Cinemas see growth despite challenging times

The cinema business has reported slower growth this year of between 10 and 15 per cent, down from 18 per cent last year, according to Kasikorn Research Centre.

However ticket sales are expected to increase from Bt4.6 billion last year to between Bt5 billion and Bt5.3 billion this year.

Piracy is a serious problem faced by the local cinema industry, especially during economically difficult times. People can watch movies on home video players for less than the cost of cinema tickets.

Between 340 and 350 titles will be screened at cinemas this year, up from 285 last year. Of these 40 to 50 will be Thai films.

Anavach Ongvasith, chief cinema officer at the Major Cineplex Group, however said strong inflation and high living costs had not severely affected the cinema business, which was recognised as a cheap entertainment product.

"Consumers continue to maintain their outgoing lifestyle. They have not yet cut personal spending on cheap entertainment like the cinema," said Anavach. He added that inflation primarily affected those with medium and lower incomes, and they would usually adjust by cutting spending on unnecessary products such as clothing and overseas or domestic travel.

Anavach said that many businesses, including Major Cineplex, had increased salaries or compensated employees to cope with higher living costs.

He added that consumers were still watching movies about 1.8 times a month on average, and up to two to three times a month for heavy users.

"The sales of tickets depends on the movies being screened at the time. During the first half of this year more than 10 movies, including 'The Chronicles of Narnia: Prince Caspian', 'Indiana Jones and the Kingdom of the Crystal Skull' and 'Pid Term Yai Hua Jai Wah Woon', had ticket sales of more than Bt50 million. I also believe that ticket sales in the second half will be higher with the coming of larger blockbusters such as 'Batman: The Dark Knight', 'The Mummy 3: Tomb of the Dragon Emperor', 'Wanted', 'Harry Potter and the Half-Blood Prince' and 'Ong Bak 2'," said Anavach.

He said that Major Cineplex Group had also negotiated with many film distributors on joint marketing campaigns to make the best use of its marketing budget.

"We want to encourage our existing and new clients by adding additional value to the films and through the efficient use of our marketing budget. This will help us maintain our performance," said Anavach.

Major Cineplex recently reported first quarter revenues of Bt1.2 billion, 8.7 per cent down from Bt1.5 billion posted for the same quarter last year.

Excluding gains from disposal of investment, the company's core net profit in the first quarter was at Bt221.6 million, up 24.7 per cent year on year from Bt196.9 million in the same period last year. However, the core net profit was a disappointing 25 per cent of the company's and 26 per cent of the industry's "consensus full-year expectations", pulled down by weak cinema admission revenue and gross margins.

Admission revenue dropped 29 per cent year on year, given seasonal and very popular admissions in the first quarter last year boosted by "The Legend of King Naresuan".

Nalaanlat Nunnonl, chief marketing officer of Pongsaap, operator of Mang Pong VCD and DVD shops, said that while the high cost of living had affected many business sectors, the company saw the situation as positive for the home-entertainment business.

"Our VCDs and DVDs are cheap entertainment products with prices starting from only Bt59 for a VCD. They are good alternatives for consumers who seek entertainment that they can share with the family at home. In addition to the cheap price, this type of entertainment product can be rotated among family members and friends.

"They can repeat their viewing many times," she said. "Many consumers have moved from watching movies at the cinema to buying VCDs and DVDs to watch at home. It costs Bt140 to a watch movie. They can sometimes purchase up to three VCD titles for that price," she said.

Nalaanlat said Mang Pong has launched proactive marketing campaigns to keep loyalty amongst customers and to attract new clients. These included a buy-one-get-two campaign and another that allowed individual customers to enjoy a discount of up to 60 per cent.