When Jack Gao launched his Smart Cinema startup on a single bold premise — that he could massively expand the Chinese box office if he could deliver first-run movies directly (and securely) to consumers’ mobile phones.
That bet appears to be paying off.
In the five months since launch, Smart Cinema has streamed 15 newly released films to mobile phones in China. The service is reaching a vast untapped market of Chinese consumers who do not live near close enough to a movie theater to buy a ticket.
“So far, the uncovered places are the big deal,” said Gao in an interview with Deadline, noting that 80% of the Chinese population has never been to a movie theater. “Another part was the people who are traveling.”
Consumes are paying the rough equivalent of a movie ticket to watch a newly released (25 Yuan, or about $3.50), compared with an average of 35 Yuan at the megaplex.
As an executive who worked in film and exhibition, Gao knew the idea behind Smart Cinema was a controversial one. Some raised concerns about the mobile service cannibalizing box office proceeds, he said.
Gao says his startup will expand the theatrical pie by attracting new audiences and increasing distribution for films that never make it to the big screen.
“From the studio and movie-maker side of it, China is one the few countries (where) it’s like winner take all,” Gao said. “Top few movies take 90% of box office and 82% of all screens.”
Smart Cinema dramatically expands the number of available screens, from the 50,000 in cinemas to the 600 million smartphone screens. It also allows studios to wring more value from their “crazy” promotional spending to launch a film.
“Smart Cinema was created not to cannibalize the existing exhibition. It increased the box office,” said Gao, saying his goal is to increase movie attendance by five times current levels. “Certain people are still skeptical, not all. But we’ll see.”