Market Snapshot: China’s Highly Consolidated Online Movie Ticketing Market

4 min read

The Chinese box office has soared in recent years and the growth is projected to continue. The movie ticket sector is a hot target for tech companies who’ve been sniffing around conventional industries for business opportunities.

China’s online movie ticket sales as a percentage of total sales reached 75% in July 2015, according to market research firm Eguan and the market data service under Chinese authorities. Mostly were through mobile apps.

Source: Eguan
Source: Eguan/Qdaily

 

Source: Eguan
Source: Eguan

The online movie ticket booking market is highly consolidated, and the new entity resulting from the Meituan-Dianping merger holds a dominant position in the market. Tencent-backed WePiao recently merged with Gewala, one of the first online movie ticket booking services in China. Tencent is also an investor in Meituan-Dianping.

The rest of the market is mainly divided between Alibaba and Nuomi, the group-buying service Baidu acquired from Renren.

Source: Bigdata-Research
Source: Bigdata-Research.cn

Like the food delivery and ride-hailing sectors movie ticket booking in China is highly subsidized. Some ticket booking apps take a few yuan for each ticket sold in commission, but no player will turn a significant profit in the near future given their massive subsidy campaigns.

For movie publishers and distributors, those popular movie ticketing apps have become a good place for online marketing campaigns. Tech companies are willing to conduct experiments with them to see what online marketing and promotions stick and which ones flop.

Unsurprisingly these movie ticketing apps are expanding to other categories such as music, arts and sports events. It’s no secret the tech giants behind them are aiming to disrupt the whole entertainment industry, not just bookings.

Maoyan App
Maoyan App

Group-Buying Helped Meituan Take The Lead

In 2012 Meituan, then only significant player in the group-buying sector, decided to develop a separate app for their movie ticket service.

Deals helped the app, called ‘Maoyan’ (‘Cat Eye’), quickly gain traction and surpass the existing movie ticket booking services such as Mtime. Group-buying discounts also helped Baidu’s Nuomi take a nice market share in movie ticket booking early on.

Maoyan generated some 5 billion yuan ($806 million USD) in gross merchandize volume in 2014 and 6 billion yuan ($970 million USD) in the first half of 2015.

Meituan claims that sales through their platform represent some 30% of China’s total box office as of the first half of 2015. The company has now begun working with directors and producers to help publish and promote their movies.

WePiao on WeChat (left) and Mobile QQ
WePiao on WeChat (left) and Mobile QQ

WePiao: The tencent-Backed Dark Horse

With Tencent behind them, two-year-old startup WePiao quickly become a major player in China’s movie and events ticketing market.

The startup is now running movie and event ticket booking services on the highly-popular Tencent social services WeChat and Mobile QQ, both of which boast more than 600 million monthly active users. Users are able to select seats and pay with the built-in mobile payment service provided by Tencent without leaving WeChat or Mobile QQ.

WePiao has also been granted exclusive rights to operate the WeChat display advertising program for the entertainment businesses. The ad solution provided by WePiao enables audience targeting and tickets to be purchased directly inside the WeChat application.

It’s one of the few cases where Tencent has allowed a startup to build a major service for its social networking platforms. Lin Ning, founder and CEO of WePiao, said it was Pony Ma, CEO of Tencent, who invited him to build the event ticket booking service for Tencent. Lin became the CEO of Gaopeng, the joint venture between Groupon and Tencent, in 2012 and his own group-buying startup would be merged into Gaopeng later.

WePiao has raised an almost US$350 million total funding through three rounds, according to the company. Tencent participated all three rounds and now they are the company’s second-largest shareholder. Wanda Group, the real estate and entertainment conglomerate, also participated in the series B and C rounds.

WePiao has signed up some 4500 movie theaters in over 500 cities, claiming to cover 80% of cinemas across China. It has added a few foreign counties including the U.S. and Spain.

Daily ticket sales and pre-orders reached 400,000 as of May 2015, according to Lin Ning. The merger with Gewala would bring WePiao an online fans community of more than 40 million users.

WePiao is now trying to be more involved in movie publishing, distribution and production. The company has started working with some movie theaters on scheduling.

Wealth management services provider NOAH, its subsidiary Gopher Asset Management, and WePiao jointly established a 2 billion yuan ($320 million USD) investment fund for movies or movie-related content and services in 2015. WePiao has invested in a dozen domestic movies.

Tencent wants to (and is able to) go even further. The company unveiled two production companies, Tencent Pictures and Penguin Pictures, in 2015. Tencent Pictures owns movie studios that will produce movies adapted from online games, and Penguin Pictures will produce online shows and make investments in movies. Pony Ma, co-founder and CEO of Tencent, is a long time shareholder in Huayi Brothers, one of the largest movie production companies in China.

Alibaba: “Smart Cinema” is the New Cool.

For Alibaba, movie ticketing is just a small part of their intended entertainment empire.

Taobao Dianying, which sells movie tickets and merchandize online, and Yulebao, an online crowdfunding platform that allows small investors to invest in movies, have recently been merged into Alibaba Pictures Group.

Alibaba bought a controlling stake in ChinaVision Media Group, a television and movie production company, in March 2014 and then rebranded it as Alibaba Pictures Group.

In March 2015 the company made a RMB2.4 billion (US$39mn) investment in Enlight Media, a leading television and movie production company, for an 8.8% stake. Alibaba’s Jack Ma is also a shareholder in Huayi Brothers.

After pulling those leading movie content producers under their entertainment umbrella, Alibaba formed a “smart cinema” initiative. The acquisition of YKSE, the cinema management software and ticketing app developer whose services are used by most of online movie ticketing services in China, is building a cloud-based analytics and business intelligence platform.

Image credits: Meituan, WePiao