A Vibrant Market: Asian cinema sector maintains growth trend
The Asian cinema market as a whole had another good year in 2017. There were nearly 4.5 billion cinema admissions in the region, an increase of 7.6% over the previous year. In numerical terms, this was driven mainly by the return to growth of China (which grew 18% in the year) and to a lesser extent India (at 2.5%). These two countries dominate the admissions count in the region, accounting for 80% of the total, although a more restrained 60% of box office.
The difference between these two major economies in cinema terms is that India’s cinema infrastructure is adapting much more slowly than China’s, which was effectively starting from scratch. We estimate there are still over 9,500 screens in India, and while the older single screens are closing and reducing in number over time, the switch to a modern screen and site environment is comparatively laborious.
Outside of China and India, the Asian market is split into those countries that have longstanding mature cinema sectors, often with high per-capita attendance, and the newer, restructuring markets that are a source of growth for the global market and in the process of providing modern cinema environments for their populations.
In the former category, we find some of the highest average visits per head in the world, such as South Korea (4.3), Singapore (3.4), Australia (3.5), New Zealand (3.4) and Hong Kong (3.3). The only one of these that has fallen significantly over the past five years is Singapore (which stood at 4.0 in 2013), as admissions have plateaued while the population has grown year on year. These are stable, mature cinema economies that have long been part of the global cinema economy. Screen growth tends to be slow and steady as cinemas are closed, built and refurbished, although both Singapore and South Korea have seen a recent resurgence in screen growth after a lull. Contrarily, after some years of good box-office growth, South Korea is going through a leaner period, with an average growth of 0.8% over the past four years compared to 8.8% for the four years before that. For Singapore, even though the number of screens has risen by a quarter since 2000, the number of admissions has remained stable.
In the higher long-term growth countries, there are several that are undergoing a transformation of their cinema sectors, with the resultant screen growth that ensues. These include Indonesia, Malaysia, Vietnam, Laos, Cambodia and Turkey. Some of these are large potential markets, but Indonesia in particular has the potential to become a major cinema market as I have identified before in these pages. The country has a population of over 260 million people, double that of Mexico, and still only has 1,500 cinema screens compared to over 6,600 for Mexico. The Mexican company Cinépolis, which has entered several countries including India and the USA, has also spotted this growth potential and recently partnered with local developer Lippo group, the owner of Cinemaxx, to grow the circuit in the country. This is aiming to push up a national box office of around $340 million in 2017.
No discussion about Asian cinema can ignore China for long. The country has fast become a global player, the second-largest box-office market for now with the highest number of cinema screens (well over 57,000), and even if the global ambitions of key players are cooling or taking time to put in place, the sheer size of the cinema sector means that it is a key area for growth for those companies that operate globally: Studios and technology companies are chief amongst them. However, even though the welcome return to growth has soothed a few nerves, there are still decisions to be made about China’s place in the global economy, not least in China. Wanda’s early optimism about playing a global role has been adjusted downwards to some extent, and the trade issue still rumbles on, with the quota and overseas studio share the central decisions pending. Although, as IHS Markit research has shown, the quota has been stretched upwards slightly when needed, so this pragmatism may mitigate any fear about the future.
The Asian cinema sector has come a long way in the past decade, with digital cinema sparking an initial fuse and the investment potential maintaining a healthy momentum. It can only be a good thing for cinema that it spreads as wide as possible, and Asia is most definitely at the forefront of this trend.
David Hancock is research director, film and cinema, at IHS Markit.