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East Asian Exhibitors Look to China Opportunities

Dodona Research Press Information for Immediate Release

East Asian Exhibitors Look to China for New Opportunities

The Chinese cinema industry is set for a wave of investment and unprecedented growth according to a new report Cinemagoing East Asia* from leading cinema analysts Dodona Research.

Of the five markets profiled in the report: China, Hong Kong, Japan, South Korea and Taiwan, China is forecast to see the greatest growth over the next five years with box office more than tripling from RMB 2.0 billion in 2005 to RMB 7.4 billion by 2010. South Korea, which saw box office rise by 160% between 2000 and 2005, will continue to grow strongly, although at a slower pace. Taiwan is also a country to watch as it emerges from a downturn: it recorded a 7% increase in box office in 2005, a year when many countries worldwide suffered a substantial dip.

One of the key findings of Cinemagoing East Asia is the extent to which digital cinema technology is being adopted in the region, and where it is going to be a driving force in future.

China is a leading adopter of the technology with almost 200 screens converted to digital at the end of 2006. China Film Group has installed the majority of these systems in cinemas with the highest box office and best locations. Report author, Katharine Wright commented, “Digital cinema provides the best prospect for a more open industry in China, which is the key to increasing the supply of films, encouraging more investors and expanding the market.”

Exhibitors in Japan and South Korea are also enthusiastic adopters of the technology. In Japan, Tokyo Recreation and Toei have installed digital cinema in at least one screen of all their multiplexes. In South Korea, Megabox Cineplex has a world first, having installed digital systems in all 16 of the screens in the Megabox Cineplex COEX multiplex. The country’s largest exhibitor, CJ CGV, has plans to convert its entire circuit during 2006.

The countries in the East Asia region tend to have strong domestic film industries that are important contributors to annual box office. 2005 was a particularly good year for Japanese films, which captured a 41% share of the domestic market. The South Korean film industry has had incredible success in recent years. Assisted by a quota system, domestic films accounted for 55% of admissions in 2005. South Korean films have become extremely fashionable and are also proving popular in Japan and the United States.

In Hong Kong, while home grown films still make the top ten, the industry is nowhere near as strong as it was a decade ago. However government support through the Film Guarantee Fund and the introduction of the Closer Economic Partnership Arrangement with China offer the production industry hope for recovery.

With most markets in the region approaching saturation in terms of the number of cinema screens, exhibitors are looking for new opportunities to expand, and China is the primary focus reveals the report. Hong Kong-based companies Lark International, Golden Harvest, Sun Wah Group and Media Asia already operate cinemas in China. Other exhibitors looking to invest in China are Japan’s Kadokawa Group, which is rapidly becoming a significant challenger to the dominance of the three major Japanese studios, and South Korea’s CJ CGV. Warner Bros International Theatres remains the only Western exhibitor investing in China’s exhibition sector.

According to the report, prospects for the region’s cinema industry look solid over the next few years. Combined admissions for the five countries are forecast to grow by 33% to reach 5.5 billion by 2010. However Wright raised a note of caution for the future, “Demographics will have a long-term impact on admissions. In countries such as Japan and South Korea, the population is ageing rapidly and birth rates are in decline. This trend has an important bearing on the future of the cinema industry, which should not be ignored.”

*Cinemagoing East Asia from Dodona Research at www.dodona.co.uk


Notes to Editors
Dodona Research is the leading provider of information and independent analysis concerning the cinema industry worldwide. Our client list includes the Hollywood studios, major and independent exhibitors, banks and financial institutions, government bodies, suppliers to the industry, real estate concerns, consultants, advertising agencies and others. We have customers in 50 countries spread across six continents.

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