Leading online movie ticketing agent Maoyan Entertainment had to refund a hefty 200 million yuan ($28 million) in the final days of January as most of the nation’s cinemas shut down in a matter of days at the height of the coronavirus outbreak, the company said.
Movies have been one of the hardest hit sectors amid the outbreak, as China’s thousands of theaters were forced to shut down starting Jan. 24, right as the industry was heading into one of its most lucrative periods during the Lunar New Year holiday. A few have begun to recently reopen, but revenues are still at a tiny fraction of pre-outbreak levels.
The huge and sudden wave of shutdowns in January forced Maoyan to hire 100 new customer service representatives just as the nation was observing its important holiday when entertainment is an important pastime, said Maoyan CEO Zheng Zhihao on a conference call to discuss his company’s 2019 results released Tuesday in the U.S.
Within three days the company had refunded the full amount totaling more than 200 million yuan for pre-purchased tickets for screenings that were canceled, he said. Maoyan itself provided the money for theaters that couldn’t immediately provide it themselves, he added.
“In early 2020, the Covid-19 outbreak is causing significant impacts to world economy, putting the entire entertainment industry to the stern test,” Maoyan said in a statement accompanying its results. It called itself “an important player in this industry,” but did not elaborate to what extent it is feeling an impact from the closures.
Industry data provided by Maoyan painted a bleak picture of the broader industry in China. Theaters have only recently begun to reopen, and are mostly screening old hits like “Wolf Warrior 2” and “The Wandering Earth.” Maoyan said that around 500 movie theaters nationwide had reopened as of Tuesday, representing just 4.36% of China’s total. The box office take for that day was a meager 27,000 yuan.
“The film market lull could last until early April or even longer, but we’re still seeing signs that everyone is getting back to work,” Zheng said. He added that the outbreak was a short-term phenomenon that shouldn’t change the longer term prospects for China’s box office.
Hong Kong-listed Maoyan gave its industry outlook as it reported full-year results that saw its revenue grow 14% to 4.27 billion yuan in 2019. It also moved into the black during the year, posting a profit of 459 million yuan. The revenue beat a forecast for 4.1 billion yuan by the market research arm of investment bank CICC.
CICC predicted that if business returns to more normal levels by the second part of May, China’s total box office would drop about 28% this year to 46.2 billion yuan. It predicted that Maoyan’s annual revenue would fall by a similar amount, around 23.6%, to 3.12 billion yuan, with adjusted profit down by 30%.
The big hit from Covid-19 comes as China’s box office was already slowing over the last three years after more than a decade of rapid growth. Last year’s box office rose just 5.4% to 64.3 billion yuan, well below the 2018 growth rate of 9%. The industry is also being hamstrung by a glut of screens, with that number up 16.2% last year — about triple the box office growth rate.
– This article originally appeared on Caixin Global.