HNA Goes to Hollywood 海航走向好莱坞

By newsdoug on May 31, 2012

RealD plays on China theater drive The huge potential of China’s box office is back in the spotlight again today, with word that US technology company RealD (NYSE: RLD) will install its 3D technology on a major new theater chain with up to 500 screens being set up by a unit of HNA Group, one of China’s more entrepreneurial business groups. (company announcement) The announcement by HNA Vigor Film Investment comes less than 2 weeks after China’s largest movie theater operator, Wanda Group, announced it will buy AMC Entertainment, the second largest US movie theater operator, in a landmark plan that also includes major facility upgrades. (previous post) All this shows how much potential these companies see in China’s movie market, now the world’s second largest, and also underscores their determination to take advantage of a newly relaxed quota for the import of foreign films that now command the big majority of the country’s fast growing box office. Let’s take a look at this latest news, which has HNA Group getting into the movie theater business with a big move that will make it one of China’s top movie theater operators, behind Wanda’s 730 screens in 86 movie theaters. Equally important, the installation of 3D technology in its new theaters means that HNA will be eligible to show films under China’s newly expanded quota for imported foreign movies. After limiting the annual import of foreign films to 20 for many years, China recently raised the figure by allowing in additional 14 movies in high-tech formats like 3D. That could mean a 40 percent increase in box office sales, as foreign films currently dominate a sector that generated more than $2 billion last year and whose sales could top $5 billion by 2015 as more affluent Chinese are willing to pay relatively expensive ticket prices to see big-budget films. The domestic film-making business has also gotten a lift in recent months, with global animation leaders Disney (NYSE: DIS) and DreamWorks Animation (NYSE: DWA) both setting up joint venture animation studios in China earlier this year. (previous post) Look for this trend to continue, with movie theaters quickly multiplying in China’s biggest cities to meet the growing demand from affluent Chinese eager to see a growing number of top-notch films coming into the country. That should play well not only for the theater operators and movie makers, but also technology and equipment makers like RealD and Imax (NYSE: IMAX).

Bottom line: Real ID’s tie-up to install 3D technology in HNA Group’s new theater chain marks the latest step the recent boom for China’s movie industry.

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