Stiff competition sends cinemas to the archives

SHENYANG -- Explosive cinema growth in recent years has led to fierce competition, forcing China's picture palaces to come up with new ideas for making ends meet.

A report released by PricewaterhouseCoopers (PwC) in May showed that the number of movie screens in the Chinese mainland increased 10-fold over the past decade, meaning nine new screens are installed around the country every day.

In Shenyang, capital of northeast China's Liaoning Province, the number of screens in the city's cinemas jumped 44 percent to 716 last year, according to the city's 2012 film market report released by the Shenyang City Bureau of Culture, Radio, Film and TV.

Although China's box office for the first half of the year exceeded 11 billion yuan ($1.78 billion), the increase in new cinemas led to stiff price competition, and therefore, lower profitability, said Wang Cheng, market manager of the Shenyang branch of Hong Kong-based Orange Sky Golden Harvest Cinemas (OSGH Cinemas).

Costs, including those for rent and labor, keep climbing, but new cinemas opening nearby have dragged audiences away, said Wang.

A movie ticket costs 20 yuan, on average, and if a ticket is sold for less than 20 yuan, there would be no profit, he said.

However, to pull audiences away from competitors, most of the city's cinemas offer a group purchasing rate of 20 yuan per ticket, and some even offer an annual deal that brings the price down to 9.9 yuan per ticket, which is not profitable, said Liu Na, a market specialist with a local cinema called Huaxing.