— This is the script of CNBC's news report for China's CCTV on August 17, 2018, Friday.
Amazon plans to expand its business, entering off-line movie industry, according to the news released overnight, and its takeover target is US landmark Theatre. People may have 2 questions about that, 1st , why does amazon want to acquire this company? Let us make a simple brief about this landmark theatre.
Landmark theatre is a US local theatre chain focused on independent movies and foreign movies, its business also including 3D films and main stream films. From it was established in 1974, Landmark theatre has owned 56 cinemas and 268 off-line screens. So if amazon can takeover landmark theatre successfully, it will has a business chain targeting independent films and foreign films, benefiting amazon's media business and fortifying its competition on film distribution channels.
Amazon is not the 1st one favored this theatre. US streaming giant Netflix once considered to acquire landmark theatre, but gave up because the two sides didn't agree on the price. And that might be the 2nd question you want to ask: why those online tech giants want to enter offline theatre business? Actually, if we have a look of market trend, we will know competition between streaming media and traditional TV and movie industry has already started, which can trace back to 2017.
Cannes Film Festival introduced a new rule in order to cope with threat to traditional film giants from streaming media such as Netflix: only films that have been shown in French theaters can compete in the main competition, and films have only shown in streaming platform don't have this qualification, firing the flashpoint in the competition between streaming media and traditional film industry.
United States Department of Justice said on 3 Aug, they are reviewing "Paramount decision" made by the Supreme Court in 1948. This decision ruled American film studios are not allowed to have their own theatres, activating the American film industry; enabling small film companies get further development and achieving free competition. While some analysts think if paramount decision overturned outright, then we will see a fierce foray in film distribution channels. Amazon also takes advantage of this opportunity to encroach this market by combining online and offline film resources.
Generally, amazon is named as "industry disrupter" when it enter a new market, causing other competitors' share drop, and there was no exception to the news overnight.
Amazon increased nearly 1% in intraday, with 0.2% close up and further 0.5% increase in after hours, causing its share price also reached a new high of 1919 dollars. Shares of U.S. cinema operators fell at the open on the news, but their losses narrowed on the day, entertainment and film technology company IMAX closed down 1.5%, while Cinemark Holdings, a maker of Cinemark films, ended up 0.7% after a volatile day.
We will keep an eye on further information.