With the publication of No. 14 of the General Administration of Radio, Film and Television, "Regulations on the Management of On-Demand Cinema and on-Demand Cinema Line", the on-demand cinema industry, which gathers multiple attributes such as pan-entertainment, commercial real estate and film industry, has suddenly attracted many attentions.

 

 

 

Then what kind of format is the VOD cinema in the end, and what kind of impact will it have on the film industry? The author has made an analysis and forecast on the commercial model and future development of VOD cinema after many verifications.

 

 

 

What kind of format is the on-demand cinema in the end?

 

 

 

As the name implies, the core breakthrough of VOD cinema in viewing mode is "on demand". Audiences can freely broadcast their favorite films on demand in an independent space free from outside interference according to their own time arrangement.

 

 

 

The essence of this format is not only that consumers put forward higher requirements for the quality of movie watching, but also that it meets the new middle class of Chinese cities which are growing up day by day.

 

 

 

For the psychological needs of identity and consumer rituals, consumers are willing to pay a high premium for this experience. High-end routes are obviously more suitable for on-demand cinemas. It's like luxury brands are essentially selling a way of life, not just the goods themselves.

 

 

 

Therefore, it is incomplete to define the consumption scenario of VOD cinema as the derivation and subset of commercial courtyards. Nowadays, many movie audiences enter the cinema not because they are attracted by the content of the film, but because of the social needs, they first decide to go out and then decide what to play. Movies are just one of the choices. As long as the on-demand cinema can provide a good experience, those who choose to go to KTV, table games, amusement parks or even shopping for dinner are also the main consumers.

 

 

 

It can be said that full age, high customer unit price and high stickiness are the goals that the on-demand cinema should pursue. This is particularly evident in the third, fourth and below cities, where the pace of life is relatively slow, the pressure of mortgage and car loans is low, the money is idle, and the demand for experiential entertainment consumption is huge, which is the development focus of VOD cinema in the next 3-5 years. This is consistent with the downward trend of the whole pan-entertainment industry and commercial real estate to the third and fourth-tier cities.

 

 

 

Is the on-demand cinema a good business?

 

 

 

In business, no matter how good the concept of VOD cinema is, it still needs to be analyzed from the most basic business model. Taking the Aurora-on-demand cinema of Baishitong as an example, the general single-store business model is as follows:

 

 

 

The theater area is 150-250 square meters, the number of cinemas is 8-15, and the single cinema area is 10-25 square meters. The initial investment is between 700,000 yuan and 1.5 million yuan, and the cost recovery cycle is about one year.

 

 

 

Regarding the Regulations on the Management of On Demand Cinema and on Demand Courtyard Line promulgated on March 6 this year, the feedback from the industry is mixed. The owners who have been following the formal compliance line are looking forward to the implementation of the new administration. The owners who have not yet joined the large-scale courtyard are in a state of panic after they start to prepare for the closure of the irregular site selection.

 

 

 

According to Miao Kan, co-founder of the Aurora-on-demand cinema of BVT, 70% of the on-demand cinemas on the market will be shut down due to improper location selection and unqualified hardware system. But these stores will also leave a huge market gap after closing. Conservatively, the demand cinema market still has about one year to adjust.

 

 

 

On the other hand, who can get the first batch of VOD courtyard line qualification is also the focus of attention. The requirements for the establishment of VOD cinema line are clearly stipulated in the Regulations on the Management of VOD cinema and VOD cinema line. The threshold mainly lies in the connection of the charging system with the SARFT and the number of stores under its jurisdiction. The number of exclusive copyright of VOD cinema is the key to the competition between the cinema lines.

 

 

 

According to Miao Kan's speculation, the first batch of enterprises to get the qualifications of VOD courtyard line will have 3-5, no accident, Baishitong will be one of them. He led the aurora team in terms of regularity, not only by the depth of strategic cooperation with Blockbuster Digital Cinema Line to obtain genuine film sources, but also from the beginning to adhere to the highest standards of location requirements. At present, more than 50 Aurora-on-demand cinemas have been opened, without exception, in compliance with the operational site selection, of which 80% are shopping centers.

 

 

 

Market Scale and Future Development Forecast

 

 

 

At present, the number of traditional large cinemas in 339 cities is about 9,000. According to incomplete statistics, the amount and conditions of investment are much lower than those of large-scale cinemas on demand. At present, there are about 4-6,000 cinemas in China, of which 70% will face closure after the implementation of the new government. Based on this, it is speculated that in the future, the market holdings of VOD cinemas will be 100,000, with an annual output value of tens of billions of yuan, and there is still a big gap in the market.

 

 

 

In addition, although there are thousands of cinemas in China, the penetration rate at the consumer side is still very low. According to statistics, only about 10% of people have heard of this form of watching movies, and even fewer have experienced it personally.

 

 

 

Therefore, as a newly standardized industry, VOD cinema still has a long way to go in terms of scale and market education. With the improvement of market threshold under the new regulations, Miao Kan speculates that the next six months will be a period of high-speed development of the industry, and the merger and acquisition of on-demand cinemas may become the normal industry. It is expected that in 2019 there will be a large strong brand in the field of on-demand cinemas.

 

 

 

Distribution or will help on-demand cinemas break through the industry ceiling

 

 

 

In the development and extension of VOD cinema industry, distribution is the most popular direction.