Despite the global economic downturn, Hong Kong’s box office remained resilient in 2009, grossing US$151.9 million, representing a 6.5 percent increase from the previous year. According to the Chief Executive of the Hong Kong Motion Picture Industry Association (MPIA), the rise was driven by the increase of film releases in 2009, particularly the surge of 3D releases. In 2009, there were 268 films released in Hong Kong, up by over nine percent from 2008. Box office revenues in 2009 for foreign films were US$120.2 million and US$31.7 million for local productions (which account for 21 percent of the market, a drop of 1.6 percent from the previous year).
The U.S. is the largest supplier of films to Hong Kong, constituting over 75 percent of total film imports. U.S. Director James Cameron’s Avatar was the top-grossing title in 2009 at US$8.43 million. This figure only reflects receipts from December 17-31, 2009, with the movie still showing at the writing of this report. Industry observers predict Avatar will reach US$12.8 million, and may break the US$14.9 million record set by Cameron’s previous hit Titanic. Avatar was followed by Transformers: Revenge of the Fallen and 2012, both of which were U.S. movies .
The gross revenue of the film industry is expected to expand in the coming years because of the opening of new multiplexes and 3D cinemas, and strong government support. The opening of new 3D cinemas has helped grow box office potential in Hong Kong. UA launched Hong Kong’s first IMAX theatre in 2007 offering a 3D movie viewing experience. MCL opened Hong Kong’s biggest 12-screen multiplex at Elements shopping mall and a 4D extreme screen at the airport. The Hong Kong government has also demonstrated support for the film sector with the establishment of the Film Development Council and Create Hong Kong within the Commerce and Economic Bureau. Create Hong Kong is intended to integrate existing policy and funding initiatives across government departments to boost the development of Hong Kong’s creative industries. Hong Kong’s film sector is also benefiting from the Closer Economic Partnership Arrangement (CEPA) with China. Under CEPA, Hong Kong firms in film distribution and production enjoy preferential access to the mainland China market.
Technology-wise, the Hong Kong Cyberport has also launched a Digital Cinema Exchange Pilot Scheme in 2009, which helps at least 10 local cinemas directly download overseas film files via the Internet. Eventually, the system will provide a 1G link to all theaters in Hong Kong, shortening movie delivery time and cost for cinema operators. It is estimated that digital distribution will cost only about 10 percent of 35mm distribution.
Opportunities in Hong Kong’s film market for U.S. firms go beyond the box office to include film production technology, multi-media content, and related services. The best prospects in Hong Kong and Macau include:
• U.S. independent feature or documentary films and videos that Hong Kong firms can distribute in Asia, and especially mainland China;
• Co-productions between U.S. and Hong Kong firms for distribution in China and Asia;
• U.S. technology products used in movie theaters in China and elsewhere in Asia;
• Cooperative agreements with U.S. film education and training institutions;
• U.S. film financing and deal-structuring techniques and services.
Content Distribution. U.S. exporters should consider selling content licenses to TV stations and Hong Kong agents for distribution rights in both Hong Kong and around Asia. For example, Hong Kong's Commerce & Economic Development Bureau is scheduled to launch Mobile TV Service in 2010, presenting business opportunities for U.S. companies to sell films and TV programs to the Mobile TV Service Providers. U.S. companies can also consider producing programs that cater to Hong Kong and Asian viewer preferences.
Co-production and co-funding. With the full implementation of the Closer Economic Partnership Arrangement (CEPA), Hong Kong’s position as a center for Asian co-production with international companies has been reinforced. Under CEPA, Hong Kong-China coproductions are treated as local productions in China. By cooperating with Hong Kong producers, U.S. firms can gain enhanced access to the China market.
Non-cinema production. U.S. film companies should consider Asia’s growing market for multimedia products. Local consumers are keen to see new content and related applications for games, comic books, mobile phone downloads in addition to films and TV programs. In flight entertainment should also not be overlooked.
3D Movies. UA-ISquare Imax Cinemas, a second Imax theatre in Hong Kong opened in December 2009. While the first Imax screen in Hong Kong used the film-based MPX projection system, the new screen will utilize Imax Digital projection. This will significantly reduce the purchase price of Imax film prints from US$22,000 to US$1,000. The reduced price will likely further enhance the popularity of Imax films in Hong Kong. U.S. film companies should consider distributing 3D versions of popular films in Hong Kong.