Our CEO, Adam Rubins, recently went to China. You can read his pre-trip thoughts below…
I’m about to experience China for the first time, specifically Shanghai and Beijing. For me, this is purely a listening and learning experience and I am under no illusions that there is work to be done in assimilating myself into the business culture. Given I value my personal space, abhor sharing food and am obsessively compulsive about hygiene, I expect to see a few hives.
All that aside, its pretty clear what China can do for my business. This is not a developing market, it is a high growth market and that delivers opportunity for any business smart enough to think globally. Looking at the cinema landscape, China’s box office is on track to hit $4.9 billion this year. To put that in perspective, last year the UK did $1.9bn and the US did $10.9bn. That makes China the 2nd largest box office market in the world, overtaking Japan.The growth is quite incredible. 5,000 new screens opened in 2013 (in 900 new complexes) but the market is still heavily under-screened. If China had the equivalent screens per million head ratio to the US, the country would have over 133,000 screens. In fact, it has only 20,000.
China also leads the way in digital and 3D where is has digitised 92% of its screens. In 2013, the US retained its lead as the largest 3D box office market in the world with a total of $1.75bn. However, in the last 4 years, China’s market share has grown five-fold rising by 47% in 2013 to hit $1.5bn. This growth means China will become the largest 3D market worldwide by the end of this year. And you wondered why movies were still being rolled out in this format.
China is also the 3rd largest film production country in the world after the US and India. Incredibly the market share between local productions and foreign films is around 50/50, amazing given not all foreign films get a release in China due to the import quota system. One way to bypass that is co-production and looking at the criteria, you can see why many Hollywood studios are focusing their attention in this market. A co-production project has to satisfy 3 main criteria:
1. At least one third of the budget must come from a Chinese company
2. A Chinese actor has to play one of the key roles
3. Part of the film has to be shot in China
Get this right and you guarantee both a release and a significant return in investment. Transformers: Age of Extinction delivered an eye watering $320m in box office against $245m in the US.
So where does our new paradigm of marketing movies come in? Our business is an insight led integrated communications approach. Listening to audiences can help you understand behaviours, create targeted outreach strategies and increase levels of engagement using a mix of content and conversation. Ultimately, we track the relationship between awareness and intent and these are two universal truths that deliver success no matter where you are in the world.
It is not only the film market that is growing at a steady rate of knots. Internet penetration (16-64) has increased from 29% to 47% in just 5 years. 73% of internet users are between the ages of 16 and 34 so perfect for communicating to film audiences. Mobile internet access grew to 83% in 2013, significantly higher than the global average opening up all sorts of targeting content opportunities. 82% of internet users purchase at least one product online per month with a further 7% researching products and buying offline. Film is the 4th most talked about subject online (36%) behind mobile phones, computers and fashion so a big appetite to engage in content and conversation. Social networking is part of daily life with only 4% of internet users not having an account with one of the major players (Sina Weibo, QZone, Tencent Weibo, Youku and Ren Ren). China is also a nation of second screeners with only 9% who say they haven’t used a device whilst watching TV, putting China at the forefront of second screening. But consumers still engage with brands by visiting their web-sites (60%) so destinations still lead for brands versus social networking. There has to be an opportunity for change here.
This is a market rich with opportunity and the reason I am excited to be there, is that whilst there is much the Chinese can learn from the way we communicate and engage with audiences to sell branded messages, there is equally a lot we can learn from how digitally active China is as a nation. They lead the way in so many areas so combining some of their learnings with an insight led integrated approach with access to more celebrity talent, more digital content and more stakeholders across that 50% market share means that a relationship is mutually beneficial. Of course, this all sounds well and good in theory. The proof will be in the pudding. And that’s fine, as long as I don’t have to share it.