China: online ticketing services expected to take over cinema market

Theater chains are the main beneficiary of online movie ticket sales, since under the sales model tickets are made available for online booking online at the lowest discounted prices set by the theaters and film companies, with online third-party payment service providers responsible for making up any price difference. In this way, the theaters can get large audiences, according to data issueby by the Economic Observer website, cited by wantchinatimes.com.

Theaters currently operate on two models. Under one, major cinema chains such as the Dalian Wanda Group invest directly in theaters and can maintain absolute control over them. Under the other model, major theater chains offer franchise opportunities to individual theaters. If major theater chains only see online bookings as an additional channel to sell tickets and allow online ticket sellers to build up their influence based on their increased user base, these sellers could have a say in the movies that are chosen to screen.

In addition to Wanda, the other 44 theater chains in the country are aligned with theaters based only on a model of film distribution and could risk losing control of their affiliated theaters as these theaters could end their partnerships after their franchise agreements expire. Under such circumstances, online movie ticket sellers could even form alliances with theaters. Currently, 500 theaters have joined a ticket-selling platform operated by Tencents WeChat instant messaging service, a number that is likely to exceed 1,500 by end of 2015.

At present, online movie ticket sale companies are seeking cooperation with theater chains but in the future theater chains are expected to tap opportunities to cooperate with online ticketing companies. If online ticket suppliers accumulate large numbers of users, they could have enormous influence on the supply chain of the industry and could even supersede theater chains role as the major ticket suppliers.