The end of online ticket supplement era: industry returns to reason 9.9 yuan, low price tickets no longer exist.

The end of online ticket supplement era: industry returns to reason 9.9 yuan, low price tickets no longer exist.

A senior television company told financial reporters that this is not the first time to discuss this matter. Previously, many companies in the industry, including projection associations, city cinema projection associations and other upstream and downstream sectors of the industry have held many seminars with the competent authorities to discuss and propose to stop the brutal growth of ticketing platforms.

Tickets for buying cheap movie tickets online will end.

In September 12th, news of a new online ticketing platform was circulated on the Internet. It is stipulated that:

1. From October 1, 2018, all online ticketing platforms, including third-party and cinema-owned channels, will cease to make up all tickets, but excluding the offline ticket sales of cinemas.

2. The handling fee of the third-party online ticketing shall not exceed 2 yuan (including ticketing system), and the courtyard line/film casting shall not participate in the distribution.

Three, films without public license will not be available for advance sale.

Fourthly, the settlement period of online tickets for cinemas will change from October 1, 2018 to 8 days, and immediate settlement will be required from October 1, 2019.

Several industry insiders confirmed the previous online rumors that the online ticketing platform would stop making up all tickets, and said the authorities had discussed the issue with industry executives not long ago.

A senior television company told financial reporters that this is not the first time to discuss the matter. Previously, many companies in the industry, including projection associations, city cinema projection associations and other upstream and downstream sectors of the industry have held many seminars with the competent authorities to discuss and propose to stop the brutal growth of ticketing platforms.

"We hope that the competent departments will come to harmony and build bridges for users and channels. Online ticketing platform returns to the function of the platform, it can earn service fees, but can not use traffic to affect the pricing of film tickets, can not use ticket subsidy in the industry competition to achieve exclusive behavior. The above said.

However, it is understood that this regulation has not yet officially landed, the hospital line and online ticketing platform has not yet received formal notification. A source from the state-owned academy told the Financial Journal that no formal notification of the new regulation has yet been received internally, and that people are just passing it on from mouth to mouth. Private film and television companies, including Bona Pictures, have issued screenshots without official documents.

In the past few years, in order to compete for the market and traffic, film producers and distributors have adopted a lot of "subsidized marketing" means to boost box office, thus obtaining higher valuation and income in the capital market and bottom-line issue. The market is full of 9.9 yuan for a single film, regardless of cost, and the box office subsidies are directly included in the total box office of the year.

The online ticketing platform in 2014 -2016 crazy subsidies also contributed to box office growth. Wang Changtian, chairman of Lightmedia, told Caijing that in 2015, the amount of supplementary votes was about 4 billion yuan, accounting for about 10% of the total box office. A movie ticket can be bought at a minimum of 6.6 yuan. By 2016, the habit of buying tickets online had developed --- more than 80 percent of users bought tickets online.

The online ticketing platform has become the most powerful part of the industry through the ticketing strategy. They control the platform, traffic and distribution resources, and even directly affect the cinema's production strategy, and compete with traditional distributors for the market.

"Take this year's film Later Us for example, Cat's Eye is the investor, the only ticketing platform, and also the issuer, to a certain extent this is a monopoly." A senior executive of a traditional film company told the financial reporter.

The above-mentioned high-level said that any industry to enter a traditional industry must first set a good threshold for the healthy development of the industry, but the current capital of the film and television industry kidnapping and business has been basically completed, can only be restored by the future bit by bit.

Platform online distribution business is most affected

After the new regulations, the issuance of online ticketing platforms has been the most affected, which is one of the most important strategies for them to transform from simple ticket vendors to comprehensive entertainment companies and compete for the right to speak in the industry.

According to Cat Eye Entertainment's prospectus, Cat Eye's traditional online ticketing service is still the largest source of revenue, but its share is declining year by year, from 99.6% in 2015 to 58.8%. But the proportion of entertainment content services, including production and distribution, is rising from 24.5% in 2016 to 33.4% in 2017.

Cancellation of the ticket subsidy means that the ability of online ticketing platforms to take advantage of platform and traffic to obtain film distribution rights and to interfere with cinema production will be greatly weakened.

Since 2015, after 70% of the total number of online ticket purchasers, ticketing websites that hold users'hands have collectively entered the publishing arena.

Their strategy of pre-sale plus ticket replacement has changed the mode of film distribution: the most direct way is to replace the film with ticket replacement, if the cinema does not increase the production, the ticket will not be used in this studio, without the support of the advantage of ticket replacement, profit-seeking audiences will be lost to the more inexpensive studios.

Through this powerful means, the online ticketing platform can directly interfere with the studio's production planning; on the other hand, as most users buy tickets directly online, the original stationed in the cinema push, campaign marketers have become chicken ribs.

"Under the impact, in addition to Huayi, Ray, Bona, Huatzer several large companies have their own large team, as well as Lianrui, Horizon, Polyfilm Federation and other major publishing companies, in two years, the original hundreds of publishing companies are few." A top film executive told Finance that few companies can build a team of so many people.

Traditional releases can only talk to studio managers about the performance of a movie's Baidu Index and Weibo Index, but these figures are like castles in the air, not as realistic as the platform to directly supplement the tickets. Today, the quality of movies has been able to directly determine the film city's layout, the importance of the past can account for 60% of the distribution business now can only play a role in the icing on the cake.

"A deep sense of powerlessness." A retired member of the Lightning Pictures Distribution Department said that talking about the data (Baidu Index, Weibo Index) now tends to say, "You're stupid."

"We are now trying to get rid of the hard schedule and avoid confrontation with the online platform." A senior executive of a traditional film and television company said. "Although the circle relies on human relations, but also can not stand the advantages of the platform, look at a few movies in 2018, even if the private relationship is good enough to finally give the cat's eye hair."

Once the new deal is officially launched, the advantage of the online ticketing platform in the propaganda link will be reduced. That is, the platform will no longer be able to use the ticket to compensate for the attraction of traffic, and use traffic instead of affecting the cinema's production strategy, and get the film distribution rights.

"The advantage of the platform is basically left to rely on the user's established online ticket shopping habits." But the new rules do not prohibit ticket subsidies for offline cinemas, so audiences are likely to change their spending behavior because of the concessions offered by theaters offline, which will have a greater impact on online platforms, a senior film industry official said.

Limited impact on cat eye entertainment IPO pricing

The new regulations also stipulate that the fee for online ticketing is no more than 2 yuan, and that the settlement cycle of online bookers for cinemas will change from October 1 to T+7, and from November next year to T+0, that is, real-time settlement. This creates new pressure on the revenue and cash flow of ticketing platforms.

In the past, the service fee of online ticketing platform was usually 2-5 yuan, which was also the main source of revenue of the ticketing platform. According to Cat Eye Entertainment's prospectus, revenue from online entertainment ticketing increased from $594 million in 2015 to $1.49 billion in 2017. The reduction of service charge and within February will inevitably affect the income of online ticketing platforms.

Cat Eye Entertainment's prospectus shows Cat Eye Entertainment has lost more than $2 billion in the past three and a half years. In 2015, 2016 and 2017, Cat's Eye Entertainment's net loss was RMB 1.298 billion yuan, 508 million yuan and 76.1 million yuan, respectively. In the first half of 2018, the loss of the cat eye entertainment was 231 million yuan, and the loss after adjustment was 20 million 700 thousand yuan.

In addition, the change of settlement cycle will also seriously affect the cash flow of online ticketing platforms. Cat eye movie cash stock at the end of 2017 1 billion 170 million, as of June 30th this year, the remaining 700 million. In the first half of this year, Cat's Operating Cash Flow was 1.22 billion, including 650 million share compensation expenses, 628 million goodwill impairment and 70 million intangible assets impairment.

Compared with the strong cash flow and resource support of Alibaba-backed ticket laundering, the impact of the new deal on cat's eye entertainment, which is about to hit the IPO, is greater.

According to Cat Eye Entertainment's prospectus, Cat Eye's external financing from 2015 to 2017 amounted to $1.06 billion, $1 billion and $500 million, depending on its own operating cash flow for a long time. Cat's Eye had a net cash outflow of 447 million in the first half of 2018, and without external financing, its business, financial and operating performance would be "significantly negatively affected".

But an investment banker told Caijing that although the new deal has a negative impact on the upcoming listing of Cat's Eye Entertainment's future stock price and market confidence, the overall impact is small.

"The New Deal affects the cat's eye profitability model, but the average investor will not make up for the votes as a sustainable profitability model, so the current risk is already within investors'expectations." These people said.

A head fund vice president told the financial reporter that capital had long been expected. For online ticketing platforms. At the end of the sale, the price must return to normal, and then the platform charges a certain fee, that's all. "Burning money can't burn anything. The handling fee of three or five yuan is not very useful, even if the monopoly industry is also a very modest profit model, meaningless.

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