Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov EXECUTIVE SUMMARY In the first half year of 2016, box office of Chinese film market was 24.57 billion with year-on-year growth of 21.38%. Of which, box office of domestic films was 12.93 billion and accounted for 53%, imported ones of 11.62 billion and accounted for 47%. According to the data of Box Office Mojo, box office of North American film market in the first half year of 2016 was $5.58 billion (about 37.28 billion) with year-on-year growth of 1.7%. Chart 1: Jan to Jun 2016 China Box Office 8.00 6.00 4.00 2.00 In RMB Bn 3.85 6.87 3.76 3.74 3.47 2.87 Imports 47% Locals 53% Market Share 0.00 1
1. NEW TECHNOLOGY Xenon lamp to laser, RGB laser technology can do RGB lasers as a new generation of light source, compare with the xenon light source, relying on the real high solid three primary colors of red, green and blue light source, the color gamut can cover nearly 90% of the color that human eyes can identify to truly reproduce natural color on the basis of inheriting all the advantages of the digital display technology. RGB laser source not only break through the projection technology bottleneck in brightness and color gamut width, but also has the unique advantages of sharpness and contrast gray scale in the laser technology, to make audience more immersive. It is reported that RGB lasers only need to modify on the part of the existing projector light source, the service life can reach up to 50,000 hours, saves a great deal of operating maintenance cost and difficulty of RGB Laser projection studio. 2
LEONIS launched own 3D audio standard technology - China HoloSound China HoloSound changed the statement of Film gold seat, each position of the audience can accurately locate the sound image, completely solved the problem of positioning the sound image in 360 degree space, put the sound from the surface to the stereo". "China HoloSound technology including two parts of immersive content mastering and immersive content rendering, for immersive audio post production unit (such as mixing chamber, film companies, distributors and immersive audio playback unit (such as the national each big cinema) respectively. Also "China HoloSound" technology can be divided by the field of its application different: HoloSound-Cinema for digital cinema and HoloSound- VR for VR application (the global first solution of VR immersive sound), HoloSound-Consumer for the application of personal consumer electronics. LEONIS is committed to the standardization and commercialization of immersive audio technology. At present China SoloShound has been deployed successful in LEONIS immersive auditorium", and plan to deploy 10 theaters this year and 100 theaters next year. 3
2. NEW PRODUCTS & NEW ARRIVALS Barco launched high brightness fluorescent powder laser projector for large Venues Global projection technology leader Barco company recently launched a new projector which used 3 chip of DLP, the projector brightness up to 30000 lumens that can provide WUXGA resolution and superior quality, and further enriched the activity and large venues applications in HDF product line (HDF is the high brightness products series of Barco, brightness from 22000 lumens to 30000 lumens, is the mainstream model for large-scale activities and displays). In addition, the powerful FLEX HDF-W30LP projector has a high brightness fluorescent powder laser light source, not only the life is very long, and the overall cost of ownership is very low. After the new HDF-W30LP FLEX projector, Barco company also launched a new phosphor laser modification module. This allows the leasing customers and venue owners can replace the light box to phosphor laser modification module, to easily refit the existing Barco HDF-W30 flex projector. 4
NC1201L Solutions for summer NC1201L projectors using laser light source, which belongs to the real cold light source, it generate fewer heat in the show, even if it is used for a long time, the device can also be to maintain stable operation; NC1201L light source is multimode group design, module independent operation without mutual influence, light source level almost does not exist stop in the show. NC1201L use the CCT cooling technology, it is NEC's patented technology of unique internal circulation heat exchange, and it is the one of the NC1201L s unique skill of heat dissipation. This technology makes the important optical components inside NC1201L machine can be completely sealed, and then conduct cooling through heat exchange medium in radiator, so that the external dust cannot enter into the internal machine causing the pollution of optical components, not only enhance the radiating efficiency of the machine, but also greatly reduces the heat of the machine, and ensures the stability when the machine is running. At the same time, due to the parts of NC1201L machine are noise elimination design, the whole noise is only 47dB, ultralow noise design makes it a leader in the similar products. 5
3. M&A ACTIVITIES Universal Pictures acquires DreamWorks Studios to against Disney According to foreign media report, the parent company of Universal Pictures - Comcast announced that it will acquire the DreamWorks Studios with $3.8 billion in cash, the transaction is expected to be completed by the end of the year. After completion of the transaction, DreamWorks will be integrated into the global film entertainment group which under the NBC Universal, it will become the subsidiaries of the group as Universal Pictures. According to the agreement, the NBC Universal will pay cash of $41 per share to DreamWorks shareholders, DreamWorks co-founder and CEO Jeffrey Katzenberg will serve as the new chairman of DreamWorks media. Comcast's Universal Studios has achieved success relying on animated film despicable me and Minions in recent years, but it still has certain gap with Disney s layout, after the acquisition of DreamWorks, the strategy of Comcast in the field of animation may speed up. The integration of Wanda Film and Legendary Pictures Wanda cinema intends to issue shares to buy the underlying including Wanda film and Legendary Pictures. According to announcement before the release, The total value of Wanda film and Qingdao Wanda film has reached around RMB350 billion, and Wanda cinema reached RMB94.3 billion before the suspension of market capitalization, if included in the legendary pictures, the market value has been much higher than Huayi Brothers and Enlight Media. 6
Wanda cinema announcement on June 5 evening said that the company intends to issue shares to purchase 100% of the Wanda film shares. 100% Wanda film stake in the estimated value of RMB37.5 billion, the parties determined the underlying asset transaction price is RMB37.20 billion. 4. CINEMAS LINES AND BOX OFFICE Cinemas & Screens In the first half year of 2016, China added 692 new cinemas with year-on-year growth rate of 5.8%, 3,800 new screens. As of the end of Jun, the total number of cinema in China has reached 7,039, the number of screens is 38,600. 2500 2000 1500 1000 2166 1634 New cinemas # New Screens # 500 411 281 0 Q1 Q2 Q3 Q4 Chart 2: Q1-Q4 2016 Chinese New Cinemas 7
Chinese Box Office In Jun 2016, total box office of Chinese film market was 3.74 billion with year-on-year growth of 11.6% and increased by 7% than last month. In Apr, total box office was 2.87 billion with year-on-year decrease of 29%, and total box office was 3.47 billion in May with year-on-year growth of 9%. 8.00 8.00 7.00 7.00 6.00 6.00 5.00 5.00 4.00 4.00 3.00 3.00 2.00 2.00 1.00 1.00 0.00 0.00 2015 2016 2015 2016 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Chart 3: 2015-2016 Chinese Monthly Box Office (In RMB Bn) 8
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