The majority of our company visits and meetings were reserved for Bangkok, so we had a busy schedule throughout the week (with some time reserved for fun activities including a day trip and a muaythai boxing match). On Monday night we heard from the Managing Director of CLSA Securities Limited, Mr. Prinn Panitchpakdi, who provided us with a brief overview of Thailand and SEA (Southeast Asia). We also heard from the founder and partner of 500 Startups, Mr. Krating Poonpol. Mr. Poonpol presented on the tech/startup ecosystem in Thailand. A graduate of Stanford Business School and ex-Product Marketing Manager of Google Earth, Mr. Poonpol has had much success in building up the Thai startup landscape. 500 Startups is a $12M micro fund for Thailand that invests in the country’s most promising startups.
The next day we woke up early and prepared for four company visits. Our first visit was to Major Cineplex. Major Cineplex operates as a lifestyle entertainment company with numerous business segments including cinema, advertising and media, bowling, karaoke, ice skating rinks, rental services, and movie content and production businesses. The company’s cinema business seeks to operate not just theaters, but as lifestyle living spaces. Its vision is “to be the world’s best cinema and total lifestyle entertainment complex.” With over 140 locations and 800 screens in Thailand (it also has locations in Cambodia and Laos), Cineplex is the market leader in cinema.
Many of Major Cineplex’s theaters are located inside Thai malls. We visited one of Cineplex’s premier theaters, located inside Central Embassy (a major mall in Bangkok). The impressive theater appears to operate and look more like a hotel than a theater – its lobby and common areas are spectacular, and its concierge services are five star. Many of its theater rooms feature reclining beds with individual mini fridges instead of typical chairs and cupholders.
We heard from the Chief Marketing Officer of Major Cineplex, Mr. Narute Jiensnong. Mr. Jiensnong provided us with an overview of Major Cineplex’s operations, marketing, and finances. In terms of revenue, 60% comes from ticket sales, 20% from concessions, and the remaining 20% from sponsorship and ads. 50% of the revenue goes to movie producers, 25% to rent, and the last 25% to cover salaries and SG&A. Most of the profit comes from concessions (this is similar to the US).
Unlike in the US where movie theaters are struggling to fills eats, Major Cineplex has seen an increase in ticket sales ever year. Mr. Jiensnong explained this phenomenon in an interesting way – he said that (and I’m slightly paraphrasing) Netflix is like frozen food; everyone in Thailand has frozen foods at home, but restaurants are still doing really well. Similarly, movie theaters are doing well despite the influx of online streaming options like Netflix.
Thailand, and Bangkok specifically, is a unique case study. The success of movie theaters and malls can be explained in several ways – the extremely humid climate makes well air-conditioned places very attractive; the influence of Buddhism in Thai business culture results in an emphasis on hospitality and good service; Bangkok is the economy of Thailand, and suburbia, unlike in America where many malls and theaters were built, doesn’t really exist here; the luxuriousness of the malls and theaters makes you want to continue to visit; the malls have virtually everything all in one location, from theaters to hair salons to restaurants to bars. All these factors have contributed to the development and success of these massive entertainment and lifestyle centers in Bangkok.
In my next post, I will talk more about this phenomenon and share with you the remaining company visits of our trip. Stay tuned for more!