Credit: Visual China
BEIJING, December 15 (TMTPOST) – Wanda Film's actual controller had been changed from Wang Jianlin to Raymond Ke, according to an annoucement made by Wanda on Tuesday.
It means that Wang, the once richest man in Asia, waved goodbye to the film unit of Wanda Group which had brought him tremendous glory.
Before this, Wanda’s Internet Technology Group and Financial Group had already gone out of business. After ceding the film unit, Wanda's non-real estate business as a share of its total business has further shrunk. Its transition from a real estate company to an international cultural giant has fallen by the wayside.
Forced to Enter into Film Industry
Wang has many hobbies, such as singing and painting. However, he does not enjoy watching movies. Wanda's foray into movies can be seen as "forced."
Wanda Group started as a real estate developer, but Wang recognized early the unsustainability of the residential development business model.
In May 2000, the group decided to engage in commercial real estate to create long-term stable cash flow. Wang then designed the Wanda Plaza, a commercial complex format which has thrived until now.
In early 2004, Wanda signed an agreement with Warner Media (formerly Time Warner) to jointly develop cinemas. However, due to policy restrictions at the time, Warner Media eventually decided to withdraw.
Another reason for its exit was that the Chinese film market was too small at that time, with total box office revenue only slightly over $100 million.
Wang had to collaborate with Chinese cinema chains, but failed again.
However, the Wanda Plaza, which was gradually expanding across the country at the time, already had a batch of completed and under-construction cinemas. In desperation, Wanda had to rely on itself.
In 2005, Wanda Cinemas was established. At that time, the film market was quickly expanding, with film production companies like Huayi Brothers gaining momentum. The cinema market was also flourishing, with multiple players including China Film Stellar.
Leveraging its massive foot traffic and cost advantages, Wanda quickly rose to become the second-largest player in the industry within three years.
Starting from 2005, China's film industry entered a period of high-speed growth, with annual growth rates exceeding 35% from 2006 to 2015.
Subsequently, Wanda started moving upstream in the film industry, attempting to build a complete film industrial system. In 2009, Wanda Media was established, engaging in film production, distribution and exhibition. It participated in the production of popular films such as Detective Chinatown.
By 2012, Wanda surpassed China Film Stellar, becoming the leader in the Chinese cinema line. In 2012, it established the Cultural Industry Group, which included cultural tourism, film industry, stage performances, and theme parks. Three years later, Wanda Cinemas went public on the SME board.
Apart from commercial achievements, Wanda also brought some changes to China's movie theaters. Through the introduction of IMAX, laser technology, giant screens, and other new technologies, Wanda Cinemas elevated the service and technical standards of Chinese cinemas.
Going global
In 2012, Wang began massive overseas acquisitions, acquiring the second-largest U.S. cinema chain, AMC Theatres, for $2.6 billion, making a significant foray into Hollywood.
Cross-border mergers and acquisitions are never easy, especially for Wang, who was seen by Hollywood as a real estate "tycoon" from China.
Despite skepticism and ridicule, after acquiring AMC Theatres at a high price, Wang converted all the cinema seats into leather sofas, replaced the screens with IMAX, and upgraded the sound system to 12-channel Dolby sound. The skyrocketing attendance rate and more expensive movie tickets allowed AMC Theatres to turn a profit in its first year, and its stock price doubled in just over a year after going public.
In 2015, Wang spent another $3.5 billion to acquire Legendary Entertainment, which owned IPs such as King Kong, making Wanda the first Chinese company to own a major Hollywood film studio.
Wanda then acquired Hoyts, the second-largest cinema chain in Australia and Odeon & UCI, the largest cinema chain in Europe. After the acquisitions, it owned over 900 cinemas, with over 10,000 screens, capturing 12% of the global box office market and becoming the world's top cinema chain.
In just a few years, Wanda became a heavyweight player in the eyes of Hollywood bigwigs. Wang also aligned his company with Hollywood. He openly accepted interviews with foreign media, frequently appeared on the covers of international magazines, and delivered speeches at top international universities. He tried to get closer to the international market, building momentum for the group's transformation.
After many efforts, Wang’s public image gradually changed. Wanda, known for its militarized management, also began to loosen its corporate culture. Wanda had strict dress regulations, but these regulations began to relax in 2015.
Gradually Letting Go
In 2017, Wanda Cinemas changed its name to Wanda Film and planned to acquire Wanda Media and Mtime. According to Wanda's own statement, its total revenue from the cultural industry reached 63.78 billion yuan in 2017, accounting for 28.1% of the group's total revenue.
However, after June 2017, the situation took a sharp turn for the worse. Wang began to "cut off his bleeding arm to survive." Besides the well-known sale of cultural tourism projects to Sunac, and hotels to R&F, Wanda also reduced its stake in AMC Theatres and sold part of Wanda Film's equity.
Starting from 2017, AMC Theatres began to experience losses, and by then, Wanda had no time to focus on overseas business. By May 2021, Wang had essentially divested from AMC Theatres.
After almost completely clearing overseas real estate and entertainment projects, Wanda experienced a brief period of respite. However, after China's total box office reached 60 billion yuan in 2018, growth stagnated. With the outbreak of the pandemic, cinema business plummeted, and the film industry faced a severe downturn. Wanda Film no longer retained its past glory.
As consumption picked up after the pandemic, various sectors of Wanda showed signs of rebound. Amid the real estate crisis since 2021, Wanda's name has not appeared in the list of defaulting real estate enterprises.
However, the listing pressure of Zhuhai Wanda Commercial Management Group has once again pushed Wang into a corner. The heavy debt burden and the pressure of a 38-billion-yuan buyback are unbearable to Wanda Group, which is experiencing the downward cycle of the real estate market.
In recent years, Wanda has continuously sold Wanda Film equity and Wanda Plaza assets, culminating in the handover of Wanda Film's controlling rights by the end of 2023.
Although Wang's dream in the film industry has broken, his exploration in the transformation of a large-scale real estate enterprise remains highly valuable.
(Note: 1 yuan equals $0.14.)
(This article was first published on the TMTPost App. Author | Hu Runfeng)