Set in Motion

9 months ago . 6 min read
MP
Marella Putri
Writer at Forbes Indonesia
Set in Motion
Kim Kyoung Tae (also known as Tommy Kim), president director of PT Graha Layar Prima (CGV Cinemas). Photograph by WS Pramono for Forbes Indonesia.

The film industry in Indonesia has been rising well in the last five years. The Creative Economy Agency noted a significant increase in the production of the local movie, from 115 films in 2015 to 172 in 2018. It grows in line with the number of audiences, which, according to data from filmindonesia.or.id, jumped from 16.2 million to more than 52 million viewers in the same time frame. While cinemas are essential to support the growth of the industry, there were only 343 cinemas with a total of 1,685 screens, making the screen to population ratio as low as 1:148,000. Those facts create an opportunity for cinema chain operators such as PT Graha Layar Prima (CGV Cinemas), which is one of the major players in Indonesia.

CGV Cinemas was formerly known as Blitzmegaplex, established in 2004. In 2014, when PT Graha Layar Prima went public, CJ CGV Co. Ltd. became a shareholder of the company and even acquired a majority share in 2016. CJ CGV is the largest multiplex cinema chain in South Korea and one of the largest in the world. Accordingly, Blitzmegaplex was first rebranded as CGV Blitz in 2015, and then officially as CGV Cinemas in 2017. By April, it operates 397 screens at 68 sites in 33 cities across the country. Indonesia is CJ CGV’s fifth biggest market after South Korea, China, Turkey, and Vietnam, followed by Myanmar, the United States, and Russia. Altogether, CJ CGV has 4,197 screens in 584 sites combined per February.

Meanwhile in Indonesia, based on screen counts, CGV Cinemas claims to have more than 20% of market share, the second largest after the local cinema operator 21Cineplex. It also shows quite a leap compared to when Blitzmegaplex had only 7% in its early days. Following behind is Lippo Group’s Cinemaxx, which is now rebranding as Mexico-based Cinépolis.

“After we come into this market, we bring a different competition. CGV is different. We are not just a cinema operator, and we don’t just show movies. We have a different market positioning, where we are an entertainment platform provider,” says Kim Kyoung Tae (46), also known as Tommy Kim, president director of CGV Cinemas since 2018. Tommy was also in charge of the global investment strategy team at CJ CGV before the company came to Indonesia.

As it identifies, CGV Cinemas provides a diverse range of entertainment, such as through contents and facilities. It regularly shows live music/concert. And it also regularly screens indie movies and other Asian movies like Bollywood, Chinese, Japanese, Korean, and Thai, which can’t always be found at other cinemas.

Furthermore, CGV Cinemas has begun modeling its new sites differently. Its new FX Sudirman branch, for example, was previously occupied by another operator with five auditoriums. CGV Cinemas decided to demolish one and turn it into a sports hall and food court, attracting many visitors during after office hours. Another auditorium also functions as “Rumah Kreasi” (Room of Creation), to accommodate independent young creators, producers, and directors who need a venue to show their movie. The move is part of CGV Cinemas’ support for the improvement of the Indonesian movie market. The sites are also available for rent by companies for any occasion.

“[Applying the same concept to] existing CGVs is not easy because of the space limits. But for new sites, whenever we see the floor plan, we think not only of auditoriums. We keep thinking of what other entertainment could be put in the floor plan,” says Tommy.

This idea also goes in line with CGV Cinemas’ vision to become the top cultureplex, which was outlined by the CJ CGV. CGV Cinemas wants to go beyond the movie platform, a place where people can enjoy many kinds of culture from film, music, games, performances, food and drinks, and so on. Moreover, Korean-related trends such as K-Pop which is getting popular globally, makes developers and landlords invite CGV Cinemas to bring more foot traffic to the mall, particularly of younger generations.

The fresh concept seems to be working well. Before the rebranding took place, Blitzmegaplex had been recording a loss, reaching Rp 36 billion in 2015. By the end of 2017, however, the company managed a turnaround, booking a net income of Rp 12.4 billion. The following year, its revenue grew by nearly 39.5% to Rp 1.18 trillion and net income by 183% to Rp 35.23 billion. Box office makes 67.24% of CGV Cinemas’ revenue, followed by 23.55% from food & beverages, and the rest from events & advertising. The improvement, Tommy says, was possible due to high-quality screening—both Hollywood and local. Moreover, CGV began focusing on promotion marketing instead of aggressive expansion, which succeeded in gaining more audiences. Its 2019 financial statement shows that the revenue further grew to Rp 1.41 trillion, and net income to Rp 83.35 billion.

In 2018, CGV sold nearly 20 million tickets, up from 15 million in the previous year. Today, its sales are driven by the younger generation, which makes majority of their audience, aged 18-35. While ticket sales are dependent on the movies, Tommy says that to increase revenue from F&B and events, CGV Cinemas provides more entertainment at the site. This way, customers come not only to watch movies, and they can stay longer while enjoying other facilities. To support the film industry, CGV also holds several movie festivals every year, such as Indonesia-Korea, Australia, Japan, and German, which received a good response.

“Many young people who are interested in other country’s cultures come to watch movies. During that time we show Indonesian movies as well, so some foreigners also watch Indonesian movies. It’s a perfect opportunity for them, for us, and also for Indonesia to let foreigners know how Indonesian movies are going,” explains Tommy.

He also sees that the Indonesian young generation’s taste in movies has changed a lot in recent years. Since they are on mobile a lot, they have access to information globally and it gives them higher awareness. Tommy says that before Indonesian audiences liked slapstick comedy, funny and light stories. So when the movie Joker was released in October last year, Tommy didn’t expect it to be a big hit in Indonesia. Another example is Parasite, which was screened in June 2019 and later made history by taking home four Academy Awards at Oscars 2020. The social inequality-themed story actually attracted 10 times more audience in Indonesia than what they had forecasted.

“Parasite was a weighty subject as well, but everyone watched Parasite in Indonesia, and they like how the director can represent the dark side of society. It discusses a hard subject, but also provides funny portions. So they say that Indonesia also needs that kind of director who can touch such aspects,” explains Tommy.

Initially, this year CGV Cinemas aimed to build 12 more cinemas while becoming an entertainment content provider—producing online content and short films on special occasions. Unfortunately, due to the COVID-19 pandemic, the company had to temporarily close all cinemas from March 23 until further notice. Tommy says that there’s a significant drop in revenues and the company has yet been able to disclose how much loss is inflicted. Therefore in this challenging period, CGV Cinemas prioritizes saving cost and focusing on raising alternative revenue by driving online contents-making online advertising and uploading to their social networking service (SNS) platform.

MP
Written By
Marella Putri
Writer at Forbes Indonesia
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