An article by Min Lee in last week’s Business Week reported strong growth in China’s box office for January according to China Film Group Corp. chairman Han Sanping. He predicts 2009 will see boffo revenues grow by at least 20% in 2009, totalling 5 billion Chinese yuan ($732 million) for the year.
There’s still an awful lot of untapped potential in China’s vast market. In an interview published by the People's Daily, Han Sanping noted that around 300 smaller cities are without adequate screens. "If these 300 cities each build two or three multiplexes, and if each multiplex builds four or five screens, then we can cover another 300, 400 million people”.
The news is not so good for Media Research Information Bureau, aka MRIB. The company tracks DVD rental activity in the UK, supplying figures to the British Video Association, the UK Film Council and others. But according to the London Gazette, MRIB is facing liquidation. It’s unclear what lies behind this sad turn of events- could it be the decline in rental business, the current economic climate or a combination of the two? Let’s hope someone picks up the reins and continues to provide top quality data charting rental behaviour, especially as the nascent download to rent market begins to take off.
Speaking of which, Marija Jaroslavskaja, research analyst at Screen Digest, has written a fascinating piece for DVD Intelligence, unpacking online business models currently in action.
She points out that the online market is currently dominated by hardware companies (ostensibly Apple iTunes and Microsoft's Xbox Live Marketplace), ‘prepared to sell content at a loss to add value to and promote their core businesses’.
Screen Digest predicts the volume of digital rental and retail transactions will more than quadruple between 2008 and 2012 in the US, and by 2013 consumers in Western Europe will spend around Euros 381 million- ten times the current amount.
iTunes and Xbox Live are expected to capture 65% of the paid movie download market in Western Europe by next year, and their popularity results from ‘a mutually reinforcing dynamic between hardware and content: consumers tend to buy content for a device they already own, while a device becomes more attractive when there is a wide selection of affordable content available for it.’
Jaroslavskaja calls this a 'value-add' subsidisation model, something akin to the ‘loss leader’ approach seen in other areas of the retail sector. And ‘loss' is about right; according to Screen Digest, the Apple iTunes store lost around £0.5 million selling new release movies in the UK in 2008. ‘While consumers spent over £2m on buying new release movies on iTunes’, Jaroslavskaja explains, ‘almost all of this went to the Studios who command up to 110% of the trade price’.
This has an impact on other competing services, claims Jaroslavskaja. ‘Small standalone services are hit by a double whammy of low margin retail prices, which they are unable to influence, and low take-up due to the lack of a device ecosystem. Moreover, small services are in danger of falling short of the minimum guarantees stipulated by studio licences, which further inflates their unit costs. Across Western Europe, service providers made a gross loss of €0.9m from digital retail movies in 2008.’
So unless you can subsidise your movie download service from other interests, like hardware sales, the standalone business would appear to be unsustainable for the time being.
This is very informative,thank you so much for bringing up this.
missy
Posted by: 24 hour package delivery philippines | 14 September 2009 at 11:36 AM