Film industry in need of greater investment

Vietnam’s entertainment industry holds substantial potential and has been helped in large part by the presence of major South Korean investors over recent years. The newly-established Vietnam Entertainment Fund (VEF) is anticipated to provide an even greater boost to the industry. Goals under the Strategy to Develop Vietnam’s Film Industry to 2020 and Vision to 2030 include 210 million filmgoers each year and 1,050 screens by 2030, and will be a foundation in the industry becoming more attractive to both local and foreign investors. 

New drive

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The local film market has long been dominated by foreign films, mainly from Hollywood. Vietnamese films account for just 20 per cent of total revenue annually, or VND2.3 trillion ($98 million). Local filmmakers depend heavily on the State budget, which has primarily supported films with wartime or propaganda themes. Access to State funding has become even more difficult in recent years due to a more complex application process. Capital is scarce for most projects though investment from private and foreign investors has come, thanks to the industry’s open investment policies. 

In such a context, the $50-million VEF is hoped to be a new force in boosting the local film industry. Some $20 million will go to producing Vietnamese films each year, according to Ms. Ngo Thi Bich Hanh, Deputy Chairwoman of the Vietnamese Film Distribution and Dissemination Association. Fifty films will be released each year, with a production cost of VND8 to 20 billion ($345,000 to $860,000) each. “More capital would increase the number of films made each year,” Ms. Hanh told VET. “More Vietnamese films would be made and many would be successful.” 

“The fund’s goal is to improve the quality of local movie production,” Mr. Richard Le, Chairman of VEF’s Board of Management, told VET. “It will be a source of finance and marketing assistance for Vietnamese filmmakers through the support of its five founding members, which have a great deal of experience in movie production and marketing.”

As a Co-founder and Vice President of BHD/Vietnam Media Corp, Ms. Hanh believes the presence of professional funds in the local entertainment industry, particularly the film industry, augers well for future development, as the film industry has already begun to boom but requires more high-quality films. 

The fund’s members are Vietnam’s Yeah1CMG, the country’s leading movie production platform; Surfing Holdings, which specializes in investment in real estate, hotels, IT, TV commercial production, sports advertising, and movie production projects; Green International; the US-based news producer the R&B Capital Group; and TV program producer MBC Studio, a joint venture between Vietnam’s MCV Corp and Japan’s Asahi Broadcasting Group Holdings. 

The fund will invest in 30 A-grade movies and 20 B-grade projects, with an average of 20 projects per year, and provide support in capital, media and marketing. The fund’s input may be 10 to 40 per cent of each movie’s budget, depending on requirements, according to Mr. Le. There are currently 14 projects on the books for 2018 and 2019. The fund also will purchase all movies released in the 2013-2017 period, advertise projects in 40 cinema complexes by 2020, and will own a new cinema complex by 2022. 

Common goal

Viewing the development of Vietnam’s film industry as being similar to South Korea’s 20 years ago, Mr. Sim Joon Beom, CEO of the CJ Group-backed CGV Vietnam, told VET that the market has substantial potential. After CJ CGV bought out Megastar, the largest cinema chain in the country, in 2014, Megastar was renamed CGV and CGV invested in opening a number of cinemas around the country, which now total 60.

Local analysts said the South Korean giant has helped Vietnamese people have more access to entertainment, particularly movies. With the arrival of the Lotte Group-backed Lotte Cinema, the two South Korean companies hold the largest market shares. “Supporting Vietnam’s film industry is one of our major strategic objectives,” Mr. Beom said. “In addition to ongoing investment in cinemas, the development of cinema technology, and human resources, we will focus on diversifying the movie genres released. We hope that all investors in the industry have the same vision towards development.”

CGV Vietnam first organized a scriptwriting contest in 2017 to find and support talented Vietnamese scriptwriters. The contest received more than 3,800 submissions from the country’s scriptwriting community last year and more than 4,000 this year. The winning submissions also received attention from many prestigious film producers. CGV will support part of the production and distribution costs for the winning films and also support the five best film projects in the CJ Short Film Making Project and send them to international film festivals. 

The CJ Group is planning to list its Vietnamese arm on the South Korean Stock Exchange to raise funds to invest as much as $200 million in the local film industry by 2020. “We are consistent in our vision of putting Vietnam among the Top 5 movie markets in the world,” said Mr. Beom.

He added, however, that CGV and perhaps other investors must also tackle certain challenges, including the fact that while spending on entertainment is growing in Vietnam it can still be difficult to earn a return on investment. 

The new fund, though, is quite confident about its investment and the possibility of turning a profit, and was established at this time because of a belief that the market is now ready and is growing in size. Average annual revenue in the film industry is expected to be VND5.6 trillion ($241 million) by 2020 and will grow 25 per cent each year.

“Investment in the industry is considered ‘venture capital’,” Mr. Le said. “An investor with different categories of films is likely to be profitable. Individual investors lack the time and relationship to assess its investment as quantitatively as we can.”

The fund has been investing since 2017 and this year and next will focus on film projects and cinemas. It has set a minimum revenue growth plan of 8 per cent per annum in 2018 and a maximum of 10.5 per cent per annum, and minimum revenue of 10.5 per cent in the 2020-2022 period. “We expect to record net profit from 2019, when the investment categories in 2018 begin providing a return,” he said. Shares in the fund are expected to be offered at an initial public offering five years after its establishment.

VN Economic Times

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