After single-screens and multiplexes, will private theatres be China’s ‘third cinema revolution’? Patrick von Sychowski checks out the comfy-sofa micro-cinema.
China made news late last year when it overtook the US in the number of cinema screens. The growth of multiplexes, IMAX and Dolby Cinema screens by operators like Wanda and Dadi has led to China having some of the most high-tech cinemas anywhere in the world. But there is a second cinema revolution underway in China that attracted little attention in the outside world. Private cinema, also known as micro-theatres or on-demand cinemas, are public establishments with high-end home cinema-type rooms seating two to 10 people. You can rent a two- or three-hour slot of time in one of these as a couple, family or group of friends. There is access to a jukebox like server of hundreds of films and other streamed content. Typically you can order drinks, snacks and food. Similar to Asian karaoke parlours, with their booth-like rooms, they are sometimes called karaoke theatres (or K theatres). It is estimated that there are more than 6,000 such venues across China today. Assuming that each has 8-10 rooms, it would mean the number of private cinema screens outstrips that of regular cinema screens in China, which stood at around 41,000 at the start of 2017. It also far outstrips the 12,000 virtual reality (VR) experience centres found across China, that get written about much more. Private cinemas began as shady and shadowy businesses, but are now smarting up their act and attracting investment and interest from major companies.
Regulation Spawns Legitimacy
The watershed for private cinema was the introduction of a new media law on 21 April this year by China’s media regulator SAPPRFT. Under the new law, earnings from private cinemas would be counted towards the country’s total cinema box office. Despite the continued growth in cinema screens, China’s box office bull-run came to a screeching halt last year. By including the emerging private cinema market it would ensure the China BO in 2017 shows an increase on 2016. (To this end, ticketing fees were also now included as part of the BO count). But what was seen as an attempt to bolster China’s box office artificially, also bestowed legitimacy on the formerly shadowy private cinema sector. The first private cinemas at the turn of the decade were small operations located away from city areas where you would find regular cinemas, some even located in private houses. Adherence to building codes, fire safety regulation, food hygiene standards and above all copyright was random at best. Some played first-run films at the same time as cinemas, or Hollywood films and TV series never released officially in China. Officials would tolerate this, particularly with a helping of bribes, when there were only a few such micro-cinemas. But as they mushroomed they became impossible for the authorities to ignore.
The most significant sign that private cinema was becoming a legitimate market came in February 2016 when the first of 400 ‘industry leaders’ attended the inaugural ‘2016 China Micro Cinema /K Theatre Industry Summit’ event in Changsa. The keynote was by Zhao Jian of online streaming service 1905.com Entertainment Group, who outlined the potential for private theatres to complement regular cinemas, particularly in smaller towns and villages. Even so, it was estimated at this time that 80% of private theatres were showing pirated content with equally poor adherence to building codes, fire, safety and hygiene standards. But as established players moved in this changed.
The authorities’ aim was to weed out shady operators and this was welcomed by serious players. “We have waited more than six years for the 21st of April document” from SAPPRFT, said Zhao Jinhai, director of Amy 1895 Movie Street, proclaiming that “From single screen cinemas to multiplexes, private cinemas are the third revolution in the history of Chinese films.” Amy 1895 Movie Street (IVIMovie) had more than 100 venues across China in the first half of this year. Meanwhile the largest operator, Poly Space (The Meeting Place), already has more than 300 venues and is growing fast.
This summit was followed by the first trade show for the private cinema industry on 15 May this year in Sanya. Attended by 75 companies and 118 delegates, it also marked the launch of the Chinese Private Cinema Union (CPCU). The event saw several streaming content companies positioning themselves as legit providers of films and TV shows — many are partnering the building, ownership and operation of the new generation of private cinemas.
Examples of operators that approach the market with a multiplex-like mindset range from small to big. Vision Time is rolling out highly professional mini-plexes of four to five screening rooms seating two to 20 people each, with high-end AV and staffed by two attendants. The company had 10 cinemas deployed this summer, with 12 more in the pipeline, including nine on a franchise model. BesTV and Wei have signed a partnership to launch 200 private cinemas before the end of the year. ‘BesTV Art Theater Program’ will focus on niche arthouse content, with the aim of growing the circuit to 400 venues and 2,000 auditoriums. Ding Junshan has ambitious plans of partnering Beijing Beiguang group to use the hotel group’s 5,000 venues to build 25,000 “new generation of intelligent live broadcast theaters” within three years.
What Does It Cost?
While a regular ticket can cost CNY ¥20 to ¥40 ($3-$6), with more for 3D and IMAX shows, a private cinema room can cost CNY ¥200-¥300 ($30-$45) per session. Split between several people and over a longer a period of time than just the duration of one film, it becomes a stronger out-of-home entertainment proposition. Families can book out a private cinema and let their kids play as they watch without bothering other patrons. It is a good date destination that offers more privacy than a cinema (though intimate behaviour is strictly discouraged), or a fun group outing for friends. Add to this a wide variety of food and drinks on offer, some including hot meals and alcohol that standard cinemas don’t serve, and it becomes a leisurely way to spend a morning, afternoon or evening.
What’s On Show, How is it played out?
Private cinemas initially stored or streamed a vast library of foreign and domestic films, TV shows, animation and even games, mostly without reimbursing the IP right owner. Add to this films not officially released or older titles not available — the original Star Wars films were not released in China (only Hong Kong), so when Star Wars: The Force Awakens was released in China, private cinemas reported a surge in demand for the original trilogies. Because China lacks arthouse and independent cinemas, private cinemas also become the only way to watch Sundance or Cannes Film Festival films that have a difficulty making the restricted quota of imported films in China.
Private cinemas are cubicles kitted out with high-end video displays and audio, coupled with a server or portal for content, as well as controllers. Typically, this is a home cinema projector, rather than a large LCD television, as well as a 5.1 or 7.1 audio setup. Because private cinemas don’t use DCI-compliant equipment, they cannot (legally) show first-run films, but tap into recently released films in HD. Increasingly they are switching from local storage video ‘jukeboxes’ to streaming from BestTV, 1905.com, Storm and other Netflix-like legitimate portals. Some private cinemas even offer 4K, Dolby Atmos audio and motion seating.
And What’s the Outlook
According to Chinese Video Network editor Chen Xiaoxiao it was estimated that the potential market for private theatres is between CNY ¥8 to ¥10 billion (USD $1.2-1.5 billion). While this is only a quarter to a sixth of what the regular market is, it could be a significant addition to the box office of the world’s second largest cinema market. However, all is not bright in these small theatres. Government regulation will raise the standard, but it will also push out a lot of operators while cutting into margins for those not in compliance with new rules.
“As a provider of screening equipment to over 600 private cinemas, I’m worried,” admitted Dodge Information Technology Company CEO Guo Hongliang. “We have not yet been given a notice of what the specific national standards will be, so in the current situation I’m afraid it’s not looking good.” Guo estimates 90-95% of existing private cinemas will not be able to meet fire safety, copyright and/or equipment standards and there is a question of whether thousands of private cinemas could be certified before the deadline in September.
Could private theatres succeed outside China? There are an estimated 80,000 karaoke parlours in China, but attempts to launch them in the UK by outfits such as Lucky Voice, founded by Martha Lane-Fox, have resulted in a handful of venues. While there is potential in other Asian markets, it would take a brave entrepreneur in Europe or North America to launch a third entertainment space between home sofas of Netflix convenience and multiplex seats of Hollywood spectacle. Yet as they become legitimate, private cinema looks set to be a big part of China’s cinema growth story.
The first automated 24-hour private cinema opened this summer in Chengdu. Customers book films on their smartphones and scan a code to open the door to one of the 11 screening rooms, each one with its own decoration theme. Projection and lights are automated. The company has ambitious plans of investing in the construction of 1,000 automated cinemas starting next year. Yet robots have not taken over completely — cleaning is done by humans and there is an F&B manager on-site. But as labour costs become an issue in China, automation is increasingly common.
Given their higher prices, private theatres offer a VIP experience that goes beyond what’s on offer in even high-end multiplexes. In addition to the technology, there are leather recliners, plush sofas, beanbag pillows and side tables. Each room has its own look with themes of everything from spring blossoms and sea pirates to prison style inspired by the TV series Prison Break. There are rooms with more of a play focus for families. The most sophisticated look like they belong to a famous Hollywood director’s private home in Beverly Hills. In addition the entrance to the complex, box office and waiting area often includes a café and loungers for people to pass time in.