EconomyEditor's PickPhilippine cinemas eye happy ending with reopening

November 9, 2021

Maintenance personnel sanitizes the ticket booth at the Eastwood Mall cinemas in Quezon City, Nov. 9. — PHILIPPINE STAR/ MICHAEL VARCAS

By Arjay L. Balinbin, Senior Reporter

JUSTIN P. RIOS, 20, is excited about going to a movie after being limited to watching streams on Netflix for the past 19 months to cope with boredom and stress amid a coronavirus pandemic.

“I can’t wait to go back to my favorite cinemas soon,” the business analytics student from De La Salle-College of Saint Benilde in Manila said in a Microsoft Teams video interview. “Traveling to a theater, buying tickets and watching the trailers before the movie starts are all part of the cinematic experience. These are what I pay for, not just the movie itself.”

Almost 50 of the more than 200 movie houses in the Philippines that became vaccination sites at the height of the pandemic are reopening starting today (Nov. 10) amid decreasing coronavirus infections, according to the Cinema Exhibitors Association of the Philippines.

An interagency task force eased the lockdown in Manila, the capital and nearby cities to Alert Level 3 as early as Oct. 13, and allowed the reopening of cinemas at 30% capacity for fully vaccinated moviegoers.

The lockdown has since been relaxed to Alert Level 2, which lets more businesses increase their operating capacity.

The cinema industry had P19 billion in foregone revenue from March 2020 to September this year, Film Development Council of the Philippines (FDCP) Chairperson Mary Liza Dino-Seguerra said in a Teams video interview.

The loss had ballooned to P21 billion as of Oct. 11, Charmaine N. Bauzon, president of Cinema Exhibitors Association of the Philippines, told PTV News.

Local government units, which charge 10% amusement tax per movie ticket, lost P1.09 million daily from the country’s more than a thousand movie screens, according to estimates by the National Tax Research Center.

“We earned P11.5 billion yearly from the box office [before the pandemic],” Ms. Seguerra said. “We sold about 52 million tickets each year.”

Cinema operators get 50% of ticket sales, while the other half goes to producers, who then give much as a quarter to the distributor, who’s in charge of marketing and distributing the film to the public.

Last year, cinemas in areas under a more relaxed quarantine made a measly P327,000, Ms. Seguerra said.

Mr. Rios now spends his money on online streaming platforms such as Netflix and HBO Go, which cost him P199 and P99 a month.

ONLINE STREAMS
The Philippines ranked fourth among 18 countries — after New Zealand, Brazil and Ireland — whose citizens used at least one streaming service, according to a survey by comparison platform finder.com released in June.

The most popular streaming platform among Filipinos is Netflix, followed by YouTube Premium and iFlix.

“Video-on-demand usage (VOD) [in the Philippines] significantly increased (158%) as people stayed at home, with Netflix emerging as the No. 1 VOD platform, outperforming local provider iWantTV,” according to the Asia Video Industry Report 2021.

Local entertainment companies such as Viva Communications, Inc. are producing more content for online streaming.

Viva, which launched its streaming platform Vivamax in January, aims to produce as many as 60 titles for online streaming in the next 12 months, from 40 titles it originally intended for theatrical release, President and Chief Operating Officer Vincent G. del Rosario said in a Teams video interview.

Vivamax subscribers had grown by a third to 800 as of September since it started in January he said. More than half of its subscribers watch local movies, while 14% were into Hollywood and Korean movies, he added.

The production cost of these smaller films is about P5 million, enough to lure customers to their platforms, Ms. Seguerra said. Big movies start at P15 million.

“The production budgets are getting smaller because we don’t want to produce an expensive project and put it online without having the traditional distribution,” producer and director Pamela L. Reyes told a virtual forum in September.

“With the pandemic, projects are also getting more expensive because we have to follow protocols,” she added.

Despite the added costs, Mr. Del Rosario is bullish about the prospects of Vivamax. “Going direct to consumer is the way to go for us although we feel that it can grow side by side with our cinema ventures,” he said.

Some film outfits have opted to wait for the reopening of cinemas, Mr. Del Rosario said. “We have 15 films waiting to be shown in cinemas. They need a cinema release. It’s either that or we have a contractual obligation with a licensor,” he added.

Revenue from online streams is smaller than that of theatrical screening. For successful movies, about 75% of a film production company’s revenue comes from cinema screenings, Mr. Del Rosario said. “The real kicker is your theatrical revenue.”

“For theatrical movies, it’s really make or break. You can have a total flop,” said Perci M. Intalan, president and co-founder of The IdeaFirst Company. “Before, you could spend P20 million on something and it came back to you with P200 million. You’re not going to get that kind of margin now.”

A film earns money from various revenue streams such as theatrical screening and video-on-demand platforms such as Netflix and Amazon, which acquire rights to the film for a fee. There’s also cable channels, television and the pay-per-view model.

Ad-supported streaming on YouTube is another revenue source, Mr. Intalan said in a Teams video interview, noting that it was through YouTube that his team’s Gameboys series last year became successful.

“It was the first time that we produced something for YouTube,” he said. “Everybody didn’t leave the house. We filmed it via Zoom, and we had to create a new production process. It paid off. It became a viral hit in a matter of days.”

The series, which was nominated in October for an International Emmy Award, got sponsored by TM and Bench, and then Netflix picked it up.

“By December last year, we were filming the movie version of Gameboys and by July, we were able to release the movie,” Mr. Intalan said.

PIRACY
Filipinos, who are some of the most active social media users in the world, should be predisposed to consume products in the digital space especially during the pandemic.

“But we oriented this market to get their content for free on YouTube, on Facebook, etc.,” Mr. Intalan said. “They got used to that — that on digital, you don’t pay.”

“We did not educate this market, he said. “We did not train this market that if they want good content, they have to pay for it. Then the pandemic happened, and here we are panicking.”

But Filipinos are now slowly learning to pay for online products and services because of e-commerce, he said.

“Our online streaming industry is young,” Ms. Seguerra said. “It’s just now that we are adapting to this new way of monetizing content.”

The film industry also has to deal with piracy. A survey by YouGov last year found that 49% of Filipinos used pirated streaming websites or torrent sites. It also said 47% of consumers who accessed piracy sites had canceled their subscriptions to content services.

The Film Development Council took down 639 piracy links on Facebook, YouTube and similar social media platforms in 2020 and 2021.

“If there was no piracy and people could just purchase films per click, filmmakers would make more money,” Ms. Seguerra said. “While it affected the industry when cinemas were open, the impact was not as big because the cinematic experience is on a different level,” she added.

“When piracy was in the cinemas, our enemy was very poor film copies,” she said. Now, the quality of pirated movies and those streamed on legal platforms is the same.

Mr. Rios, the avid film watcher, looks forward to going back to cinemas soon.

“The audience plays a big role when we go to the movies,” he said. “Whenever something big in the movie happens, the audience reacts and it just builds up the atmosphere. If you watch alone at home, it doesn’t quite capture the same experience. That’s the experience I miss the most.”

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