Potential tapped
23-10-2017

Potential tapped

Photo: Viet Tuan

Beta Media entered Vietnam’s cinema market as a new player focusing on the budget segment and has well and truly made a mark.

People in northern Bac Giang province and Long Xuyen city in the Mekong Delta’s An Giang province will have the opportunity to go to a Beta Cineplex for the first time come late September and October. Mr. Bui Quang Minh, founder of Beta Media and General Director of Beta Corp., told VET that in its plans for this year, besides Bac Giang and Long Xuyen, Beta Media will also open two other Beta Cineplex cinemas, at locations he declined to reveal, bringing its total to ten.

Since 2015, after the launch of the first Beta Cineplex in northern Thai Nguyen city, with total investment of VND10 billion ($500,000), Beta Media has built and opened others in Bien Hoa city in southern Dong Nai province, in northern Thanh Hoa province, and two in My Dinh and Thanh Xuan districts in Hanoi. It has also officially entered into the production and distribution of films, producing five films and distributing 15 foreign films around the country.

The expansion of Beta Cineplex has brought a new form of entertainment to many people who have never seen blockbuster movies on the silver screen before. It’s also changed the complexion of Vietnam cinema market. Beta Media received $3.5 million in investment capital from Vietnam Investments Group (VIG), an investor in the Galaxy Cinema chain and Galaxy Studios as well as many food and beverage (F&B) brands, and recently signed an investment agreement with Blue HK, a financial group from Hong Kong, worth VND600 billion ($27.5 million). These are major steps in Beta Media developing at a solid pace.

New player, new strategy

The decision to liberalize the movie industry in 1995 opened up a new era in Vietnam’s cinema market. While it was controlled by State-owned enterprises for many decades, foreign cinema chains now dominate, especially those from South Korea. Investing in cinemas in provinces, where tickets are sold for just two-thirds of the price in larger cities or even less than half, is a good strategy for new players, especially domestic enterprises like Beta Media. “Vietnam’s film market is growing and there is a lot of potential, while many modern cinemas only focus on the high-end segment with high ticket prices compared to incomes in the country,” said Mr. Minh. “We have a great opportunity to create a new model that serves many types of customers, making going to the movies easier.”

One problem in the market is finding prime locations for cinemas, as there are technical specifications relating to floor area and screen height to be met. After finding a suitable location, investors must then negotiate a reasonable rental. A recent report from real estate consultants CBRE pointed out that rentals in Vietnam are among the most expensive in Southeast Asia. In particular, retail floor rentals in major cities such as Ho Chi Minh City have increased 15 per cent over the past year, or three times the market average. Investing in cinemas in provinces is therefore cheaper, at about 60 to 70 per cent of what’s needed in a major city, according to Mr. Minh.

And Vietnam is considered to have great potential for development, with a population now exceeding 90 million, most of whom are young people. The average number of Vietnamese people going to the cinema, however, is lower than in other countries in the region. According to figures from Beta Media, the average the number of times a Vietnamese person goes to the cinema is just one-sixth of the average in Malaysia and one-twelfth of in South Korea. “The ratio of cinema-goers to cinemas is low due to the distance from where people live to a cinema,” Mr. Minh said. “Therefore, I prefer to open cinemas in the suburbs of a city, where screening good quality films creates a loyal customer base.”

In its business strategy, Beta Media wants to develop the Beta Cineplex brand in a more diverse manner. In all of its cinemas are Foodfair areas with hot pots or dim sum as well as fast food and popcorn. Selling food at its cinemas brings in considerable revenue, together with ticket sales and advertising. On average, two people at the cinema will spend VND100,000-150,000 ($4-$5) on two soft drinks and a box of popcorn, nearly equal the cost of the tickets.

As a new form of entertainment in provinces, the whole family can head to a Beta Cineplex together, watching a movie and also eating out. “If I’ve recognized the potential in the low-cost cinema segment, surely others have also recognized it,” Mr. Minh said. “I decided to build Beta Cineplex as an entertainment center rather than just for watching movies. This is a new option for customers.”

Competitive market

According to the Ministry of Culture, Sports, and Tourism, there were less than 100 cinema screens in Vietnam in 2009, with 26 in Hanoi and 65 in Ho Chi Minh City. By the end of 2016, figures from the Vietnam Cinema Department (VCD) show, there were 138 cinemas with 510 screens and a total of 86,500 seats. The local cinema market was dominated by five major players as at the end of 2016, which held a combined market share of 98 per cent: CJ CGV Vietnam (CGV), with 43 per cent, Lotte Cinema Vietnam with 30 per cent, Platinum with 10 per cent, Galaxy Cine with 9 per cent, and BHD with 6 per cent, according to a report from KDB Daewoo, a South Korean securities company. The development of the two largest cinema complexes has created a major challenge for Beta Media.

CGV opened its 50th cinema complex in Vietnam in September, at Parkson Dong Khoi in Ho Chi Minh City’s District 1, with five modern cinemas and 404 seats. The new opening brings its total to 313 in the country with 42,795 seats. In an official statement released in May, the South Korean company said it planned to invest some $200 million over the next four years to upgrade and expand its cinema complexes in Vietnam, including in second-tier cities and remote areas. It posted $79 million in revenue in 2016, 3.3 per cent higher than in 2015, with profit at around $4.1 million, almost triple compared to 2015.

Lotte Cinema Vietnam has also expanded its cinema complexes in certain provinces besides major cities like Hanoi and Ho Chi Minh City. It entered Vietnam in 2008, with its first two cinemas being in Ho Chi Minh City’s District 7 and District 1. It now has a presence in 20 cities and provinces around the country, with 31 cinemas and 21,000 seats. “Entertainment demand is increasing but not being met, especially in smaller cities and in provinces,” Ms. Le Ngoc Tran, Marketing Director at Lotte Cinema Vietnam, told VET. “Lotte Cinema Vietnam has boldly invested in the construction of new cinemas not only in large cities but also in many provinces, to meet recreation demand.”

Building inexpensive cinemas in provinces is a reasonable strategy to adopt but also has many drawbacks. Ms. Tran said that when people have greater demand or a higher standard of living, there will be higher demand as regards services. “Investing in inexpensive cinemas may turn away some people looking for quality products,” she added.

In general, however, Vietnam’s cinema market is attractive for investors. Analysts have said that with revenue growing 20 to 25 per cent a year and entertainment needs among young people being on the rise, the development of cinemas in the country holds great promise. According to Hollywood Reporter magazine, Vietnam is on the list of countries with an annual box office of more than $100 million. The market is clearly going through a boom. Mr. Minh cited figures indicating that, in 2018, total box office revenue in Vietnam is expected to double compared to 2015, to over $200 million. He also mentioned a survey revealing that ticket price is the most important factor in customers choosing which cinemas to go to, according to 80.7 per cent of respondents. Following was the quality of the cinema, including factors such as whether it has a widescreen and superior sound. The least important factor, nominated by 15.1 per cent respondents, is location. “This shows the potential of inexpensive cinemas in provinces,” he believes. 

by Ngoc Lan / VET

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