Soft Power: Cinema’s center of gravity is shifting eastwards
CineAsia is upon us already, the last major cinema conference of the year and a time to take stock. This show has taken on new significance in recent years as it highlights the growth of Asia as a film market and the increasing importance of the region to global cinema. The Asia-Pacific region will account for 40.4% of global box office in 2016 and for 44.9% of global revenues in cinemas in 2019, up from 22.6% in 2000. The center of gravity of the film industry is shifting eastwards, driven on by these developing markets and a relative stagnation in mature Western markets. Between 2006 and 2014, mature cinema markets grew by 15.7% compared to 110.5% for developing markets.
The potential is clearly there in Asia—it is a very populous region of the world and many countries have come relatively late to the modern cinema. Indonesia is probably the country with the highest growth potential for cinema: the world’s fourth-biggest country in terms of population, but 19th in terms of box-office gross in 2014. The equivalent figure was 31st in 2012, which illustrates how that growth has already begun since the appearance of a new major cinema circuit which is doubling the number of screens in the country.
The Philippines is the ninth most populous country, and ranks 29th in box-office terms, while Vietnam is the tenth most populous country in the world but only 49th in box-office terms in 2012, but experiencing growth to the point where it could be around 40th by the end of this year. Thailand is the 14th-largest country by population but only 38th by box office. These comparative statistics serve to underline the growth potential of Asian markets outside China.
However, China is where the focus of attention lies and the reasoning is clear: It is now the largest cinema market in the world by number of screens, overtaking the USA in mid-November 2016 and the box office will follow within two to three years. I have maintained for some time now that global film players will need to adjust their content to take account of Asian audiences and Chinese audiences, in particular. This may include making different version of films for a certain audience, and we can already see some evidence of this localization. However, the strategy of the studios towards visually recognizable characters (particularly superheroes) is also driven by the need for a new type of global film. This is a sea change in the business of providing content for the world’s cinema screens.
Asian companies are also displaying global ambitions, not just content to operate in their own backyard. Dalian Wanda controls around 15% of global box office through various acquisitions and is engaged in building a global powerhouse for the film and cinema industries, including the acquisition of blockbuster producer Legendary Entertainment. Korean media group CJ-CGV is also looking outside its domestic market for both exhibition and cinema technology (4DX, Screen X and VR), most recently acquiring Mars Entertainment in Turkey. Chinese company Huayi has invested in U.S. producer/distributor newcomer STX Entertainment, whilst HunanTV is backing Lionsgate’s current slate.
Many Asian audiences are only now being exposed to modern cinemas, opening up their sectors to inside and outside investors to build modern multiplex sites with digital technology at their heart. These provide a brand-new and powerful experience for customers, allied to the powerful experiential nature of new cinema technologies such as immersive audio, HDR, multi-screen formats, immersive motion seating and 4D. The growing middle classes of Asian countries are largely embracing this form of mass entertainment. This can be seen from where these technologies are being adopted. For example, China can be considered the spiritual home of IMAX now, its largest single market and provider of a third of its global revenues, and new technology-driven cinema like Premium Large Format, 4D and Immersive Motion Seating, and RGB Laser are proportionally more prevalent in Asia than in most other regions.
Asia is the new battleground of cinema growth, forcing studios and other global players to adjust strategies and content and forming the basis of a new reality in the film business. As cinema evolves into its digital future, Asia is here to stay and the region is starting to call the shots.