There have been more than 8 mergers and acquisitions by theater giants this year. Where will the cinema usher in the wave of mergers and acquisitions?

After the scale of ticket subsidies shrank, the demographic dividend dropped, and the market bubble was squeezed out, as competition in the region intensified, theaters became increasingly difficult to survive, and theaters launched a merger model. Although the integration of theaters will bring more standardized operation and management and a better movie-watching experience, thinking about how to do a good job in the film market itself is still the key.

"The rapid increase in the number of theaters and the slowdown in box office growth trend have led to" three cinemas in one region that could do well, but now there are ten cinemas, and the overall box office has increased, but each cinema either loses money, earns less, or profits have dropped. "Wu Siyuan, founder of UME Cinema, said at the 3rd Zhejiang Youth Film Festival Summit Forum on October 20.

After the scale of ticket subsidies shrank, the demographic dividend dropped, and the market bubble was squeezed out, as competition in the region intensified, theaters became increasingly difficult to survive, and theaters launched a merger model.

The wave of cinema mergers and acquisitions has begun

. In recent months, cinema mergers and acquisitions have become a hot topic in the industry. According to statistics, there have been at least 8 small-scale and multi-frequency investments and acquisitions by giants this year.

1. Perfect World acquires Jindian Cinema

Earlier this year, Perfect World acquired 217 theaters under Jindian. US media reported that the booming growth momentum of China's movie box office may be cooling down, but another trend may be on the rise: mergers.

2. Alibaba Holdings Hangzhou Star

In the first six months of 2016, Alibaba successively spent about 2.1 billion yuan to invest in Dadi Cinema and Bona Films. In June, it subscribed for another 1 billion yuan in convertible bonds from Dadi Cinema, followed by another 100 million yuan in August to acquire 80% of the equity of cinema operator Hangzhou Xingji, and plans to invest at least 1 billion yuan in the next step to continue promoting Xingji Cinema's business development.

3. China Film Holdings Dalian Huachen

On October 16 this year, China Film announced that it planned to acquire 70% of the equity of Dalian Huachen Film Group Co., Ltd. in cash, with a purchase price of 553 million yuan. China Film stated that after the transaction is completed, Dalian Huachen will become a subsidiary of China Film Holding, which will help China Film further increase its market share in the company's film screening sector and enhance the company's entire industry chain competitiveness and brand influence.

4. Cooperation between Bona and Xinhualian

On October 24, Xinhualian Holdings and Bona Film Group signed a long-term cooperation framework agreement in Beijing. Xinhualian Holdings has invested 150 million yuan and will actively cooperate with Bona Film Group in film and television theaters. Xinhualian was founded in October 1990 and has invested in companies such as Wanda and LeTV.

The film market itself is sluggish, and theater mergers and acquisitions are another

export1. Supplementing the business sector. Integrating theater terminals to

acquire Huachen is the first foreign investment made by China Film Group after its listing. Huachen's layout is mainly concentrated in the Northeast region, while China Film's operating income and growth momentum in the Northeast region lag far behind major regions such as North China and East China. This acquisition can enhance China Film's market share in Northeast China.

In addition to business layout considerations, after China Film Corporation went public, it chose theaters for its first foreign investment, which also means that a giant entered the market and began to integrate theater terminals.

At present, the concentration of domestic theaters is not high, with the market share of the top ten theaters being about 66%, and the market share of the top four theaters being about 40%. Compared with mature markets where the top four in North America account for 60%, South Korea account for 96%, and Australia account for 50%, there is huge room for integration of domestic theaters.

2. It is a good investment in itself

. In addition to supplementing the business sector, it is also a good investment in itself.

"At present, the average number of seats in movie halls across the country is 130, and 1000 screens is approximately equal to 130,000 seats. If calculated based on the price of 50,000 yuan per seat, it is a transaction target worth 6.5 billion yuan. However, its The actual investment cost does not exceed 3 billion yuan." Wang Yizhi, founder of data consulting firm Fanying, once made a simple calculation."With the stock market so weak, Many media-related listed companies need topics and projects to stimulate market attention to themselves. As a result, cinemas, like Pu 'er tea and Moutai wine of the past, have the attributes of investment products in addition to the value of fixed assets."

In recent years, the expansion of the film market has been accompanied by the rise of the theater business. Land acquisition, construction, and waiting for films to be released. This model is simple and straightforward. Wang Yizhi predicts that in 2016, as the film market will still grow at a super-high speed, the premium space will increase.

3. Small cinemas are facing a survival crisis, and it is time for large companies to take action. The

development of the film market this year is surprisingly poor. Many small cinemas are facing a survival crisis. Small cinemas have to form alliances with each other to warm up. At the same time, they avoid competition from large cinemas and place their target areas in third-and fourth-tier cities.

But now, new theaters can cover fewer and fewer people, and this year, box office output per theater fell by 6.8%. The growth of small cinemas is slowing down, while large companies still have capital advantages. Now can be said to be the best time to acquire cinemas.

After the merger, where to go

? In the past 10 years, some theaters that have undergone asset reorganization and integration have gained good development opportunities. For example, China Film Southern Shinkansen, Jinyi Pearl River, Chongqing Poly Wanhe and other theaters have all been revitalized after integration and reorganization. However, as box office growth gradually stabilizes, after a new round of restructuring, it is difficult for theaters and theaters to rely on scale to break through their operating difficulties again.

1. Differentiated management, improving the viewing experience, transforming the projection technology

differentiated management, improving the viewing experience, and transforming the projection technology will become the key words for the next stage of theater development. Shanghai Film Co., Ltd. once predicted based on annual data that after the renovation of 4D movie halls, each movie hall will add 1.6 million yuan in box office revenue every year, and screening panoramic sound films will also increase box office revenue by nearly 3 million yuan.

"Wanda Hall 9", which focuses on high-end differentiation, appears in some cinemas in the north. With Dolby Atmos +4K Color +6FL projection brightness as a technical gimmick, Wanda wants to recruit some movie enthusiasts and professional filmmakers.

In addition, large-scale technical screening transformation is also underway. The mid-year report showed that in the first half of the year, Wanda Cinema Line signed an agreement with IMAX to add 125 screens, making it the largest order ever in IMAX's history. As of June 30, Wanda Theater has a total of 156 IMAX screens in operation, surpassing AMC to become the theater with the largest number of IMAX screens in the world.

2. Integrate existing businesses and create a diversified profit model

. Under normal conditions, it is difficult for the gross profit margin of film screenings to exceed 20%, so advertising and derivatives revenue is still the main focus of revenue growth for various theaters. However, how to integrate existing businesses, increase the audience's willingness to consume scenes, and enable theaters to abandon their purely terminal channel role is also an issue that needs to be considered by large-scale theaters.

Take Wanda Cinema as an example. In the first half of the year, Wanda Cinema's non-box office revenue accounted for 32%, an increase of 12% over 2015. The announcement explained that the acquisition of film digital marketing company Muwei Fashion promoted the income of advertising members. increase. In the first half of the year, Wanda Cinema Line received 520 million yuan in theater advertising revenue and 216 million yuan in patch advertising, film investment and promotion revenue, which together accounted for more than 13% of total revenue.

On July 27, Wanda also acquired Time Network, the largest film vertical media in China. Mtime. com has derivative licenses from Hollywood including Disney, Sony, Paramount, Warner Bros., Universal Pictures and 20th Century Fox, and has formed an integrated linkage with the Wanjingyuan derivative physical experience store. Before the release of "Warcraft", Wanda used Shiguang's online sales channels to obtain sales of more than 100 million yuan.

Alibaba's ever-expanding cinema business is also planning to improve the operating efficiency of acquired cinemas based on the development of online derivatives such as Entertainment Treasures and the operation of online data such as ticket shopping.

When the film market itself is depressed, the investment value of movie theaters is stronger. However, one of the reasons why the film industry is sluggish is that the quality and output of the creative industry of film are not directly related to capital. Capital only provides more opportunities.

Therefore, although the integration of theaters will bring more standardized operation and management and a better movie-watching experience, thinking about how to do a good job in the film market itself is still the key.

Editor: yvette