Major Film Studios in China MarketⅠ

2011/12/19 15:01:00(Beijing Time)    by: EntGroup Consulting

Just like North-American market has six major film studios in Hollywood, there are several companies in China known as the majors, commonly regarded as the media conglomerates, who release a substantial number of films annually and consistently commands a significant share of box-office revenues in Chinese market. Hereby is the brief description of the key competitors in China film industry. The whole content will be divided into three-part essay which are about to be published in the next three-days by EntGroup.

China Film Group Corporation 
 
Among the 300 production/distribution companies in China, China Film Group Corporation enjoys an absolute advantage on the number of distribution and the total theatrical revenue. Owing to its resource in each sector of the film industry chain, its great market influence, and its privilege to distribute films of different types (imported or domestically-made), most of the commercial films will choose the company as their distributor in China. Therefore, 60% to 70% of the total annul theatrical revenue in China goes to China Film Group. In 2009, China Film Group distributed a total of 62 films; the total revenue was 4.044 billion yuan, which accounted for 64.5% of the total theatrical revenue in China. Its market share was 38.4%, a percentage that earned it the first place of the top ten distributors. In 2010, the China Film Group distributed 90 films and gained revenue of 8.022 billion, which accounted for 78.43% of the total theatrical revenue in China; the market share was 36.2%, slightly lower than that in 2009. In 2010, the top ten films distributed by China Film Group collectively created 4.23 billion in their theatrical revenue and 64.5% of it was from imported films, much more than the revenue of domestic films.

According to state regulations, China Film Group Corporation has the privilege of distributing imported films (revenue-sharing imported film, flat-fee films, and special films), domestic films (including co-productions), and pure Hong Kong productions and Taiwanese productions films. From the data collected, EntGroup found that except for pure Hong Kong films, the ratio of   box office revenue of China Film-distributed films in each film type is higher than the ratio of  films numbersIn other words, China Film Group has  accurate understanding about the market   and can make the right decision to ensure the success of box office of their films. Owing to its privilege of distributing imported films, 49% of China Film’s total distribution revenue in 2010 came from revenue-sharing and flat-fee imported films. This has widen the income gap between China Film Group and other private film enterprises.

According to WTO ruling, the distribution right of revenue-sharing imported films may be gradually granted to other companies, starting from April 2011. So far there’s no specific regulations being announced, but it’s an inevitable trend in the market for private companies to distribute these revenue-sharing imported films. In the coming two years, however, EntGroup predicts that the distribution of foreign films  will still be largely controlled by China Film Group and Huaxia, and private companies still have to go through a strict examination process to gain the privilege. As for flat-fee imported film, it is estimated that the outstanding performances of Residence Evil 4 and The Expendables in 2010 will  encourage private companies’ interests in these films in 2011. A new round of severe competition may take place in this formerly neglected market.

Huaxia Film Distribution

In 2009, Huaxia distributed 54 films and earned RMB 2.813 billion theatrical revenues, 47% of the total theatrical revenue in Mainland market. Its market share in distribution sector was 20.7%, which made it the second largest distributor among the top ten companies. In 2010, Huaxia distributed 46 films and made RMB 4.083 billion theatrical revenues, 39% of the total theatrical revenue in Mainland market. Its market share was 19.9%, slightly lower than it was in 2009. Although it did not distribute as many domestic big productions as China Film Group did, it has steadily increased the number and revenue of domestic films it distributed compared to 2009. In 2010, the top ten films distributed by Huaxia have created RMB 3.327 billion theatrical revenues in total and 80.8% of it came from imported films, the highest percentage among the top ten distributors in China. 


Huayi Brothers

Movies and brokers business are the star business for Huayi Brothers, which have a high growth rate in its industry. Moreover, the two businesses have a relatively high market share, which are 1.6 and 1.2 times larger than that of its biggest competitor. Huayi Brothers attaches great importance to the development of the two businesses and have a fierce competition with its rival company. Huayi Brothers continues investing and strives to expand the market share and becomes the absolute leader of the market, and it will become the larger and more stable source of cash income in the future.Cinema is the new business of Huayi Brothers in 2010, which has a low market share; however, Huayi Brothers is investing heavily in expansion of cinemas on the basis of the rapid growth of the market to keep up with market growth and stabilize its market position.

In May 2010, Huayi Brothers’ announcement that the company's IPO equity raised funds over the remaining 34.45 million yuan for the acquisition of the 51% equity of Beijing Huayi Brothers Music Co., Ltd. Involved in record production, distribution, brokerage and business development and music field, Huayi Brothers uses the advantages of its own resources, integrates its artists, interacts and collaborates with other parties, are also preparing to enter the performance market.

Bona Film Group

Among the main businesses of Bona Film Group, the gross margin of the cinema investment business is the highest, up to 53.1%, mainly attributing to its acquisition of the cinemas that contributed $ 6 million profit in April 2010. In the past four years, the gross margin of the distribution business is the most stable. The gross margin of brokerage business of performing artists rose rapidly.

In 2010, Bona Film Group’s distribution ability increased, its film market share also was more stabilized. Bona Film Group distributed a total of 11 films,and the gross box offices were over 650 million. Among them, seven films were the exclusive distribution by Bona Film Group.

In 2010, 53.5% of the annual net income is from the top five box office makers, as opposed to 67.9% in 2009 down.

Bona Film Group also cooperated with international partners to strengthen its film production. On June 13, 2010, South Korea CJ Entertainment and Bona International Film Group signed a strategic partnership agreement in Shanghai. CJ Entertainment and Bona (considered to be the leading players in the industry) estimated that more than two pieces of works will be released in joint investment, planning, production and distribution. This can take full advantage and bring full play of the system, specialized project development and post-production team and global resources of CJ.

EntGroup is China’s leading entertainment research service center, focusing on Chinese film and animation industry. We provide consulting services through comprehensive industry reports, customized research as well as enbase to meet the requests concerning Chinese entertainment business. EntGroup also operate online platform for entertainment industry at http://english.entgroup.cn/index.aspx

Enbase, database of EntGroup, it includes information of over 300,000 films and television productions, data of Chinese cinemas and films (e.g. Box-office Records, Weekly attendance, Theatre revenue, etc) http://english.entgroup.com.cn/enbase.html
 
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