As soon as the news came out, the shares of cats eye entertainment (01896. HK) rose to HK $14.34 on July 17, up 6.38%. In addition, according to the professional edition of cats eye, on the day the cinema returned to work, the national box office totaled 3.504 million yuan, with 156000 tickets issued, including 86000 tickets for cats eye.
Founded in 2017, in less than three years, cats eye entertainment has become the largest online ticketing system in China. In February 2019, cats eye entertainment was successfully listed on the Hong Kong stock exchange, speeding up the pace of marching into the cultural and entertainment industry. According to the data, in 2019, the companys ticket sales revenue was 2.303 billion yuan, accounting for 54.0% of the total revenue.
It is undeniable that this years epidemic has had a great impact on the film and television entertainment industry. However, for cats eye entertainment, which has just turned losses into profits in 2019, there is still a lot of pressure on how to alleviate the impact of the epidemic and achieve the goal of transformation to the full entertainment industry.
Behind the sluggish growth of online ticketing
According to the data, in 2017 and 2018, the revenue of cats eye entertainment was 2.548 billion yuan and 3.755 billion yuan respectively; the net profit was - 75 million yuan and - 137 million yuan respectively, and the loss in 2018 was slightly expanded. Until 2019, the company achieved the first profit, the revenue scale increased to 4.268 billion yuan, and the net profit began to turn loss into profit, reaching 463 million yuan.
From the three major business changes of cats eye entertainment, the proportion of ticket sales revenue in total revenue has decreased. In 2019, the proportion of online ticketing entertainment business decreased from 60.7% in 2018 to 54.0%, the proportion of entertainment content service increased from 28.5% to 32.7%, and the proportion of advertising and other business income increased from 10.8% to 13.3%.
In addition, the companys overall gross profit margin also declined slightly, from 62.7% in 2018 to 62.3% in 2019. From 2017 to 2019, with the growth of business, the companys accounts receivable and bills increased, respectively 311 million yuan, 325 million yuan and 552 million yuan.
Behind several business changes, it reveals the strategic adjustment of cats eye entertainment. In July last year, its cats eye full-text entertainment strategy cats paw model was launched. The model is composed of cats eye full-text entertainment ticketing platform, product platform, data platform, marketing platform and capital platform. It serves the full-text entertainment industry chain such as live entertainment, short video, video, film, entertainment media, drama series, music, artist KOL, etc.
However, when the whole industry encountered the black swan incident, the transformation plan of cats eye entertainment had no choice but to run aground.
As for the impact of the epidemic on both the cinema line and ticketing business, Zhu Zhu, an analyst at Guohai Securities media, believes that for the cinema company, the first half of this year was a loss, and in the second half of the year, it was necessary to see the fixed files of the film in order to see its performance. On the whole, the quarter on quarter was improved. The core of the ticketing company is the number of films to watch. The box office market will pick up in the third and fourth quarters, and the corresponding back-end will also benefit.
When will the tide of revenge return
Affected by the epidemic situation, the upstream and downstream of the film and television entertainment industry are still in business difficulties, waiting for the opportunity for recovery.
According to Shanxi securities research paper, in the first half of 2020, 133 shadow management and shadow investment companies and 8 cinema line companies were cancelled or revoked, 243 new cinema companies were added, but the increase was less than the same period last year. For small and medium-sized film and theater companies with small scale and insufficient cash flow, the operating pressure will increase.
Mo Zheng, a film practitioner, told investor.com: in the current market environment, rent is the main reason that directly determines the survival of cinemas. At present, many cinemas lose 15000 yuan a day when they open their doors, but they still have to open. Only when they open can they have hope and return to normal track.
Although offline theaters are out of service, the online viewing mode is becoming popular. Although all the Spring Festival films have been withdrawn from the cinema, some films such as lost mother are premiered online for free, and major video platforms have also launched free viewing mode to attract user traffic.
However, online viewing failed to meet the needs of users. According to the report on Chinas film market in the first half of 2020, from January to March this year, there was a short-term explosive growth in users online viewing demand. In February, the average growth rate of users monthly work of iqiyi, Youku and Tencent was as high as 8.3%. With the gradual improvement of the epidemic situation, the monthly number of live users of the three major video platforms fell precipitously in April, and the growth rate of active users in May was - 12.2%.
The epidemic also intensified the audiences desire to watch the film offline. According to the survey, 54% of the audience expected to return to the cinema in September accounted for 74% of the total number of people who expected to return to the cinema in September.
I think that retaliatory consumption will come. I believe that in another 10 days and a half months, the whole situation will improve. At present, only more than 2000 cinemas have returned to work, which is a very low number. There are more than 13000 cinemas in China, and most of them are still on their way back to work. Zhao Jun analysis said.
But Mo argues that retaliatory consumption will not last long. Because the consumption properties of movies cost time, you can buy ten clothes at a time, but its hard to watch two movies in a row. If the film industry wants to recover, on the one hand, the epidemic situation will not recur, which is beyond everyones control; on the other hand, good films will be released, and if the epidemic situation is over, the film market will be in dire straits.
Source: investor.com editor in charge: Yang Qian_ NF4425