Smart Cinema Has a Five-Year Plan of One Billion New Screens Across China

The Chinese Start-up Smart Cinema is Looking to Bridge the Gap Between the Box-Office & Digital Release Windows

This week in Shenzhen Jack Gao, former head of Wanda’s cinema ventures and interim chief of its American subsidiaries; Legendary Entertainment and its formerly controlled AMC Theaters, announced a brand new entertainment-tech venture for China – the Smart Cinema APP.

It is not a movie ticketing app like Maoyan-Weiying, nor is it an OTT or Streaming platform like iQiyi, nor is it a content creator with its own platform like Tencent Video. To best sum it up in a Western perspective, it is the bridge that fills in the gap between the theatrical release window and that of VOD and Home Video aka Blu-ray / DVD.

A gap that has ever been decreasing and one that cinema chains in North America have been decrying for years, claiming that since the days of VHS to DVD to VOD and now OTT & Streaming, these new technologies have been cutting into their established cinema revenue sources.

An issue that is both real and not. An issue that cinema chains need to face the music and change with the growing technological achievements that allow more people, more access, to movies at all time.

An issue that China so-far has not faced, as the rise of the cinema market, IMAX, 3D screens, and streaming platforms have been relative to one another. With all of these relative markets growing side-by-side. With the exception of VOD, a segment of the market that has been gobbled up and integrated into the streaming platforms of China – rather than sitting on its own, as it does here in the U.S.

If Smart Cinemas were opening in North America, I feel they would be met with more hostile opposition than even MoviePass has faced from certain cinema chain CEO.  I’m not 100% sold on this idea, but if it could work somewhere it would be China.

Smart Cinemas is looking to take its place in China, in a market that has a large discrepancy between the cinema availability and quality from 1st & 2nd tier cities, mostly on the Eastern seaboard of China, and those of 3rd & 4th tiered locations in the rest of China.

A gap that is at this moment the only true avenue of growth for China’s plateauing box-office. An area of the market that Smart Cinemas is looking to integrate itself into, rather than compete against, as another form of cinema viewing.

Smart Cinemas is not a traditional VOD service but one that exists side-by-side of the box-office receipts themselves. Allowing moviegoers to purchase box-office tickets, at prices around 25RMB ($4USD) and watch the movie available on the APP as it is still in the movie theaters at 2K resolution. The standard resolution of Chinese digital cinema projectors across the Middle Kingdom.

This is a viable option in cities with limited or no available movie theaters, or quality cinemas, for this specific strategy to work, i.e. 3rd & 4th tiered cities, and not in major metropolitan areas of Beijing, Shanghai, Guangzhou.

The prices being the same as the actual box-office tickets appears to me to be a non-starter for established metropolitan areas, that have led China’s box-office boom. The question here, lies in the 1st & 2nd tiered cities, on why would moviegoers shell out full-price for a movie that is still in the cinema when they could watch it for that same very price on the big screen?

An obstacle that I am sure the company has already addressed in its business model and rollout, but let us take a gander on how they may adjust this model to fit into the more established theatrical venues of 1st tier cities.

Smart Cinemas could possibly be looking at negotiating terms with the major cinema chains (something that they said is apart of their strategy) to place new major releases onto their app on the 10th day of the movies release, in key regions. As nearly every movie in China makes the bulk of its money, sometimes 90-95% of their entire theatrical run in the first ten days.

Placing strategic films on the app, with a discounted rate that is near-equal to but below movie ticket value, on the tenth day of release may drum up a repeat viewing of the film. That certain demographics – China is full of data analysis availability – my not purchase at full or premium price at a major cinema chain.

Another obstacle that this new entertainment-tech venture faces is, in-home projection with 2K resolution capabilities, could allow people to have at home screenings via the purchase of one single ticket. An entire extended family gathering at one’s home for dinner, with a home theater experience for the price of one ticket.

Potential safeguards could be put into place for this, or this may be apart of their strategy all along. With measures in place to equate for this obvious occurrence, but it is an occurrence that in the short term in rural communities would be worth the one-ticket per-family to watch together at home. In rural areas that do not have access to movie theaters, thus being a purchase of a box-office ticket that did not exist in the first place.

These are question that have surely been addressed, and if not thoroughly answered, will be through trial and error for the Smart Cinema team. As the app gains traction in the Middle Kingdom.

The Smart Cinema APP falls under the Regulatory guidance of CRISFT a division of SARFT. The project was initiated by China Research Institute of Film Science and Technology in 2015, and then carried out by tech firm Yuntu Shidai. Smart Cinemas appears to have the full backing of the governing bodies of the Chinese Cultural Industries.

If this venture’s business model does work in China, could we see it copied here in North America to bridge the ever shrinking gap between theatrical to VOD to Blu-ray release windows, of shared monetization that theater chains have been pushing back against since VOD and OTT streaming has hit the market?

That is yet to be seen, but I would like to wish the best of luck to Jack Q. Gao and Luke Xiang in this interesting venture, and let us see if China makes another app breakthrough in the way they have been leading social media (WeChat), fintech (Alipay), and online movie ticket purchasing (Maoyan-Weiying). We shall see.

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About the Author
Born and raised in the Missouri-Ozarks Ryan studied Film Production, and East Asian Culture, at the University of Kansas where he was a UGRA recipient that led him on a seven-year long, Journey From the West, to China. Where he worked with Warner Brothers, the China Film Group Corp. and the National Bureau of Statistics of China. Before returning to the States, where he specializes in Chinese Anime & Comics, China’s Box-Office, and Chinese entertainment-tech industries. He has a dog in China, Abigail, and a dog in the Arkansas-Ozarks, King Blue, who help ease his anxiety of suffering from the “Two-Dimensional Complex” that is trying to understand the Culture Industry landscapes of the Middle Kingdom.