Entertainmentmovie business takes a beating as costs bite

Last year four Hollywood blockbusters grossed over Bt100 million each in Thailand: "SpiderMan 3", "Harry Potter and the Order of the Phoenix", "The Transformer" and "Pirates of the Caribbean: At World's End". The average ticket cost is around Bt120.

This year only "The Mummy: Tomb of the Dragon Emperor" has reached the Bt100million mark while "Batman: The Dark Knight" earned only Bt80 million in Thailand.

To filmdistributors this indicates a severe drop in moviegoers' appetite for outofhome entertain¬ment at a time when consumers are cutting expenses amid economic and political uncertainties.

"At this time only a few block¬busters can attract the audience. Consumers can't afford high enter¬tainment costs, and the situation is likely to continue until next year," said Jirath Pavaravadhana, vice pres¬ident of the moviedistributor Rose Media and Entertainment. He said all Thai movies released in the first half of the year had posted lowerthanexpected revenue.

The company has accordingly reduced its marketing activities with theatres to save costs and maintain profit margins. It will release only eight movies this year, down from 12 last year. The number of screens will also be reduced. To boost revenue, Rose is also launching a cable cartoon channel in September and focussing more on VCDs and DVDs as more clients entertain themselves at home.

Suraphong Triamchanchai, chief executive of major local moviedis¬tributor M Pictures Entertainment, said that the decline of the audience number in the second and third quarters was due to seasonal factors and predicted the number would pick up in the fourth quarter. However, he admitted that the tur¬bulent political situation, if not ended soon, could gravely affect the movie business.

M Pictures this year plans to release around 50 titles, up from 30 last year. He said the revenue from selling movies to the theatres might drop by 10 to 15 per cent from last year but revenue from selling movie rights to VCD and DVDmakers would increase.

"Therefore our revenue this year is unlikely to fall. The revenue from selling rights to VCD and DVD accounts for 70 per cent of the total," he added.

M Pictures targets combined rev¬enue from selling movie rights and the moviedistribution business of Bt200 million this year. The compa¬ny has no plan to reduce the number of releases next year, most of which are locked in by advance contracts.

Moreover, movies have to be in line with the theatreexpansion plans of its parent company, Major Cineplex, which controls over 70 per cent of all theatres in Thailand, totalling 316 screens and about 76,500 seats. Despite the smaller audiences, Major will continue to expand its network over the next few years. The company will add 22 screens at four locations in the sec¬ond half and at least 22 screens next year.

Walt Disney Studios Motion Pictures Thailand is the other dis¬tributor feeling the pinch of the slow¬ing economy.

"Our marketing budget for one film used to be around Bt10 million, but with the present dull sentiment of consumers, we've cut the market¬ing budget to Bt8 million per film," said the company's marketing direc¬tor Dujdao Promobol.

Walt Disney Thailand will releas¬es five titles this year, down from 10 last year. Three of the five were released in the first half, and Dujdao is pleased that they met their revenue targets.

Total box office revenue in July was Bt360 million, according to Tisco Securities research. Though 20 per cent down from the same month last year, it grew 28 per cent from the previous month. The securities house said that the positive trend had continued in August, on the back of the recent decline in fuel prices, which in turn should ease inflation¬ary pressures and improve dispos¬able income.

"However, the positive effects of a decline in inflation could be offset by heightened political risks following the massive antigovernment protest in Bangkok," it said.

Slow traffic at movie theatres is a reason why Tisco revised down its 2008 earning target for Major, the only listed theatreoperator, by 811 per cent.

UOB Kayhian (Thailand) Securities, noted that many block¬busters, including "Iron Man", "Indiana Jones" and "Narnia 2" had revenue lower than expected, large¬ly as a result of lower ticket prices and less advertising.