Wanda Cinemas 2016 income jumps 39pc as ancillary sales more than offset flat box office growth
Merchandise, snacks and advertising help chain weather industry slump
China’s largest cinema chain Wanda Cinemas fended off the gloom of the country’s stalled box office growth thanks to robust sales of merchandise, advertisements, as well as popcorn and soft drinks.
The cinema offshoot, under the watchful eye of China’s richest man Wang Jianlin, saw income for 2016 climb 39 per cent to 11.1 billion yuan, beefed up by a more than doubling of revenue from goods and services that did not involve film ticket sales.
The growth came despite an expansion of only 3.73 per cent in China’s film market for the same period. Two national holiday weeks saw contractions in box office receipts, as many big budget films failed to break even on their production costs.
However, in-house sales of snacks such as popcorn, soft drinks and other junk food that are much more expensive to buy than at outside retailers, helped Wanda increase revenue while weathering the film industry slowdown.
The cinema giant has also reaped the benefits from its hefty investment in merchandising sales of film-related products, while paid commercials screened before each film also contributed to growth.
In July, the Wanda Group offshoot agreed to spend US$350 million to buy Mtime, one of China’s top movie e-commerce and ticketing portals,which has the merchandising rights for Hollywood studios such as Disney, Warner Brothers and Universal Pictures.
Zeng Maojun, president of Wanda Cinemas, told mainland media in November that there was a plan to open 50 to 60 outlets across China selling film-themed products, revealing that merchandise sales had already accounted for about 20 per cent to 25 per cent of the company’s revenue.
During 2016, Wanda led an aggressive build out that put the mainland ahead of the US in terms of cinema screens for the first time. As many as 1,391 screens were added across Wanda’s network last year, rivalling the number installed during the company’s first decade of expansion, Wang said in a speech at the weekend in the central Chinese city of Hefei.
“Over this coming year, people will see how big a boost the new screens will give us,” Wang said.
In recent years, the billionaire tycoon – who amassed his fortune from property development – has shifted his focus on to the film business.
Following a worldwide buying spree of theatre chains and studios that added AMC Entertainment Holdings, Legendary Entertainment and Odeon & UCI Cinemas Group to his stable of companies, Wanda now operates the world’s largest chain of cinemas with a combined 12 per cent market share.
“Wanda today is the No 1 cinema house across Europe, North America and China ... we shall strive to lift our global market share to 20 per cent by 2020,” Wang said.