WEEKLY CineBUZZ REPORT - May 24 2012

Highlights of the Week's Report:

- Movies Go Foreign First
- Biggest Cinema of All
-Virtual Print Fee Program Highlights
- Chinese Conglom Buys AMC Theatres

Spanish Poster: Ice Age 4

Foreign Market Huge for Hollywood

In a complete 180 from a decades long tradition, the Hollywood studios are finding it more lucrative to release would-be blockbusters to the international market before the U.S. - and with good reason.
The non-U.S. movie market has grown to 70% of total movie grosses from less than 50% a decade ago, making that market much more profitable and, unlike the U.S., global admissions are growing at 7% per year.

The latest example is The Avengers (Disney) which opened wide internationally nine days before the U.S. release and had already grossed over $250 million.  Battleship (Universal) had been in release overseas over a month before hitting U.S. screens and had amassed over $215 million at the foreign box.  Prometheous (Fox), and Ice Age: Continental Drift (Fox) both anticipated to be big earners are scheduled for premier releases off-shore.

The studios also benefit by foreign first releases as this practice has the added benefit of diminishing piracy in foreign locales.  Given movie going trends we're likely to see more and more of this continental drift as foreign first releases of big earners become common place.

A Really BIG Cinema

With 3.3 billion admission last year vs. the U.S.s 1.3 billion, Bollywood far outshines Hollywood in size and the Indian box office is growing at a current rate of 10%.  This growth is due primarily to digital cinema which Indian exhibitors have marketed so as to convey the idea of a flawless presentation (which was not always the case with Indian film presentations). Also pushing higher attendance is the Indian notion that not all 3D movies have to be high-impact, action films but are accepting 3D in regular Indian movies.

Multiplexing arrived in India only seven or eight years ago but as shopping malls are exploding across India so are cinemas.  In tandem with this growth, the Indian production studios have linked up with Hollywood studios, such as Fox and Viacom (Paramount) to improve their production skills and sophistication.  It may be that in the future Indian movies cross over and have major release in the U.S.

Virtual Print Fee Program

  

AMC/Wanda Deal Signing in Beijing

Wanda Acquires AMC

In one of this year's largest acquisition deals, Dalian Wanda, a large Chinese commercial and hospitality property owner, purchased  AMC Entertainment for a staggering $2.6 billion this week.  AMC, which is privately owned by Apollo Global, Bain Capital, and the Carlyle Group (all venture capital firms) and others, is  the second largest movie exhibitor in the U.S., after Regal Entertainment.

Wanda, which is involved in movie distribution and production, will now have a distribution outlet for its products in the U.S. and represents the latest in deals between the movie entertainment industry and Chinese companies.  Just last week, News Corp. which owns Fox Entertainment bought a 19.9% stake in Bona Film Group, one of China's largest film distributors.  And, as previously report in this blog, in February, DreamWorks inked a deal to form a production company with state-owned China Media Capital and Shanghai Media Group.

The Chinese believe  that movies carry  high significance in cultural terms, and want to control the Chinese film industry.  The best way to do this is to buy into Hollywood and the three facets of the business: production, distribution, and exhibition - and they are willing to pay dearly for this.  The AMC purchase is a perfect example,  With over $2 billion in debt the AMC movie chain is, like the other large cinema circuits, a marginal business with few opportunities for continued growth.  It has no control of product (films) and very little control on pricing (either admission or concession). However, the purchase makes sense for the Wanda Group as it 'completes' its vertical integration within the movie industry and provides a large U.S. distribution point for its productions.


Best and Happy Movie Going!
Jim Lavorato