Small is Big --The Battle over New Film Distribution Channels

Have you noticed? The movie theaters across Taiwan have all had a face-lift.

The Lifecycle of Taiwan Films.

Large-scale theaters with seating for over 1000 are being converted into "multi-cinema" complexes with medium or small theaters. New accoutrements like Dolby Surround Sound and acoustic alignment have been added to pull in the viewers. Those video cassette vendors and rental shops that cannot adjust to the changes have no choice but to close their doors.

Video cassettes are the second biggest distribution channel for films,attracting those viewers who can't be bothered to queue up for tickets.

In truth, consumers' access to movies has for a long time not been limited to theaters. Cable TV broadcasts a hurly-burly horde of films, and the fight over movie media has moved "downstream" from cinemas to your livingroom and mine.

Some people say these changes symbolize the arrival of "the era of diversified visual media." How will domestic Taiwan film, up to now in an unfavorable position amidst the competition, evolve in the face of this revolution in the industry?

How long has it been since you went into a cinema? One professional woman with preschoolers says, "Four months ago I went to the West Gate district to see a movie, and I was surprised to find out that we didn't have to stand up for the national anthem like we used to a few years ago."

She can easily count the number of times in a year she darkens the doors of a movie theater, but when she goes home, the cable TV remote control is in her hand non-stop. Every day without fail she tunes into several different channels, like HBO, the Sun Movie Channel, or the Star Movie Channel, to see if there are any films that draw her interest.

Box office shrinkage

In terms of quantifiable statistics, Taiwan's moviegoing habits have certainly changed over the years.

In 1992, the National Film Archive did a survey of the film-viewing habits of the residents of the greater Taipei metropolitan area. Results indicated that 90% of interviewees had seen a movie within the previous half year, but only 48% had seen their last film in a theater. Forty-four percent had seen their last film on television, cable TV or VCR.

The first indication of fewer viewers in the theaters is a drop at the box office.

Looking as a whole at the top ten money-making Chinese-language films of last year, a huge drop in profits can be seen across the board. In past years, motion pictures that did not earn more than NT$50 million simply could not make it into the top ten list, but last year movies that raked in as little as NT$20 million could count as money makers.

In the past such big Hong Kong stars as Chow Shing Che, Jet Li and Andy Lau were guarantees of a box office bonanza. Last year the response to films flying their banners could only be described as average. One Jet Li vehicle with profits of NT$28 million just managed to squeeze into the top ten. Compared with Li's acting fee of over NT$10 million, the results could hardly bring a smile to his boss's face.

Growing small

If theaters can't bring the crowds back, they naturally will not turn a profit. For big cinemas that can seat over a thousand customers, the vast emptiness of the theater makes the scarcity of viewers more obvious.

Proprietors who can't withstand the losses have little choice but to close up shop. Between 1990 and June 1995, the total number of cinemas throughout Taiwan diminished by about 100.

It has become popular with the cinemas that are still in operation to "slim down and beautify." One after another, large thousand-seat theaters have been converted into smaller auditoriums that can seat a few hundred. With smaller numbers but a greater variety, they hope to draw in a few more "market segments."

In Taipei there are currently 60 movie establishments, but 144 theaters. An eight-theater movie complex has reared its head in Taipei's East District. And in the moviegoer's Mecca, the West Gate district, a wave of "multi-theaterization" is taking place, giving the customer a whole range of choices as soon as they cross the threshold.

While the number of cinema attendees grows smaller with each passing year, rental and sales of video tapes is also entering a sluggish period. Back in the mid-eighties, the halcyon period for video shops, Taiwan had more than 8000 such stores. In recent years, the number has fallen to 1400.

Seeing that video stores' business is tepid, some have predicted that the video tape industry will disappear within ten years.

Wolf Chen, assistant vice president of marketing at the film distributor ERA International, on the other hand, is not nearly so pessimistic. He believes, "Maybe laser discs will replace video tapes, but the behavior of rental and sales won't change."

Nevertheless, the capital required for manufacturing laser discs, as well as rental and sales, is greater than that for video tapes. So although video shops are on the decrease, they are at the present stage still the second biggest medium, next to theaters.

Cinemas blossom anew

The golden era for theaters and video tapes has passed. Could it be that no one is watching movies anymore?

Of course not. It's only that the viewers' eyes are no longer focused on the silver screen, but have moved to "movie channels" on cable TV. Film- watching habits have evolved from theaters to VCRs and have now arrived at the age of the channel zapper.

The number of movie channels on Taiwan's cable TV is the highest in Asia, more than in the United States, where cable TV got its start.

"This phenomenon is very abnormal," says ERA International's director of distribution Lei Kuo-fu. Taiwan's stock and real-estate markets are both in a slump, leaving an excess of investment capital with nowhere to go. Because television channels are new products, they are able to attract investment. "Right now movie channels are going through a Warring States Period."

When you turn on cable TV, you can find more than ten different movie channels showing Chinese, American, European and Japanese films, as well as cartoons. Each channel shows about ten movies a day. Except for intermittent commercials, motion pictures are shown back to back.

Several major Chinese motion picture companies, such as Scholar Film Company, Unique Entertainment, and Long Shong Pictures, have started their own cable channels, showing the Chinese-language movies in whose production they have invested or whose distribution rights they have purchased.

Martial arts star Jet Li's Huang Feihong series, the Hong Kong director Wong Kaiwai's Ashes of Time and Chungking Express, the Taiwanese director Wu Nien-chen's A Borrowed Life, Tsai Ming-liang's Rebels of the Neon God and Ang Lee's Eat Drink Man Woman have appeared one by one on the television in your home.

Unrivaled in Asia

The results indicate that this kind of programming has been popular with viewers.

In a survey last year based on 130,000 ballots cast for cable TV programs, channels specializing in motion pictures won three spots in the top ten, coming in at second, sixth and seventh place. These were Home Box Office (HBO), exclusively showing American and European movies, the Unique Entertainment channel, specializing in Chinese movies, and the Sun Movie Channel, which shows 70% Chinese and 30% American and European films.

Movie channels need to broadcast about ten movies a day. Where do they dig up so many films?

"Finding films from the West is no problem. Pictures from the USA, Europe, New Zealand, Australia and Canada can all be grouped in this category. The number of sources is broad," says Unique Entertainment Company assistant general manager Yao Ching-kang. But currently less than 200 Chinese-language films from Hong Kong and Taiwan are made every year; the quantity is simply insufficient. Sometimes they must fill out the roster with Korean or Japanese films dubbed into Chinese.

After the ROC's Government Information Office recently announced that mainland films could legally be distributed in Taiwan under certain conditions, mainland movies joined the battlefield, and cable TV acquired access to yet another cache of films. After news got out that mainland features could be aired in Taiwan, industry representatives rushed to mainland China to negotiate the cultural exchange of film and the purchase of motion pictures. Taiwan viewers can already see such mainland films as A Small Town Named Hibiscus and Red Sorghum on satellite TV.

While new movies are in hot demand, old movies have also gained the chance for new life. Frequent cathode-ray-tube gazers will have noticed that the 1970s "three-set" movies, in which a bellbottomed Lin Ching-hsia embarks on school-age romance, have all been recently unearthed, as have Hong Kong whodunit farces from 20 years ago,

"Ten years ago, a movie might leave the theaters after a three-day showing and never see the light of day again," says ERA's Wolf Chen. "Now they have another chance to get acquainted with the audience." For the films' producers, giving an old film a second life could hardly be a bad thing.

Still a leading indicator?

The diversification of film distribution channels has served to lengthen films' lives. Most scholars believe that increased longevity should be good for a film's revenues.

Robert Chen, associate professor of communication arts at Fujen Catholic University, observes, "With the present increase in the number of ways you can see a movie, we can no longer exclusively judge the success of a film by its box office earnings."

Film critic Peggy Chiao notes, "Everyone says that new Taiwan films are doing badly at the box office. I want to ask, why is it that so many people have seen them? It's because of TV and VCR." She emphasizes, "Revenues don't just come from movie theater box offices. You have to add in all the rental and sales profits from cable TV, satellite television, video tapes and laser discs."

But people in the industry have a different point of view. "On the face of it, it seems like more income, but actually the profit is not so great," says Unique's Yao Ching-kang. No matter how good a movie's box office take is, video cassette rights are sold for about NT$3 million. And cable TV broadcast fees are standardized. If a film is broadcast several times over the course of two years, it can earn about NT$700,000.

As for the question of film revenues, the film industry and academia are concerned about different issues and therefore have differences of opinion.

Business-minded industry professionals remain narrowly focused on net profits, especially if they have invested in a big Hong Kong production which usually requires a capital outlay of NT$50-60 million or more. Overhead is huge, and the pressure to turn a profit is great. They naturally hope to quickly pull in box office returns well in the eight-digit range. The few million coming in from video tapes and cable TV are a drop in the bucket to them.

But the increased income from diversified film channels has given a shot of vitality to local Taiwan movies that rely on grant money to film.

Most Taiwan films operate with no more than NT$30 million dollars of capital, NT$5 to NT$10 million of which is provided by grants. The capital outlay that film investors must shoulder is thus already lightened by half. Box office revenues of NT$7-8 million may be enough to pull some films out of the red. With added peripheral profits from video cassettes and cable TV, they may even make a little money.

20 million to reel in

Although right now the revenues from secondary channels like video and cable are only a small enhancement, some players in the industry have begun to pay attention to the "home-viewing" trend. Such companies as Long Shong and Scholar are making arrangements to show feature films at home on the very day they leave the theaters. With the use of decoders in people's homes, they will prearrange a broadcast time on cable TV. This approach is called "pay-per-view" cable TV. At NT$150 to NT$200, the cost of one pay-per-view showing is less expensive than a single theater ticket.

Long Shong Pictures general manager Paul Wang states his case optimistically: "As a rule, the prestige of Hong Kong movie star Chow Yun Fat ought to draw in NT$50 million. Why is it that his Peace Hotel only made NT$30 million? Maybe the audience didn't like the subject matter. But it's more likely they were just too lazy to leave their houses. Pay-per-view channels can earn back that extra 20 million."

Other industry insiders, however, are skeptical as to just how many viewers will be receptive to this method of paying to see a movie.

"This goes back to the days when cable TV was not regulated [and stations therefore aired films without paying royalties]. Taiwan's film watchers have always had one point of view: You don't have to pay to watch a movie on TV," says Unique's Yao Ching-kang. Leading actors like Chow Yun Fat and Andy Lau are big draws, but they star in a vast number of movies every year. And after these blockbusters appear on pay-per-view TV, won't they still be broadcast on ordinary channels? If so, why wouldn't viewers wait a little while and see them for free? For this reason, it's still hard to say just how much money this new strategy will generate.

Controlling the flow

The fact is that even if cable TV had not "got in on the action," distribution channels for Chinese-language films could still be even more flexible.

A few big movie companies in Taiwan not only have a grip on simultaneous screening in movie theaters, but also have a hold of distribution rights through video tapes, as well as conventional and cable television. Single enterprises control the flow from primary to secondary distribution outlets. Robert Chen reproachfully comments that this has created a "complete vertical monopoly."

Within this kind of closed system, independent filmmakers who are unwilling to be dependent on big movie companies rarely have any negotiating leverage.

Eric Shih, marketing manager for Warner Bros. Taiwan, observes that independent filmmakers such as Wan Jen, director of Super Citizen Ko, Edward Yang, who directed A Confucian Confusion, and Huang Ming-chuan, the director of The Man Who Came from the West, only make one or two movies a year. But movie theaters need to have an endless supply of motion pictures, so they like to work with big film companies. Because of this, these independent films have to wait for an "empty slot." If theaters do not schedule space for them, releasing a film can become a daunting feat.

Furthermore, if a film can't make it onto the cinema circuit, purchase of its video cassette and cable TV rights is also put off.

"The Taiwan audience is far more aware of films that have hit the theaters than those that have not," notes Eric Shih. "News about video tapes comes from the impressions left over from theater showings." Primary distribution gains recognition, so video tape rights sell better for films that have been in the theaters.

Two years ago video tape rights sold for around NT$4 million, but were later chopped by the video cassette industry to NT$3 million. Independent producers without distribution channels have been helplessly "slaughtered."

"We're not asking for film companies that have distribution channels to disappear, but is it possible to have a little leeway within a closed system to give filmmakers with cultural merit a chance to survive?" ponders film critic Peggy Chiao.

Countries like the USA and Japan can boast privately operated small movie theaters. Director Tsai Ming-liang, who won the Venice Film Festival's Golden Lion Award for his Vive L'amour, recalls that when he went to Sapporo, Japan to take part in a film festival, Vive L'amour was shown for a month in a little mom-and-pop theater with only 29 seats. The theater was nearly always filled to capacity.

Not fit for big-league control

In the past Taiwan's movie companies would pump themselves up at any cost. Every film they put out would be shown in fifteen or twenty cinemas. Trying to make themselves look bigger than they really were, what they feared most was having too few theaters showing their film, so that it would be seen as a minor event.

But this kind of a motion picture market is simply not advantageous for local films. Peggy Chiao observes that most Taiwan films have small overheads of NT$10-20 million, and small productions cannot afford to spend a lot of money on marketing. They have to rely on time and word-of-mouth to attract a percentage of the audience.

"The special characteristic of the art film audience is that they are inactive and slow to move. They might go to see a movie two weeks after it has been showing," observes Warner Taiwan's Eric Shih.

The problem is that if such films, which rely on word-of-mouth, reap meager returns when they first come out, they are often discontinued early. (Most movies stay in the theaters for two weeks.) After word has finally spread, the film is nowhere to be seen.

One female moviegoer who supports local films relates that a colleague of hers told her Hou Hsiao-hsien's film Good Men, Good Women was in the theaters, but by the time she was free to see it, it was no longer showing.

In fact, early on when the "New Wave" movies (by Edward Yang, Hou Hsiao Hsien, etc.) were being labeled "box office poison," people called for a change in the concept of how to market local films. "Every movie should not have to enter into a gamble that offers not the smallest bit of choice, first giving it a look over in the Taipei area, and within three days quickly deciding whether it lives or dies."

A recent example is Super Citizen Ko, which depicts the psychological journey of a man caught in political trouble. When it first came out, it was shown in eleven theaters throughout greater Taipei, but failed to earn NT$2 million in its first two days. Plans were made to drop it early. Then it gained the vigorous support of the Democratic Progressive Party (DPP). Such party heavyweights as Peng Ming-min, Frank Hsieh and Shih Ming-teh all went to theaters to watch the film. Taipei mayor Chen Shui-bian even bought up a morning matinee. All students had to do was show their student ID to get free admission to the show. The movie's advertisements announced an "emergency," and radio stations appealed to their listeners to go see the movie. Finally, the film's box office revenues made a miraculous turnaround. After the second week, most theaters had stopped showing it, but three or four still kept it running.

Eric Shih, marketing manager for Warner Bros. Taiwan, which is responsible for distributing Super Citizen Ko, comments that "a long-term showing in a little theater would be the ideal situation" for this piece which recounts political experiences during the era of White Terror. But he also emphasizes, if the number of people coming to see the film is consistent, movie theaters will continue to present it. If seats are empty during the first week, it can only be blamed on "the short lifespan of the film itself."

The end is far from near

It appears that since film distribution channels have diversified, it is still impossible to guarantee that local movies will be able to escape the fate of an early demise. Do we ultimately want to have a film culture of our own?

"Chinese-language film is an industry in crisis, but it's not an industry on its last legs," says Robert Chen. Analyzing worldwide motion picture productivity in 1993, first place was India with about 800 films. Second place was the USA with more than 600 films. Hong Kong came in third, and Taiwan was not far behind, placing in the teens. Chen's conclusion is that Taiwan's film industry is actually prospering. "If we can maintain our current productivity, we've succeeded."

Chen adds, "In comparison with films from the West, the position of Taiwan films is like having a little noodle stall in a big shopping district; you can make ends meet, but you shouldn't plan to start up a franchise."

Chen believes that when attending movie theaters is no longer the entertainment of the masses, the production rate of about 20 local films per year will on the one hand satisfy those moviegoers who support local films, and on the other hand will protect our right to cultural self-expression.

ERA International's Wolf Chen comments that the whole world has been knocked flat by American films, and Hong Kong has churned out a plethora of lousy movies, so the audience's taste has been ruined. "In the future, filmmakers will be very careful. They won't make movies that burn a lot of money, and they will seek out subjects whose storylines suit local tastes. If costs are low, the pressure to generate profits will be low too."

One industry professional put it well: "Movies are like a mother hen that lays eggs. No matter how hard the times, you can't kill the hen to get the eggs. Movies will continue to be made."

The truth is, movie theaters, video cassettes, laser discs and television are all fundamentally empty vessels. If they are to do even better business, they must support the primal source of film culture. No matter how good the distribution channels are, don't the souls of the films come from those who create them?

More theaters with fewer seats is a more flexible method of doing business. If a movie turns out to be a poor draw, these theaters that seat as few as 100 don't appear to be too empty. If a movie is hot, tickets become a sought-after commodity, and more than one mini-theater can show the same film.

Dolby Surround Sound systems give audience members the sensation of being involved in action.

Film distribution channels in the nineties have entered the age of cable. Competition is centered around who has the most films, and old movies have a chance at a second birth. （photo by Yang Wen-ching）