The "scheduling" market in 2023 has shifted to the right again because the market expectation before the schedule is generally low, so funds are more inclined to realize performance expectations after the box office results are realized. The domestic film market was relatively bleak in June this year, so the summer schedule has not yet started, and the film and television sector as a whole is at a low valuation. The product structure, 10-30 billion yuan products operating income, amounts to 401/1288/60 million yuan respectively.
According to the Taijing Finance App, GF Securities released a research report stating that the global film market's recovery is lower than expected, and China's box office is leading, which is currently the largest and fastest recovering barrel in the world. After the Spring Festival and National Day schedules in 2020, the "scheduling" market shifted to the left. In 2023, the "scheduling" market shifted to the right again, because the market expectations before the schedule were generally low, so funds are more inclined to realize performance expectations after the box office results are realized. The domestic film market was relatively bleak in June of this year, so the summer schedule has not yet started, and the film and television sector as a whole is at a low valuation. It is expected that by 2025, the lack of content supply will be improved, and policy encouragement of funds to enter the film industry will promote the prosperity and activity of the film creation.
The global film market's recovery is lower than expected, and China's box office is leading. According to Tiopo data, China recorded a service fee-included box office of 21.6 billion yuan from January to May 2024, a year-on-year decrease of 2%, a decrease of 20% compared to the same period in 2019. Among them, the box office in the popular schedule reached 127% of the same period in 2019, exceeding expectations. This is because an increasing number of consumers prefer low-priced experiential consumption during statutory holidays; the box office in other periods is only 59% of the same period in 2019, which is lower than expected. This is because the consumption habits of high-frequency moviegoers have shifted during the epidemic. Assuming that the box office in the summer schedule this year decreases by 10%-20% year-on-year and the box office from September to December increases by 10%-40% year-on-year, we expect the total box office revenue in 2024 to be between 51.4 billion and 57.1 billion yuan.
The "scheduling" market has shifted from left to right. After the Spring Festival and National Day schedules in 2020, the "scheduling" market shifted to the left. This is because of the uncertainty and systemic risks in the film and television industry during this period. Market funds have shifted from "speculating on performance" to "speculating on expectations". In 2023, the "scheduling" market shifted to the right again, because the market expectations before the schedule were generally low, so funds are more inclined to realize performance expectations after the box office results are realized. The domestic film market was relatively bleak in June of this year, so the summer schedule has not yet started, and the film and television sector as a whole is at a low valuation. Last summer schedule refreshed China's historical box office record. If "Ne Zha" and "Jie Mi" can be successfully scheduled in the summer, the head film reserves for this year's summer schedule are basically the same as last year, and there is hope to surpass last year's summer schedule.
The development status and policy orientation of the film industry in 2024. (1) The domestic film market lacks head films in the first half of this year. It is expected that the shortage of content supply will be improved by 2025, and policies encourage funds to enter the film industry. (2) Film types are clustered, and policies promote the prosperity and activity of film creation. (3) The low box office of the accounted film, domestically increase screening of buyout films from various countries/regions. (4) The total number of domestic cinemas has increased slightly, the market share of film investment has declined, and policies support mergers and acquisitions to improve industrial concentration. (5) The content of cinemas is highly homogenized. Efforts are being made to promote differentiated distribution. (6) Actively promote the application of AI technology in the entire film industry chain, including content creation, post-production, virtual shooting, market analysis and optimization, and automated management. (7) The ticket purchasing behavior is after the fact. Female audiences and 25-29 year old audiences have become the main force of purchasing tickets. It is necessary to focus on developing the 20-24 year old and 40 year old and above viewing markets.
Investment suggestions. It is recommended to pay attention to Wanda Movies (the main investor of "The Successor Program", and the main distributor of "White Snake: Tassel Life"), Maoyan Entertainment (participating in "The Successor Program", "Decryption", "Silently Killing", "White Snake: Tassel Life", etc.), Beijing Enlight Media (main investor and distributor of "Ne Zha"), Ali Pictures (the main publicity and distribution company of "The Counterlife"), China Literature Group (participated in "Customs Front Line", "Under the Weird", etc.), Bainanoia Pictures (participated in "There is a Small Convenience Store on the Cloud Edge"), and Hengdian Entertainment and China Film, which will benefit from the summer schedule and large-cap market.
Risk prompts. Industry regulatory risks, box office lower than expected, uncertainty of film projects, and application risks of AIGC.