Theaters

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HONG KONG The line outside the five-screen multiplex stretches around the corner. The marquee advertises Hollywood’s latest action blockbuster.

Inside, the air is heavy with the smell of popcorn and at the concession stand a teenage couple stocks up on cola, chocolates and dried squid

Welcome to Asia, where U.S. entertainment companies are battling for a piece of the world’s fastest growing film market.

With the cost of making movies skyrocketing, U.S. box office revenues are no longer enough to break even, much less turn a profit. So Hollywood is depending more on overseas for profits.

According to the Motion Picture Association of America, more than 50 percent of Hollywood studios’ theatrical revenues came from outside the United States in 1996.

In Asia, Hollywood is being aided by a boom in construction of multiplex theaters.

From Tokyo to Singapore, a revolution in entertainment is taking place. Old, single-screen theaters, notorious for their moldy seats and scratchy sound systems, are being replaced by glittering entertainment complexes.

Michael Connors, MPAA’s senior vice president for Asia, who is based in Singapore, said: “Going to the cinema is now more than just (seeing) a film. They are creating a setting that is attractive to the whole family.”

Peter Tam, executive director at Golden Harvest Entertainment, Hong Kong’s biggest filmmaker and a leader in cinema construction, said “these multiplex theaters are a one-stop shop for entertainment. They become a meeting place where people gather,” he said.

As a result, after years of declining theater attendance, Asians are turning off their television sets and going to the movies.

And Hollywood studios such as Warner Bros., Universal Pictures, Walt Disney Co. and 20th Century Fox are making a killing.

Analysts say that U.S. theatrical revenues from Hong Kong more than doubled in 1996. Singapore and Thailand saw growth of around 50 percent in 1996, while in Malaysia, revenues shot up 80 percent last year.

“The prospects for continued growth in Asia are 100 percent. It is fast and furious,” said Connors. “(Audiences) like action out here; the bulk of the business involves big stars.”

Ivan Cheah, Warner Bros. senior vice president for theatrical distribution in Asia, said construction of new screens in Asia has been the driving force behind his company’s success in the region. “The growth (in Warner Bros. box office revenues) in countries where multiplex theaters has started has been tremendous for us, in triple digits.”

In Thailand, where about 10 new multiplex theaters have opened over the past three years, Warner Bros.’ billings have risen more than 300 percent, he said.

Tam used Steven Spielberg’s dinosaur epic “Jurassic Park” as an example.

“Five years ago the biggest grossing film in Thailand took in around 30 million baht ($1.2 million U.S.). When the theater construction boom was accelerating, ‘Jurassic Park’ made more than 80 million baht ($3.2 million U.S.). And now that construction in Thailand is reaching its peak, ‘Lost World’ is expected to make more than 120 million baht ($4.8 million U.S.).”

Such growth could not come at a better time for Hollywood studios, which are paying more than ever for big-name stars and cutting-edge special effects.

Credit Suisse First Boston media analyst Laura Martin said: “The cost of films is going up faster than earning streams, so they need growth in offshore markets to finance top talent.”

For decades Hollywood studios have focused on Europe, not Asia, for overseas revenues, but that is changing. Europe accounted for 47 percent of Hollywood studios’ overseas theatrical revenues in 1996, according to analysts. While Asia’s total was lower, at 30 percent, it was up sharply from 26 percent in 1995 and 22 percent a year earlier. Clearly, Asia is closing the gap and will likely surpass Europe soon, studio executives and analysts said.

Cheah of Warner Bros. is confident. “The surface has really only just been scratched; we are entering into a period of unprecedented growth in this region.”

With South Asian growth well under way, developers are already looking for new markets in which to grow. The new-term expansion target is South Korea.

Always a strong market for U.S. films, South Korea had been hampered because tight restrictions on foreign ownership of land curtailed construction of multiplex theaters. But in the current era of deregulation, a multiplex construction boom is also occuring in that country. Golden Harvest and its partner Village Koadshew of Australia are planning to build 11 multiplexes there by the end of the century.

As a result, Cheah said Warner Bros. is projecting triple-digit annual growth in its theatrical revenues in South Korea in the coming years.

Another potentially massive, lucrative market is China. As of yet, the world’s most populous nation is largely virgin territory for U.S. films. It has only been since “The Fugitive” was released in Beijing two years ago that the Chinese government has allowed the 50-50 box-office split that is standard through the rest of the world.

Conners of the MPAA summed up the attitude of most investors in China: “We need to be patient; one day it is going to be huge.”

So are Asian filmmakers feeling threatened by this avalanche of American movies?

Tam is pragmatic. “The American films would have come anyway. Without multiplex theaters the local films would not have had a slot. Now, if they (local Asian films) don’t attract enough people, we can put them in one of the smaller theaters and they can go on playing forever.”

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