Cinemas all over the world tend to have universal lobby experiences: flashy ads promoting the latest releases, concessions stands hawking popcorn and soft drinks, hordes of moviegoers queued up at ticket counters beneath electronic signboards showing screening details.
But walk into any Chinese cinema and you’re immediately confronted with a unique sight: deserted ticket counters. Instead, China’s legion of young moviegoers—faces glued to their mobile phones—line up behind an array of brightly colored online ticketing machines to print out their tickets to the hottest new Chinese blockbuster.
China’s online ticketing industry is booming. In 2015, 57.5 percent of movie tickets were bought online and 9 out of 10 of those tickets were purchased using a mobile phone, according to a report from Chinese entertainment research firm EntGroup. Analysts predict that nearly three out of every four movie tickets will be purchased online in 2016. Meanwhile, North America, the world’s top film industry for the time being, sells only about 20 percent of its total annual tickets online. So what’s driving the Chinese craze?
Price and Convenience
In a recent report from marketing research firm Ad iiMedia, Chinese moviegoers overwhelmingly cited “convenience of purchase” and “cheaper ticket prices” as their main reasons for purchasing tickets through third-party online ticketing apps.
The average ticket price in China has hovered around $6.50 for the past five years, but with the advent of online ticketing portals, moviegoers can now snap up tickets as cheap as $1.50 on opening weekend. Compare that to North American online ticketing market leaders Fandango and MovieTickets.com, which add a $1 or $2 service charge on top of the average American ticket price of ~$8.50, and it becomes apparent why Chinese moviegoers are flocking to mobile ticketing apps.
Changing Trends in Chinese Moviemaking
In the past, the journey a Chinese film took from production to the end user was straightforward and linear. It started with the production company, then was handed off to a marketing or distribution company, then delivered to exhibitors in the form of theater chains or individual theaters, and finally screened for the moviegoer.
The chain nowadays, however, is far from a straight line. Third-party ticketing apps have disrupted every link—data collected from users help inform production companies what demographics are watching their films and what celebrities have the most bankable appeal, distributors can better target their marketing campaigns, and exhibitors can ensure packed houses on opening weekend. Online ticketing has become so essential that those bankrolling the largest apps (Baidu, Alibaba, and Tencent—collectively known as BAT) are more than willing to subsidize the difference in ticket price; each link in the chain comes out a winner.
The online ticketing arena was once riddled with small-time players, but once BAT began to expand out of solely e-commerce and web services and dipped their toes into the inviting waters of the entertainment industry—each company now produces and distributes films through their own channels—consolidation has happened at lightning speed.
Cat’s Eye (Maoyan), which merged in October 2015 with Meituan Dianping—a group-buying discount website—is the market leader with 23.5 percent market share. Following closely behind is Baidu’s Nuomi ticketing app with 19.5 percent, the Tencent-backed WePiao now combined with Gewala since December 2015 with 13.1 percent, and Alibaba’s Taobao Movies with 9.3 percent market share.
Outlook for 2016 and Beyond
In Hollywood, only 20 percent of movie revenue comes from the box office. In China, the situation is reversed. Box office revenue combined with product placement accounts for nearly 90 to 95 percent. As the entire movie chain develops and matures, the industry will begin to diversify into areas such as merchandising and paid-streaming sites, and the online ticketing apps—now led by Baidu, Alibaba, and Tencent—will be spurring this transition.