Vietnam's movie screening, distribution, and production industry has been overgrown from 2010 - 2020. However, the emergence of Covid-19 has seriously affected the operation of the whole industry.
Before the Covid-19 pandemic took place in early 2020, Vietnam had 1,063 screens in 204 cinema complexes, reaching 4,064 billion VND (more than 176 million USD), 20% higher than the strategic target.
However, due to the impact of the epidemic, cinemas suffered a heavy loss of revenue, causing the total income of the whole industry in the first half of 2020 and 2021 to drop sharply. Specifically, because it had to close from March 20 to May 9, 2020, the revenue in 2020 dropped to VND 1,660 billion, only one-third of the revenue in 2019. In 2021, it only earned a modest income of 1,156 billion dong. This must be an unforgettable period for cinemas and Vietnamese film producers as cinemas were forced to close twice in early February and from May 5, 2021. Ho Chi Minh City - the area that plays the country's leading role in cinema- has experienced 6 months of freezing at this stage. The second largest film market share after Ho Chi Minh City is Hanoi, which also suffers from a similar situation. At this time, the theater system faced hundreds of difficulties.
The fact that cinemas cannot reopen for a long time puts theater businesses in a difficult position, leading to the risk of bankruptcy. Besides, after the end of the social distancing period, the cinema clusters faced the problem that customers no longer wanted to go to the cinema due to the fear that crowded places would create epidemics, and there were not many new movies to attract viewers. The reason is that movies have been delayed many times due to the epidemic, leading to a limited source of new films. During this period, film businesses had to pay many fixed costs such as salaries, social insurance, health care for employees, premises, bank loan interest, electricity, and water to maintain machinery and equipment while revenue to zero. Many units reported a loss of 15-20 billion dong per month because of the closure.
In this period, film businesses faced many difficulties when they had to pay many fixed costs such as salaries, social insurance, health care for employees, premises, bank loan interest, electricity and water, maintenance, and maintaining machinery and equipment while the revenue was zero. As a result, many units said they suffered an average loss of 15-20 billion dong per month because of the closure.
From the end of November 2021, cinemas will gradually reopen. Despite facing many difficulties, with a diverse source of films from foreign blockbusters to domestic film projects queuing up after a long delay, this time has become the "weapon" of the film industry. However, theaters still recover slowly because viewers are used to watching movies at home during the social distancing period, along with economic and financial impacts, so viewers tend to save. Therefore, it takes time for viewers to return to theaters. With this challenging situation, many Vietnamese film producers agreed to postpone the release schedule to 2022, hoping the film industry would have a better time. That point will get better.
By early February 2022, Hanoi began to allow the reopening of cinemas in the area. From here, the revival of Vietnamese cinema officially began. According to the representative of Lotte Cinema, people have begun to get used to the new normal life, cinemas can recover about 70-80% compared to the time before the epidemic in 2019.
Which cinemas does the market share belong to?
Thanks to strong financial strength, CGV and Lotte have expanded and become the primary cinema market in Vietnam. Lotte has captured 30% of the cinema market share in just a short time. After Lotte, CGV also quickly entered the Vietnamese market and held a 43% market share. CGV cinemas appear in most major cities, in densely populated areas, and in new urban areas; there are Lotte cinemas. Thus, 73% of the Vietnamese cinema market share is in the hands of 2 Korean enterprises, and the remaining 27% belongs to 3 other enterprises, namely Platinum Cineplex of Indonesia and 2 domestic enterprises, namely Galaxy Cinema of Thien Ngan Film Joint Stock Company and Star Cineplex which belongs to Binh Hanh Dan Co., Ltd.
Statistics by the end of 2021 show that the number of cinema clusters of some foreign companies in Vietnam is CGV and Lotte, accounting for 43% and 30% of the market share, respectively, and Platinum accounted for 10%. Two Vietnamese private companies, Galaxy accounted for 9%, and BHD for 6%. The state cinema system only accounts for 2%.
CJ CGV is Korea's largest multiplex cinema chain, with branches in Vietnam, China, and the US. This is a unit of CJ Group - one of Korea's largest multi-industry economic groups present in 21 countries worldwide. CJ CGV is headquartered in Seoul, holds more than 50% market share in the country of Kim Chi, and has been recognized by consumers as the best cinema brand for 8 consecutive years.
Two years after the $73.6 million acquisition of Envoy Media Partners (owner of MegaStar Cinemas) in 2011, CJ CGV Korea transformed the MegaStar brand into CGV. Currently, CJ CGV is one of the world's top 5 largest cinema chains and the largest distributor and cinema chain in Vietnam.
During 2013 - 2020, CGV accounted for an average of 50% market share in Korea. This cinema chain also has a similar market share in Vietnam and is leading the market share in the country. CGV Cinemas dominates the cinema market with a 43% market share.
Before the Covid-19 epidemic, CGV Vietnam's revenue grew relatively steadily. Accordingly, the company's net revenue has improved, reaching nearly VND 2,900 billion, a gross profit of VND 351 billion, and reporting a loss of VND 38 billion in 2018. In 2019, CGV's revenue grew by 29%, touching VND 3,708 billion and a profit of VND 122 billion. This is the highest level since its inception.
By the end of 2019, CGV Vietnam system owned 82 cinemas with 475 screens. After increasing the average ticket price by over 6%, tightening and effective management of spending and sales activities improved the profit of this theater chain. With an effective business strategy when actively working on social networking sites to update about the upcoming movie. This strategy gives CGV a lot of interaction on "social media." The total assets of CGV reached VND 3,696 billion at the end of 2019, of which equity was VND 627 billion, accounting for 17%, and liabilities paid were VND 3,069 billion, accounting for 83%.
The two years 2020 and 2021 are dark times for many cinemas, including CGV, when the Covid-19 pandemic occurs.
In 2020, CGV Vietnam's revenue reached more than VND 1,400 billion, down more than 60% compared to 2019. In addition, the increased costs caused CGV Vietnam's loss to VND 850 billion.
Particularly in the fourth quarter of 2021, thanks to the attraction from the movie Spider-Man: No Way Home, CGV's revenue increased by 67.6%, specifically nearly VND 1,800 billion, still losing VND 860 billion in the same period. However, this level of damage is only about half of the same period in 2020.
Galaxy Studio owns the Galaxy Cinema cinema system, currently ranked 3rd in Vietnam in market share, after two companies from Korea, CGV and Lotte. According to data from Statistics in 2019, Galaxy Cinema attracted about 13% of visitors, Lotte 21%, and CGV 44%.
In early 2005, Galaxy started to invest in the cinema sector. In May 2005, the entertainment and commercial complex Galaxy Cinema in District 1, Ho Chi Minh City, began to be put into operation. Galaxy Cinema is the first cinema system built to international standards with a vast screen and vivid digital sound system. Professionalism, thoughtfulness, and perfection are the criteria that Galaxy Cinema aims for throughout the development process. Good movies, good theaters, and strong ads are the top campaign choices to conquer viewers. By creating a new lifestyle in entertainment culture, Galaxy Cinema has opened up a new trend in investment and cinema business under the model of a complex theater complex.
In terms of revenue, when there was no epidemic, Galaxy Cinema recorded more than VND 1,200 billion in 2019 gross profit of VND 539 billion, equivalent to a gross profit margin of about 44%; this figure is considered to be relatively high. Despite many expenses, the company still recorded a profit of more than VND 70 billion after tax..
In previous years, the revenue of this movie house was always around VND 1,000 billion. In 2017 it earned more than VND 1,050 billion (VND 119 billion in profit) and more than VND 975 billion (VND 49 billion in profit) in 2018. A representative of Galaxy Cinema said that earnings in these years were used to invest, expand cinemas, and increase the number of cinemas—screening rooms to meet the audience's needs.
In 2020, the Covid -19 pandemic made Galaxy's business situation gloomy. As a result, businesses had to completely close 18 cinemas across the country. Ms. Mai Hoa, Marketing Director of Thien Ngan, shared that the company had to deal with many expenses without any revenue since closing. Revenue in 2020 fell below VND 500 billion, down 59.3% compared to 2019. Galaxy's profit also recorded a loss of VND 98 billion this year.
Lotte Cinema is a leading brand in the Korean cinema industry, having been present in Vietnam and officially present since 2008 with the acquisition of the Diamond DMC cinema complex. After nearly 15 years of market penetration, Lotte Cinema Vietnam has expanded the scale of more than 40 cinema clusters in Hanoi, Ho Chi Minh City, and the northern, central, and southern provinces.
Lotte Cinema's net revenue reached more than VND 900 billion in 2019, but it was also the most significant loss year, coming more than VND 770 billion. However, in 2020, the epidemic's impact caused Lotte Cinema's revenue to decrease to VND 451.3 billion, a loss of VND 668 billion.
By 2021, this cinema chain and several other large enterprises in the industry, such as CGV, BHD, and Galaxy, ... must write a petition for help to the Prime Minister of Vietnam to apply for funding, preferential credit loans, and tax reductions... because the theater has to close due to the epidemic. This year, Lotte Cinema continued to decline in revenue to less than VND 350 billion and lost more than VND 450 billion.
Data from Lotte Shopping LTD's financial report shows that the cinema segment at the company's branches, including Vietnam, does not have a very positive business situation. Although the revenue is close to a trillion, Lotte Cinema is also facing many difficulties, and the financial picture is bleak when the profit is full of losses. In the period of 2016 - 2021, Lotte Cinema has never made a profit; every year, it has been running at a loss. Specifically, in 2016, Lotte Cinema reported a loss of over 60 billion VND; in 2017 said, a loss of over VND 100 billion; in 2018 loss of nearly VND 270 billion; in 2019, a loss of more than VND 750 billion; In 2020 it reported a loss of more than 650 billion VND, and in 2021 it reported a loss of more than 450 billion VND. Thus, after 6 years, Lotte Cinema reported a loss of more than VND 2,000 billion.
Lotte Cinema is also the leading theater in the Marketing campaign, most recently "Delightful Popcorn Beast." Lotte Cinema's popcorn campaign started on October 24, 2022. On this day, buy movie tickets and bring any items to store popcorn; customers will get free popcorn refills. The show was created to entice audiences to return to theaters after two years of the film industry being affected by the Covid-19 epidemic. Because of this "playability," Lotte's campaign created a great deal of talk, promising to create a marketing success. However, this campaign met with mixed opinions on the issue of food waste.
Beta Cinemas is the leader in the mid-market segment and the first cinema chain to complete the franchise policy with the most substantial growth potential in the market. Beta aims at a youthful and modern cinema concept; the price is suitable with modern standard equipment and spacious and modern facilities; with the customer file are students, students and people with middle income. Established in 2014, by June 2022, the chain has 15 cinema clusters spanning the following provinces: Ho Chi Minh City, Hanoi, Thai Nguyen, Thanh Hoa, Bac Giang, Nha Trang, Dong Nai, Ba Ria Vung Tau, and An Giang.
2019 was a successful year for Bata Cinemas when it was the first profitable year in 2017 - 2019; revenue reached VND 156 billion and reported a profit of more than VND 4,000 million. When the Covid-19 pandemic broke out, this mid-range cinema chain was on the verge of bankruptcy.
However, during this period, Beta Cinemas made impressive breakthroughs. Mr. Minh - CEO of Beta Cinemas, said that his cinema chain can still maintain long-term operation thanks to policies to optimize human resources and costs. During the pandemic, this unit also develops new cinema models, perfects the franchise business, and finds investment cooperation opportunities with single theater clusters or theater chains to overcome difficulties together. In mid-2020, when the epidemic subsided, Beta Cinemas negotiated and completed a capital contribution agreement worth 8 million USD from the Japanese investment fund Daiwa Pi Partners and achieved a business valuation of VND 1,000 billion. Previously, this theater chain had 2 successful capital calls from foreign investment funds: Vietnam Investment Group and Blue HK financial group from Hong Kong.
Big names such as CGV, BHD Star Cineplex, Lotte Cinema, and Galaxy Cinema have dominated the market share in the cinema market. Therefore, Beta Cinemas chose to go its way and develop under the franchise model. With the first cinema franchise model in Vietnam, Beta Cinemas has a low investment of only VND 3 billion per room reasonable ticket price. This model is optimized for operation and cost while maintaining the core cinematic experience and service quality standards.
In 2021, this brand signed a franchise contract for 2 Beta Premium cinemas in Phu Quoc and Ho Tram after a chain of 3 previously successful franchised cinemas.
BHD Star Cineplex
BHD Star Cineplex is known for its first theater cluster with 5 screens in 2010 at Maximark 3/2 (now Vincom 3/2).
Compared to the three "big guys" operating in the cinema field, namely CGV, Galaxy Cinema, and Lotte Cinema, BHD's scale is much smaller, with 10 cinemas across the country, most of them in Ho Chi Minh City. As a result, BHD's revenue is much less than its peers.
In 2017 and 2018, BHD's net revenue decreased from nearly VND 70 billion to less than VND 60 billion; the gross profit of these two years was 22.5 billion and VND 21 billion, respectively. The business reported a loss of VND 100 million in 2017, which continued to be negative VND 5.3 billion in 2018. In 2019, the revenue of the owner of these 10 cinemas nationwide increased by 65% to VND 98 billion. However, BHD reported another loss of VND 1.5 billion to VND 6.8 billion.
Before there was no epidemic, BHD faced many difficulties. Similar to Lotte Cinema's problem, the BHD theater cluster reported continuous losses. Specifically, in 2016, BHD said a loss of more than VND 4.5 billion; in 2017 loss of VND 100 million; in 2018 loss of more than VND 5 billion; In 2019, a loss of nearly 7 billion; in 2020, it reported a loss of VND 30.8 billion, in 2021 a loss of VND 20.9 billion. Thus, after 6 years, BHD lost nearly VND 70 billion. Accordingly, BHD's biggest problem is cost and cost control.
At the time of the Covid-19 epidemic, BHD Star Cineplex also had to close all 10 cinemas nationwide. The enormous pressure on this theater is the space rent because the rental units have less cost reduction, while the rent is high. In addition, tremendous pressure also lies in paying taxes and bank debt.
Mr. Le Hoang Minh, Marketing Director of BHD Star Cineplex, said: "Apart from financial problems, another difficulty that BHD faced was that due to the long closure, some employees found new directions, human resources lost some positions, and BHD is having to re-hire."
Starting from 02 cinemas, Cinestar Quoc Thanh and Cinestar Hai Ba Trung in Ho Chi Minh City. Up to now, Cinestar has expanded and developed 8 cinema clusters stretching from Ho Chi Minh City, Binh Duong, My Tho, Kien Giang, and Lam Dong to Hue.
In 2017 - 2019, Cinestar's revenue increased from VND 64 billion to VND 77.9 billion. However, the profit of this theater house recorded a loss. Specifically, 2019 reported a loss of nearly VND 15 billion, an increase of almost VND 6 billion compared to 2017.
Mr. Nguyen Ngoc Thanh Trung, Marketing Manager of Cinestar cinema system, said that the epidemic caused a series of cinemas to close two years in a row. Fortunately, Cinestar's cinemas in other areas and provinces are still operating and maintaining the same quality. Cinestar has set a goal of reaching 100 cinemas nationwide in the next 10 years.
Besides, Cinestar has to face financial problems because it has to bear many expenses, while its revenue is frozen because of the epidemic. However, after being operated again, seeing that the demand of viewers is still high, the business still has a strategy to promote and maintain the quality. It is estimated that from February to September 2022, the whole theater cluster will have a revenue of about 70-80% compared to the time before the epidemic; this is a good number.
After the recent "price storm" of gasoline and raw materials, Cinestar maintains the same ticket price and offers more promotions, gifts, and vouchers to stimulate customers to return to the theater. In particular, at the Student Cultural House theater complex in Binh Duong province, Cinestar applies the total ticket price of 45,000 VND, regardless of time or holidays. In addition, Cinestar also supports facilitating domestic films to be promoted more by increasing the showings as well as the broadcast schedule.
Mega GS Cinemas is a chain of cinemas officially launched for the first time in Ho Chi Minh City in August 2015 at 19 Cao Thang, District 3. The total number of seats with 6 modern screening rooms are nearly 1,000, including two 3D projection rooms and four 2D projection rooms.
Before the pandemic, Mega GS recorded revenue of VND 41 billion in 2019, a gross profit of 17.3 billion, corresponding to a gross profit margin of about 42%. Therefore, the gross profit margin is relatively high.
After the epidemic outbreak, Mega GS was severely affected when the revenue of this theater chain dropped from VND 41 billion in 2019 to VND 14.4 billion in 2020 and VND 10.5 billion in 2021. Mega GS is also facing many difficulties when only recording a total loss in 2017 - 2021. Specifically, in 2017 a loss of VND 4.5 billion, a loss of VND 7 billion in 2018, a loss of VND 4.2 billion in 2019, and a loss of VND 5.6 billion in 2020 and VND 3.8 billion in 2021.
Mega GS also continuously offers many promotions for weekdays, such as "Monday a fun day," "Tuesday a good day,"...; holidays such as "Tet lucky money," "Happy Women's day," and even "nothing occasions" such as "Member's Day," "Mega Hours,"...to stimulate demand and bring viewers back to theaters However, the theater is still recovering slowly from the pandemic.
In terms of future goals, Mega GS will develop more cinemas in Ho Chi Minh City and across the country, with the motto of bringing customers different cinematic experiences and the best service quality.
Cinebox is copyrighted, managed, operated, and exploited by MCV Network under MCV Group. Cinebox's theater system has large screens with international standard picture quality. In addition, this theater cluster also has a 2D cinema room and a 3D cinema room equipped with modern movie projection technology specifically designed for each vision and a modern DOLBY Digital sound system. Besides, the reasonable cost also makes viewers pay more attention to this theater cluster.
Cinebox's net revenue before or after the epidemic has not improved. Specifically, Cinebox achieved a revenue of nearly 25 billion VND in 2017, which gradually decreased to less than 18 billion VND in 2018, and by 2019, this theater's revenue was only 15 billion VND. This was before the Covid-19 epidemic, but Cinebox's revenue decreased by more than 9 billion VND in 2017 - 2019. Cinebox's revenue was much lower than the "big guys" in the world—cinema businesses such as CGV, Lotte Cinema, Galaxy Cinema, etc. However, during this period, Cinebox all recorded it. Specifically, in 2017 the profit was more than VND 140 million; in 2018, it was more than VND 160 million and profit was more than VND 160 million. It continued to profit more than VND 90 million in 2019.
By 2020, the epidemic's impact caused a severe drop in Cinebox's revenue. In 2020, the theater revenue was at VND 6.5 billion; only half of 2019 and 2021's income will decrease to more than VND 3 billion.
As an industry heavily affected by the pandemic, businesses still have strategies to promote and maintain quality, seeing that the demand for viewers is still high. Filmmakers are still working towards the flourishing growth of the global film industry. The cinema business is expected to grow in revenue and operating profit in 2023.