kong 30 years ago and ran the cinema business for three decades.

Vallone, now 72, became an adviser of the company but he and Wong still work closely to expand the cinema business in both Hong Kong and China.