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Confessions of a former theater group executive: tried, gave up

In the past nearly two decades, the downstream of the film market has created many "legends": from the first movie theater to hundreds or thousands, from nothing to becoming the cornerstone of China's rapid box office growth, and from crazy expansion to the point of difficulty - the times and environment are changing, and today's movie theaters seem to be aging.

G (pseudonym) was once an executive of a leading cinema/film investment company in China, and the development path of the company he once worked for was basically in line with the general trend of the industry: taking advantage of the trend, with the help of capital, the number of its self-operated and franchised theaters once rose from a few hundred to more than a thousand, maintaining a high growth rate every year - the growth of the number of theaters led to an increase in box office share, and the cinema line once became the top head in the industry.

Of course, the debt inevitably increases. However, at that time, the industry was concerned about how to adjust the business model and make breakthroughs in management and operation in addition to quantitative growth, and at the same time, the market was very clear signal that the reshuffle and integration of the industry led by the head company was the general trend. G is added at that time node.

Later, the epidemic occurred, the industry pressed the pause button, and because of the "package" of the epidemic, many problems were temporarily covered. And now the "fig leaf" has been torn off, and after the big waves of sand, some survivors stand at a new starting point and restart, and some seem to have reached the point of exhaustion. G is one of them, and his past experience in the Internet has not brought fundamental changes to the companies he works for in the traditional industry downstream.

"It's a place where it's hard for anyone to turn the tide." G chooses to leave. The following is G's account after being sorted out by Poison Eye.

"Loose alliance"

In fact, only three of China's cinemas and film companies really have capital value: Wanda, Hengdian and Bona.

Wanda is in a leading position in this industry and has a good financial position, and the "non-Wandian store" has little impact on the group's entire financial statements, while Wanda store, anyway, is its own assets, and can use various means at the reporting level to minimize losses and cash flow problems. But that's not the case with the theater group I worked for, which has a lot of scattered "party A".

Confessions of a former theater group executive: tried, gave up

Wanda is different, at the level of commercial real estate, the rental cost of their cinema is low, and it will not be so uncontrollable; Once a problem occurs, personnel costs can also be quickly reduced; At the equipment level, due to historical accumulation, there are more replaceable and reducible resources. So I think Wanda's base and foundation are good.

The entire group behind Hengdian Cinema Line also has money, without much baggage, and people's groups have tentacles in the whole industry and all fields, and every foot is very deep; PropNex's issuance ability is very good, it has indeed made money in recent years, and Bona Group can mobilize a lot of external resources, which is also a unique advantage.

Wanda's future scale will expand, Wanda Film's box office share last year was more than 16%, and it may exceed 20% in the future, after reaching a short-term ceiling, to strive to achieve 30%, and finally achieve the improvement of the entire downstream concentration - now the domestic theater line is still too scattered, such as Dadi, CGV, Jinyi, Xingyi, etc., in fact, they are eating scraps of cold rice.

I joined the company because the total number of theaters it joined and directly operated was relatively large, and I think it was willing to expand and grow, and another reason was that it implemented its digital strategy earlier, and I had similar practices in other industries, and I wanted to find a suitable soil to move forward.

Therefore, my planning goal at that time was to completely realize the digitalization of cinema operation and management, and to cover the entire industry through the management output and hosting operation of the digital operating system, so as to realize the rationalization and improvement of the concentration of China's cinema industry. This was my ambition at that time, and it was also the right path that I thought the domestic film industry must take.

People like me, who participate in the downstream of the film industry, no matter which company, as long as it uses me, the reason must be to achieve growth (in the number of theaters and market share) under the change of business model. But what is the premise of growth? It's that the concentration of this industry is too low. In 2019, the proportion of downstream big brother Wanda is only about 12 or 13% - open 30 theaters in China, and the basic listing rate can rank in the top 20.

Confessions of a former theater group executive: tried, gave up

Therefore, in theory, the integration of theater concentration is very possible. But the problem is that everyone wants to play their own thing.

The digital level of China's film industry is low, this is a reality, and Wanda's digital level is relatively high, and the management model also has its own advantages, if an individual theater gives Wanda a tube, maybe after seven or eight years can still rely on equipment or Wanda upstream resources to continue to survive, earn financial stability. But everyone is not convinced, Wanda did not complete the road of theater integration, because everyone is not convinced, each family thinks that they may have the opportunity to become a hegemon, and they are unwilling to play with their big brother.

Think about it another way, even if who makes 3,000 theaters? Do you have the ability to wrestle with China Film and Huaxia? I'll bring in three external screenings myself next month, is it possible? The film market is a Liangshan, of course, there are good guys, but everyone (theaters, film investment) is an ally, and the constraints of the alliance relationship and environment lead to the industry's "revolution" willingness is not strong, and the "revolution" process is not complete - in such a market that is actually monopolized, it is impossible to have full competition.

Under this loose alliance formed by various theaters or film investment companies, there is a lack of credit awareness forced by the market environment. This is similar to the reasons for the failure of modern channels in the past: the terminal "washes" the channel, the channel "washes" the dealer, the distributor "washes" the manufacturer, and finally because of the credit collapse, it is impossible to get out of the road of digital industry collaboration and the performance system based on this.

You can't just think about making everything yourself

In the sales business, there are also many theaters who want to try to make their own brands, but there is a biggest problem, that is, they are unprofessional and do not respect professionalism. It seems that many people in the film industry do not know that there are other industries in the world, just stay in their own small circle, and his logic is simple: isn't there this in the market that sells well? We sell it too!

For example, there is no KFC in Universal Studios, and its food is to cooperate with enterprises with its own special procurement system to serve, and it will process and operate by itself, because their basic sales volume can be basically maintained, so Universal Studios will not let KFC in. But Happy Valley may know that it does not have the ability to close the loop in its own system, so it chooses to attract investment and is willing to let KFC in - what drinks are not sold in KFC's Happy Valley stores, what kind of burger cola set is to sell, how much is sold per day, what time to sell, KFC has such a predictive ability, then Happy Valley will choose it and share money with it.

Confessions of a former theater group executive: tried, gave up

The cinema does not understand this logic, he will think, I make it myself, sell it myself, obviously I can earn five yuan, but let you sell, I can only earn two yuan and seven cents, why should I let you earn those two yuan and three cents? But the loss to the theater behind these two three-cents may not be affordable for the theater - some money must be earned by others, such a simple logic, but it just can't be explained.

And the throughput of cinema sales is too low, may be high in large schedules and holidays, but the high and low points of traffic are too extreme, if the theater traffic does not go up, there is no ability to do a good job in the category of sales, and if it is not done well, there will be no special consumers to go to your theater for that "snack" and "milk tea". But if it is a purchase, people sell you things, but also have to sign a contract with you, send special personnel to manage, inventory, their own logistics system must also be specially unloaded for you - and the theater may only need two boxes of goods at a time, two or three months to order goods, on this amount, directly online purchase, why should people cooperate with you?

There are other attempts to innovate and save themselves downstream, such as the integration of "cinema +" diversified formats, turning the theater into a space where you can sing, eat skewers or immerse yourself in game interaction outside of watching movies, etc., but many of them have failed, not because this model does not work, but because it will not be done, or cannot be done.

Confessions of a former theater group executive: tried, gave up

Of course, we want each store to make each store different according to the city and surrounding environment, consumption level, culture, innovation must have a chance to succeed, and it is necessary, after all, theaters do not sell popcorn from the beginning. But the reason why it doesn't work is because there are too many interests involved, we want to do something, but we can't execute it.

The cinema group I once worked for originally had the opportunity, whether it was the number of theaters, digital capabilities or understanding of the industry, it was relatively sufficient, and completely explored a set of solutions applicable to the entire industry, realized the integration of online and offline, and then with the resources of the cinema line, from asset-heavy to a relatively asset-light player.

But the big group is too bloated, and if you want to do something, you have to approve it layer by layer and accept many restrictions. Some higher will is slogan-like, does not give trial and error opportunities, and will move the interests of many people. To give a simple example, the popular massage chair, many theaters have seats, agree to install this massage chair, the theater manager may receive 10,000 yuan privately, two hundred theaters are installed, that is, two million, do you want to prevent others from earning these two million?

Confessions of a former theater group executive: tried, gave up

My experience in the Internet has told me that "whether the model and gameplay of the Internet can be rooted in the film industry" is not a question worth discussing, because I don't think there are any advanced models and industrial digitization methods that cannot work in the traditional industry of film. But the utility of digitalization must be based on the assumption of growth, and it is customary to say that "shopping malls are like battlefields", but we must be soberly aware that there is no strategy of "survival" on the battlefield - only competition or defense.

Competition and defense are both based on the elimination of the opponent's strength, and there is no difference between the two sides on the battlefield, and there is no one or the other. But the film market is very strange, we can not eliminate the opponent, everyone can mix and pass, get through and do not digitalize, the competition is not sufficient, so there is no need to digitize, this is the biggest failure.

Cinemas are not a money-losing business

The company I worked for was also involved in the crazy expansion of the downstream a few years ago, even the limelight, but many financial crises were also buried at that time - you have to pay for someone's theater, where does the money come from? Opening a theater also requires rent, and there is a reason to say to owners, employees and suppliers during the epidemic: brothers, wait for me to slow down. Now that the epidemic has passed, why haven't you paid back?

There is too much money owed, and the revenue of the theater can maintain daily operations, but how to pay back the money owed? Whose money is repaid first and whose money is returned later brings completely different results. In the face of "debt collection", the boss did not come out to endorse with personal credit, and it was delayed until today's financial situation was so bad, and many things were too late.

Now that I've shrunk to this point, I'm like standing in front of a dying commercial building – you must have seen a lot of places like that, it has changed its name several times, it has done a lot of self-help games, it used to have a good business model, but it just doesn't work. Standing in front of it, you know that it can't work, no one can come, and its qi number is gone.

Many local theaters and film investors have a similar temperament, there are too many debts, and the operating cash flow will recover this year, but who will bear the historical debts for you?

Interestingly, the pandemic is not an excuse for a downstream crisis, and it has hardly changed the industry. In the past few years, as soon as the epidemic loosens, the whole industry will recover quickly and locally, and I think this is first of all because there is no change on the supply side at the top of the industry. However, the impact of the epidemic on the change of consumer habits is relatively long-term, and phenomenal movie content is needed to stimulate consumer minds.

Confessions of a former theater group executive: tried, gave up

Source: Lighthouse Pro

On the other hand, the epidemic has affected changes in the pattern of commercial real estate and adjusted the rental structure. Cinemas have a rational trend in the policy and logic of investing in and expanding stores - this role, I think may be beneficial to the concentration of industry heads, but the actual situation in the future needs to be observed.

The growth rate of the number of theaters or screens in the country will continue to decline, and the total amount will enter a short-term increase, medium-term structural adjustment, and medium-term and long-term stable curve, which also depends on the development of commercial real estate in combination with the film terminal market. In the past few years, the development of commercial real estate has slowed down, but the non-residential format has maintained a certain growth rate, and the decline in fixed asset investment from last year to this year is more obvious, then commercial real estate is expected to rebound in financing and investment with infrastructure and urbanization.

Therefore, an increase in the number of theaters as a standard package can be expected. However, the elimination rate of some old commercial entities will accelerate - this will produce a state of old theaters closing stores and new businesses attracting investment in the medium term. After the end of this adjustment period, it will return to a stable period in about five years, but it is difficult to increase the total number of terminals significantly.

As for the loss of moviegoers, the decline in attendance and the attraction and cultivation of audiences, the screening terminal is passive, there is no alternative, can only rely on the sky to eat - many people say that movie ticket prices still have room to rise, but my ticket prices should not rise, because there is a billing system in this market containment. In the case of homogeneous content, the proportion of film pricing is still relatively large in the factors affecting the price of the ticket price. Under the game of incomplete proportion (with a minimum issue price to support), the probability is to maintain the current average ticket price level.

As mentioned earlier, I think that in the next three years, one or two film investors will run out and become real leaders, and the trend of Xiaoying investment accepting hosting operations to join large chains will continue to deepen in the future, especially the film investment with close strategic cooperation with commercial entities, and its advantages will become more and more. The management advantages of regional concentration and large national chains will slowly increase, but compared to other industries, oligarchs will basically not appear, because the largest oligarchs already exist.

Confessions of a former theater group executive: tried, gave up

The European and American markets and the domestic market are very different, and there is almost no reference significance in terminal operations. But I think there are a few trend judgments that can be enlightened. First, the growth of national strength brings industrial development, we can see the recent situation of the film industry in Southeast Asia, and we can also see that the film country is not only the quantity, but also the content influence, which will have a spillover impact with national strength and people's self-confidence; Second, do not be superstitious about young people, the structure of the moviegoers in the future will be more healthy and rational, and if the viewing preferences of the 5-15-year-old and 40-50-year-old population are taken seriously, it is conducive to the prosperity of the overall supply side.

On the whole, I still think that cinema is not a money-losing business, but who can make money and how to make money is not a proposition that an individual can solve in the short term - the industry needs to make truly ambitious and drastic changes in a limited space.

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