For the film industry, the memories of 2022 are definitely not pleasant.
According to Maoyan data, more than half of the screening market in 2022 failed to reach 50% of its maximum screening capacity. The impact on the industry as a whole is fatal. Whether it is film companies mainly based on theatrical assets or film investment, they have been affected by the wave of closures and film shortages to varying degrees, especially in the second and fourth quarters.
At the end of April, listed film companies released their financial reports for last year and the first quarter of this year. On the whole, almost all listed film companies were losing money last year, and the net profit fell from 10% to 2000% year-on-year, of which Wanda, Huayi and Guangguang led the loss. However, in the first quarter of this year, with the blessing of the second Spring Festival in history, all companies except Bona achieved year-on-year profit expansion or loss narrowing.
The impact of force majeure in the industry is holistic, but in the face of common risks, different companies still show different anti-risk capabilities and differences in strategic shifts.
Wanda: Asset-light, risk reduction
After briefly recording a profit of 106 million yuan in 2021, Wanda Film had a net loss of 1.923 billion yuan in 2022, down 1908% year-on-year.
The biggest impact of the wave of theater closures in 2022 is the listed companies that hold theater lines, which is also the biggest reason for Wanda Film's loss. In the revenue composition of Wanda Film, the revenue from watching movies, merchandise and catering sales accounted for nearly 70% of the total revenue.
According to the financial report, in 2022, Wanda Film will achieve a box office of 4.39 billion yuan (excluding service fees), down 29.4% from the same period of the previous year, and the number of moviegoers will be 110 million, down 33% from the same period of the previous year. However, the decline rate of both indicators was lower than the national average, and its cumulative market share also reached 16.8%, an increase of 2.1% year-on-year.
Although the decline is largely due to force majeure factors, it inevitably exposes the risks of the asset-heavy model, and Wanda Film has clarified the future development direction in its financial report - slowing down the expansion of theaters and steadily increasing asset-light income. During the Reporting Period, Wanda opened 38 directly-operated cinemas, closed 33 directly-operated cinemas and opened 65 newly opened asset-light cinemas. Among them, the closure or transfer of theaters with poor tail operating efficiency will further reduce operational risks, reduce future cash flow expenditures, and improve overall asset quality.
The specific plan for 2023 is to build 10-20 new high-quality cinemas and 50-60 asset-light cinemas, orderly promote the external cinema agency construction model, provide design, construction, technology and cost services for other cinemas in the market, and find new profit growth points.
However, although this part of the revenue is important, it is not the largest revenue component of Wanda's decline in 2022. According to the financial report, the revenue of the production and distribution of movies and TV series and related businesses has decreased by 60.61% and 77.4% compared with 2021, and its proportion in total revenue has also fallen from 13.11% to 5.49% in 2022.
In terms of movies, Wanda Film and Television originally planned to release 12 movies, but actually screened 7, of which 6 were the main control projectors. At the top of the list are "Brother, Hello" and "Want to See You" only achieved box office 550 million yuan and 400 million yuan respectively. During the reporting period, the project "Mozart in Outer Space", which had high hopes, performed inaccurately, and the final box office was only 223 million.
By the first quarter of this year, the revenue has improved significantly, achieving a box office of 2.16 billion yuan (excluding service fees), which is close to half of last year's results. The movie "Want to See You", which was mainly invested and controlled, finally achieved a box office of 400 million yuan, and also participated in the investment of "The Wandering Earth 2" and "Bear Haunted: Bear Core with Me" in the Spring Festival file to obtain better investment returns. The main investment and control films planned to be released this year include "Peacekeeping Riot Squad", "Looking for Her", "Three Major Team" and so on.
Huayi Brothers: Waiting for the new film to be saved
The second largest loss was Huayi Brothers, with a net loss of 982 million yuan, down 298.72% year-on-year.
The same is the asset-light transformation, and Huayi transferred out the real-life entertainment business. In 2022, the brand licensing and live entertainment business fell from 8.39% to 2.81% in the total revenue structure. In the financial report, Huayi Brothers attributed it to "the impact on the expansion of new projects and the low operating rate of the park", and hoped to "introduce high-quality partners and further focus on the asset-light model with content operation as the core" in the future.
This is also in line with the trend of Huayi from light to heavy and back to content production. However, in the main business film and television entertainment sector, which accounts for 86.35% of the revenue, among the top 5 film and television works that achieved revenue during the reporting period, one was an online movie, one was a TV series, and one was "Samurai God's Order" in 2021, and the proportion of movies decreased.
Even in the first quarter of this year, Huayi Brothers still did not achieve a turnaround, with a loss of 11 million yuan, a year-on-year loss narrowing by 91.99%. The works released during the reporting period mainly included "The Wandering Earth 2", which participated in the investment, and the other main investment and control works such as "Love is Delicious" only had a box office of 14.53 million, and "Rock Tibetan Mastiff: Riding the Wind and Waves" only had a box office of 1.47 million.
It can be intuitively seen that in the field of theatrical films, the content production capacity of Huayi Brothers has dropped significantly compared with the past, and the market influence is no longer there. In the rest of this year, there is only one National Day film "Volunteers: Heroic Attack" that has a clear release plan. Other well-known directorial works such as "Predecessor 4: Teenage Marriage", "Dog Formation", "Do Not Disturb 3" are still in the production process.
After breaking up with Feng Xiaogang, whether Huayi Brothers' performance can rejuvenate in the case of a serious lack of new growth points is still closely tied to the market performance of the big director's new works.
Light: Increase the importance of the head project
Guangguang Media, which has always had stable profitability, also recorded a net loss of 702 million yuan in 2022, which is a real loss this year compared with the "loss caused by the adjustment of the accounting method of the partnership" claimed in the previous year.
Regarding the reasons for the loss, Guangguang said in the financial report, "Due to the impact of the industry, the release plan of most of the company's films has been postponed, and the number of films released during the year is limited, and the box office performance has also been affected to a certain extent." ”
However, this loss situation has been significantly alleviated in the first quarter of this year, and the Spring Festival films "Deep Sea", "Manjiang Hong" and "Exchange Life" all participated in the investment, and the net profit in the first quarter reached 122 million, a year-on-year increase of 63.38%.
Specific to the revenue structure, the proportion of film and related derivative businesses in 2022 will be basically the same, close to 80%; The proportion of TV drama business in total revenue plummeted from 9.15% in 2021 to 0.05%, in sharp contrast to PropNex; Brokerage business and others increased, accounting for 8.84%.
Whether in terms of the number of projects or the total box office, the large-scale ability of light in the field of theatrical films has been formed. In the wave of closures and film famines in the second quarter of 2022, Light still released "I Really Hate Long-distance Relationships" and became the champion of May 1st, eventually achieving 165 million box office.
Batch control of medium-cost films has always been the magic weapon of light to maintain stable revenue, but in the financial report, light also revealed subtle changes in future strategic decisions - under the premise of strict cost control, on the basis of ensuring excellent quality, appropriately increase the proportion of medium-sized projects and above the top of the project, and increase the productivity of the head content.
In addition, some adjustment actions have already begun in 2022. In addition to the original animation film label "Color Stripe House", Light has established a new animation film label "Light Animation", aiming to produce the company's own animated films, and the main task in the early stage is to develop the Chinese mythological universe system that the company spent two years combing and building. At present, the first work of light animation "Xiaoqian" is in production and is expected to be released next year.
In the financial report, Guangguang understood this action as "As the company's animation business continues to grow, animation production forces are also increasingly scarce." In addition to investing in and forming several animation production companies early, the company will start to set up an internal animation production team in 2022, which will shorten the production cycle and improve production efficiency while improving content quality, providing a strong guarantee for the production of animated films. "This shows Light's long-term confidence in the animated film market and its own business."
At the same time, the financial report revealed that Guangguang's plan to "train 20 excellent producers" is progressing smoothly, which strengthens the company's ability to operate multiple projects at the same time; More than 60 writers and directors have been contracted, and have accumulated successful and replicable valuable experience on multiple projects.
Compared with the model of binding head creators, the large-scale production system makes Guangguang Media significantly more resistant to risks. Not long ago, Wang Changtian, chairman of Guangguang Media, emphasized in an internal letter that "increasing the application of AI in the main links of film production" is also a concentrated embodiment of this large-scale and standardized thinking. However, whether the specific results can adapt to market changes remains to be verified.
Boena: One trick is eaten all over the world
In stark contrast to the light is Bona, one by scale and the other by absolute head.
In the first year of A-share listing, Bona's annual net loss was only 72 million yuan, although it expanded by 119.88% year-on-year, but it was already among the best in the industry last year.
Bona, which has always regarded "main theme commercial film" as its business card, is still inseparable from this label when it achieved such results last year. According to the financial report, Bona released only 5 films last year, and only 3 main investors and controllers, but "Shuimen Bridge of Changjin Lake" alone has achieved a box office of 4.067 billion, accounting for 13.58% of the total box office of the film market for the whole year.
However, this also had an impact on PropNex's financial report in the first quarter of this year, after losing "Changjin Lake", PropNex was the only listed company with a sharp year-on-year decline in revenue and net profit in the first quarter, with a net loss of 108 million yuan.
Specific to the composition of revenue, the proportion of film investment in total revenue fell from 45.48% to 34.67%, and the vacated proportion was allocated to the income of film distribution, dramas and theaters. It is worth mentioning that the drama business, although currently only accounting for 4.16% of total revenue, has achieved a year-on-year increase of 154.74%. During the reporting period, Bona's "Under the Sun" sister film "Unexpected" was broadcast exclusively on Youku platform.
From the development strategy of the drama business, the financial report clearly mentioned that Bona intends to "expand the film theme of the main theme to the field of online dramas/TV dramas with rich formats and a wide audience". At present, the key drama "Shangganling" for the 70th anniversary of the victory of the War to Resist US Aggression and Aid Korea has been launched.
Strong binding to a certain type is both an advantage and a risk. In the film market, in addition to continuing to play the operational advantages of the main theme film, Bona also mentioned that "it will actively seek the diversification of film types", such as the sci-fi film "Sanxingdui: Future Apocalypse", which has been approved.
China Film: Vigorously develop CINITY Cinema
China Film Group's loss of 215 million yuan in 2022 is also within the acceptable range.
In the composition of the business, the revenue decline of the creative sector was the most obvious, down 64.75% from the previous year, and now only accounts for 14% of the total revenue. In 2022, China Film will lead or participate in the production and market of a total of 14 films, compared with 24 in 2021, which is a reasonable decline.
The popularity of the Spring Festival in the first quarter directly drove the strong rebound of China Film's revenue. The top four films at the box office of the Spring Festival are all led or produced by China Film, with a total revenue of 1.445 billion yuan and a net profit of 182 million yuan in the first quarter, all of which have achieved a year-on-year increase of more than 50%.
The distribution, screening, and technology sectors were relatively stable, with lower declines than overall. Among them, in terms of distribution, China Film has released a total of 448 films, and the ratio of domestic films to imported films has changed. In 2021, China Film will release 92 imported films, accounting for 66.46% of the total box office of imported films in the same period in the country, and 61 imported films will be released in 2022, with a cumulative box office of 2.31 billion yuan, accounting for 57.13% of the total box office of imported films in the same period in the country, while this ratio of domestic films is increasing.
In terms of screening, the market share of China Film Screen was 27.91%, and a total of 129 new theaters were joined by its subordinate control and shareholding theaters, and 858 new screens were added. In terms of technology, CINITY Cinema has become a new growth point, and the technology has been registered in the United States. Wanda, Hengdian, UME, Jinyi and many other film investment companies have cooperated with China Film to build CINITY Cinemas, and as of the end of the reporting period, 115 CINITY Cinemas have been opened in China, 9 cinemas to be opened have been installed, and nearly 100 cinemas are in planning and installation.
On the whole, the objective impact of the epidemic on the film market has dissipated, but the impact on the production side is more long-term. Whether the thinking inertia and path dependence of established film companies at the content production level can continue to be effective, whether they can quickly restore high-quality reserves after getting rid of the impact of the epidemic, and maintain efficient output will become hidden variables in the development of the film market this year.