June 15, 2021

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The ‘great drought’ of cinemas

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Covid-19 has lasted for more than a year, causing the movie theater business to plunge, but if overcome, the opportunity to explode after the epidemic is said to be not small.

Minh Tu (District 10, Ho Chi Minh City) has been a member of VVIP (the highest class member) of a large cinema chain for 4 years now. In 2018, he entered the top 1,000 members who met the VVIP standard as soon as possible to rank for 2019. At the end of that year, he spent more than 12 million VND on film money.

Minh Tu belongs to the generation of young urban people who choose to watch movies in theaters as a regular entertainment channel. A 2019 survey of 16- to 39-year-olds by Q&Me showed that up to 84% of respondents said they watched movies in theaters. Of these, 57% go at least once a month.

The movie theater industry has thus benefited significantly. In the period 2010-2019, the number of cinemas nationwide increased from 90 to 1,096 screens, an increase of 1,104%. Along with that, the number of people watching movies in theaters increased from 7 to 57 million times per year (up 714%); movie sales in the whole industry increased from 540 billion to 4,147 billion (up 668%).

Customers buy movie tickets at a cinema in District 1 in May 2020, after Ho Chi Minh City lifted the distance order. Photo: Quynh Tran.

But things suddenly turned around when Covid-19 appeared last year. The amount of money spent watching movies of a VVIP member like Tu has also continuously decreased. This number decreased to more than 10 million VND in 2019 and dropped to just over 7.4 million VND in 2020.

“Last year, due to Covid-19, the cinema was closed for a while, the movies were also few and less special, so my spending decreased. Fortunately, the system also lowered the VVIP standard to 5 million dong, instead of 10 million, so I kept the rank. At the beginning of the year, I only spent 1.4 million on movies, the annual gift tickets for members have not been used up,” he said.

This also clearly reflects the general gloomy picture of cinemas in recent times. According to the financial report of CJ CGV Korea, the parent company of CJ CGV Vietnam, the company’s revenue in 2020 is nearly 72 billion won (more than 1,400 billion VND), down more than 60% compared to 2019. along with a loss of more than 43 billion won (more than 850 billion dong). The revenue in March 2020 alone decreased by 500 billion VND, which is the first time the theater was closed because of the epidemic. By April, the system said no revenue.

The Lotte Cinemas side is not better either. Not disclosing individual revenue in the Vietnamese market last year, but Lotte Shopping (Korea) recorded revenue from movie screenings in all markets down 65% compared to 2019. In which, the number of visitors alone box office in Vietnam decreased by 29.8%.

In 2020, after exciting periods such as Tet or April 30, the “great drought” of cinemas is even more acute. In an official letter sent to the Prime Minister in the middle of last month, four big enterprises, namely Thien Ngan, BHD, Lotte Cinema, and CJ CGV, said that from February until now, revenue from film screenings and distribution has been almost zero, while still bear the cost of space, salary and benefits.

“With this situation, whether large or small businesses can fall into bankruptcy, leading to the decline of a film industry is inevitable,” the document stated. Other theater names, also confirmed the difficulty of the market.

“After the outbreak of Covid-19 in Vietnam from January 2020 until now, many service industries have been severely affected, including the film industry. Until early 2021, the domestic film market will has not been able to restore the normal state before the epidemic,” said Mr. Bui Quang Minh, CEO of Beta Cinemas.

Exchange with VnExpressMr. Minh said that he is optimizing the costs of space, operation and personnel. This unit also spends the epidemic season to develop new cinema models, perfect the franchise business and find investment cooperation opportunities with single theater clusters or theater chains to overcome difficulties together.

The CGV side also seeks to optimize cash. For land owners who cannot find a common voice, they ask the court to arbitrate. From May until now, two land owners have sued at the People’s Court of District 1 (HCMC).

“During the shutdown period to combat the epidemic, movies currently showing have to be paused, and upcoming movies have to be rescheduled, leading to losses in ticket sales and promotion costs,” a CGV representative said, adding, Even though it is closed, it still has to pay the costs of the premises, operation and maintenance of equipment, and cleaning.

Employees of a cinema in District 1 clean up after Ho Chi Minh City stopped non-essential services to fight the epidemic on February 9.  Photo: Quynh Tran

Employees of a cinema in District 1 clean up after Ho Chi Minh City stopped non-essential services to fight the epidemic on February 9. Photo: Quynh Tran.

In a document sent to the Prime Minister, four large cinema chains offered many options for financial support, such as loan support, extension of time for paying social insurance and health insurance until the end of this year, reduction and Deferring payment of value added tax… In addition to financial-related support policies, they also want to return to work soon, committing to comply with epidemic prevention measures.

Struggling to pay for the closures, but the theater industry is also a service segment that is likely to revive well if it reopens. Mr. Bui Quang Minh said that, regardless of the immediate challenges, the cinema market is a potential and attractive business market for investors.

Both CGV and Beta agree that, after each epidemic, the audience’s demand for movies is increasing day by day. The proof is that when the theater reopened, a series of movies like The Godfather, Flip Face or Kong vs Godzilla all had good sales.

Lotte Shopping’s (Korea) first quarter business results report also recorded that the revenue of Lotte cinema segment in Vietnam in the first quarter and then increased by 5.5% compared to the same period in 2020, thanks to domestic films with high quality. high revenue. Similarly, the report of CJ CGV (Korea) in the first quarter also assessed the recovery of box office revenue in Vietnam compared to the first quarter of 2020.

“After the pandemic, the entertainment demand of the audience will gradually increase again and even more because of the pressure and stress due to the isolation period. So this is also an opportunity for filmmakers and filmmakers alike. movie theater investors,” said Minh.

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