The 2nd largest movie theater chain in the US, AMC Theaters (American Multi-Cinema) is being purchased by the expanding Chinese company Wanda for $2.6 billion.
Founded in Kansas City back in 1920 the AMC multiplex theater chain now boasts 347 theaters with 5, 048 screens. Despite its substantial presence throughout America, AMC owes $2 billion in debt, and movie theater attendance in North America was down 4 percent as of last year. These low figures make Wanda’s investment appear a bit risky, but they obviously see many signs of promise.
In contrast to the US, where less people are willing to spend money on going to the movies, the Chinese movie theater business is growing at an incredible rate. The communist country has seen an increase of roughly “eight movie screens a day” according to Rance Pow, head of Artisan Gateway. Pow also comments that what’s driving that growth is rising incomes, better Chinese movies, and new state of the art theaters. Only 15 years ago going out to the movies in China meant sitting in a theater with only a single screen available, old rickety chairs, and outdated sound systems. Wanda now provides 730 screens in China (including 10 IMAX), attracting a new generation of young people who are eager for access to state of the art entertainment.
Overseas the giant Chinese conglomerate Wanda is already bringing in $17 billion in revenue through shopping plazas, department stores, and hotels. By buying AMC it gives the company an opportunity to shift movie production into China and not rely entirely on Hollywood for new movies.
Gao Shouzhi, CEO of Entgroup, a Chinese entertainment research company makes another observation regarding the desire for cheap commercial real estate in the US. “Wanda's strategy isn't only to make a profit from its cinema investment," says Shouzhi, "a bigger part of it is to take Wanda's other businesses — like hotels — overseas through this channel. This is the idea behind its internationalization plan."
Whether the company’s aspirations to move into the US market will become a reality is yet to be seen. For now it appears Wanda will focus on building more and more theaters for their country’s rapidly growing number of movie goers; whose increasing attendance is expected to top Japan’s box office and become the world’s second largest within the next year.
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