How COVID-19 Is Impacting Asia’s Film Industries

Data from S&P Global Market Intelligence and OPUSData shows that box office revenue declined in Asia for the first quarter of 2020, amid the global COVID-19 pandemic. China, one of Asia’s key markets and the world’s second largest theatrical box office market after the United States and Canada, with a box office growth rate of about 250 percent since 2012, recorded the highest year-over-year loss in box office revenue in the region with a fall of 97.4 percent in ticket sales. In Japan and South Korea, where total box office revenue in 2019 was $2.4 billion and $1.6 billion, respectively, box office revenue in the first quarter of 2020 for the two countries fell to just $190.3 million and $139.5 million – representing a drop of 46.2 percent and 65.3 percent, respectively. India, another big market in Asia, also suffered a loss of about $130 million in box office revenue as shares of PVR Cinemas (PVR) and INOX Leisure Limited (INOXLEISUR), the country’s two largest multiplex operators plummeted by more than 40 percent within the same period – falling from all-time highs in the latter part of February.

The tumbling box office revenue is due to the spread of the COVID-19 pandemic, which began in Wuhan, the capital of China’s Hubei province, in late 2019. The pandemic, which had spread around the world by March, compelled governments in the region to issue lockdown directives – including orders that forced movie theaters to shut down their operations – in a bid to curb the upswing in new coronavirus infections. This action had a tremendous impact on the release schedules of theaters, as many film production companies in Asia struggled with liquidity challenges largely as a result of the plunge in box office revenue. For instance, in China, more than 13,000 film and television companies have cancelled their business registrations already this year – this figure exceeds the total number for 2019. Many movies scheduled for production this year have been halted as more than 70,000 screens in 10,000 movie theaters in China have also stopped operating.

In Southeast Asia, Singapore, Indonesia, Vietnam, Thailand, and Malaysia have been the five major countries boosting the expansion of the region’s box office market. The film industries in these countries have also lost enormous revenues as a result of the closure of theaters. Malaysia’s film industry began to experience a dip in box office revenue in February, when big titles from China like “Vanguard,” “Jiang Ziya: Legend of Deification,” “Detective Chinatown 3,” and “The Rescue” were withdrawn from the Chinese New Year movie calendar because of the coronavirus outbreak. A Movement Control Order (MCO) was implemented to minimize the spread of COVID-19 in the country. This diminished the revenue stream of Malaysia’s film industry as cinemas were ordered to shut down. Similarly, other countries in the region such as Singapore, Vietnam, Thailand, the Philippines, and Indonesia have seen their film industries continue to record a drop in revenue from low patronage of cinemas.

The closure of movie theaters and enforced precautionary measures for public gatherings changed the consumption pattern for moviegoers in Southeast Asia – according to a report from Media Partners Asia (MPA), between January 20 and April 11, 2020, the total weekly minutes spent online video streaming on mobile devices soared by 60 percent across Malaysia, the Philippines, Indonesia, and Singapore. The report further revealed that the four countries had a combined 8 million paying online video customers by the end of March 2020, accounting for $400 million in customer spending per year. Aggregate data collected from Thailand, Singapore, the Philippines, and Indonesia shows that there has been a surge in video streaming during periods of “major disruption” (meaning partial or total lockdown) in these four countries with Netflix, Viu, iflix, and iQiyi being the four main video streaming service providers with the largest subscriber base.