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Film goers shift venues
By TANG YUANKAI (bjreview)
Updated: 2004-05-18 13:52
Movie watchers head to Internet cafes to watch the latest blockbusters.
Some Internet cafes
will soon feature commercial movies
[newsphoto] |
The movie industry has been going through some tough times. Twenty years ago,
there were 29.3 billion people going to cinemas every year.
In the last decade, the movie industry lost 1 billion in audiences annually,
seeing its annual income shrink from 2 billion yuan ($242 million) in the 1990s
to 900 million yuan ($109 million) in 2003.
The reason is not because the audiences have changed their interest in
movies, but because they have changed the places where they watch movies. Movie
industry insiders attribute the shift in audience venues to pirated movie copies
and Internet cafes.
Statistics show that, by the end of 2003, there were over 79.5 million
netizens in China, 60 percent of them doing their surfing in net cafes.
About 10-15 percent of these net cafe customers frequently watch movies,
while others choose to link online movie websites at home. To the movie
industry, the Internet and net cafes seem to have become their natural
adversaries.
But they should be friends in a win-win relationship on business, said newly
established A-G Entertainment Co., Ltd. (AGEC), which is applying itself to film
promoting and distributing, and offering services for the domestic movie market.
AGEC operates in cooperation with its U.S.-based partner, International Date
Group (Asia) Co., Ltd. On May 1, 2004, AGEC launched a trial operation of a plan
called China Net Cafe A-G Cinema-Line, a new initiative in movie distribution.
The operation would be tried first in big cities such as Beijing, Shanghai,
Guangzhou and Shenzhen.
With AGEC‘s authorization, net cafes that join A-G Cinema-Line will possess
the legal right to feature AGEC’s movies in their cafes. Customers in the
partner net cafes can link to AGEC’s website for movie viewing, for which they
pay. The payment for the movies is distributed between AGEC and its net cafe
partners. The process is similar to setting up a legal video-on-demand system
between the AGEC and its partner net cafes.
Before the plan was launched, people mainly watched movies in net cafes in
one of two ways. The first is watching movies on free websites, or watching by
paying the websites online. The other is the more popular choice of net cafe
owners, who set up their own movie hard disks by downloading from the Internet,
or copying movies from elsewhere. Both these methods have deficiencies. For
example, free movie websites with high link-up speeds are rare, and downloading
or copying movies and offering them to the public without authorization is
illegal.
"We don't want to download movies without copyright authorization," explained
Li Ming, Marketing Manager of the Shanghai-based 3Dtop-Net cafe. "In that way,
neither the movie quality nor charging movie watchers can be guaranteed.
Moreover, we are constantly worrying about being punished by anti-piracy
authorities."
However, if net cafes pay the website so as to let their customers watch free
movies online, they cannot profit from the movies, as their customers only pay
for the cost of Internet surfing.
Net cafe operators would also like to offer high-quality service to customers
who like watching movies online. But they are hamstrung by deficient movie
resources and bad feature quality, due to movies are usually being distributed
through cinemas and TV movie channels.
The environment in net cafes has little chance to match that in cinemas. In
addition, people have to watch movies on computer screens, and listen through
earphones, which definitely reduces vision and audio quality. However, people
have more freedom while watching movies in net cafes: They can choose which
movie to watch, when to watch, as well as how to control the featuring process.
As Internet industries, especially broadband, became more popular, the movie
industry and its affiliates began to seek their active cooperation. Now they
realize that as customers change their habits and behavior toward entertainment,
the only thing suppliers could do is to adjust their operation in accordance
with the new tastes. Hostility and prejudice can just lead to a loss of profit.
Far-sighted business people, like the decision makers at AGEC, discovered the
new road leading to wealth—spreading or selling movies through the Internet.
According to their budget, even if only one customer watches one movie, on each
computer, everyday, in a net cafe possessing 50 computers on average, the total
of 200,000 net cafes in China will make 10 million yuan ($1.21 million) a day,
if charging 1 yuan ($0.12) for a movie. In this scenario the total business
volume generated annually will be 3 billion yuan ($362 million).
The AGEC method is: First, it buys the copyright of some movies from movie
producers; then it distributes the movies through its cinema online partners,
while appointing agents throughout the country to explore more net cafe
resources. The distributor, agent and partner net cafe will share the profits at
a proportion of 5:2:3.
AGEC has already signed agreements with over a dozen agents in Beijing,
Shanghai, Shenzhen and Guangzhou. And, its agent in Beijing has signed with over
40 net cafes, the most among all the agents.
Manager of the Jinlandao Club, a net cafe in Chaoyang District, Beijing, that
signed an agreement with AGEC early on, said that, as AGEC is responsible for
the complete set of featuring software, the net cafe only needs to provide
computers. “We already have over 200 computers, with 20 of them specifically for
movie watching, as online movie audiences account for 10 percent of total
customers,” he said.
The 3Dtop-Net, one of the AGEC’s partner net cafes in Shanghai, also owns
more than 200 computers. Though most of its customers prefer online games, 5-15
percent of them also watch movies in net cafes. Li Ming believes that if the
online cinema alliance had more movies of high quality, and promotion was
efficient, the population of movie audiences in net cafes would increase
substantially.
Wang Yi, Chief Marketing Official of AGEC, is quite confident with their
business in Beijing and Shanghai, because the two cities have enough net cafes,
hardware options and purchasing power. So a considerable profit is a distinct
possibility.
However, as the cinema online plan is still in a trial period, many net cafe
owners would like to be observers. Experts believe there are several reasons for
this. The first problem is control. For example, many customers may start a new
movie, before they finish watching the last one. This makes it difficult to
calculate the cost for the movies they have watched. Another problem is what
happens to the computers designated for movie watching, if there are no movie
customers. People also worried that if there are too many customers watching the
same movie, it may cause an Internet jam.
In spite of those problems, many net cafe owners expressed that they would
most likely join the cinema online plan, once AGEC has established a set of
proper guidelines.
Many people believe that if the alliance of hi-tech companies, movie
distributors and net cafes becomes a reality, it would exploit a huge and
potentially lucrative movie market outside cinemas.
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