Chapter 459: Restarting the Acquisition

Early the next morning, Xia Yu arrived at Jiuding Tower and instructed one of his assistants, "I have a task for you: gather information on the Hong Kong film and cinema market. Also, I want all the details about Siyuan Films, the production company behind 'Drunken Master.' Report back to me as soon as you have it!"

"Yes, sir!"

The assistant respectfully responded and left the office, closing the door behind him.

Watching this, Li Qi, who was nearby, blinked her big eyes and softly asked, full of curiosity, "Xia Yu, are you planning to enter the film market?"

"I have that intention," Xia Yu admitted frankly.

Li Qi pursed her lips and nodded slightly, then furrowed her brows in slight confusion, "But movies aren't supposed to be profitable, right? I remember the highest-grossing film in Hong Kong last year only made 7 million. The lesser ones earned around 5 or 3 million; it doesn't seem like much money, does it?"

Before meeting Xia Yu, Li Qi would have considered millions a large amount. However, after spending time with him, dealing in billions, she had become numb to amounts in the millions. Besides, this was also her honest opinion. Xia Yu was exceptionally good at making money, making the film industry seem slow by comparison; slow profits would be a loss to Xia Yu.

Xia Yu chuckled and gently smoothed Li Qi's furrowed brows, explaining softly, "At present, the Hong Kong film industry isn't large, and even the industry leader, Shaw, has thoughts of exiting."

"Then why do you want to enter?"

Li Qi blinked her eyes, questioning, as she had no resistance to Xia Yu's mischievous plans.

"There's more to consider here," Xia Yu sighed before explaining slowly.

"The film industry is a piece of the cultural and entertainment puzzle. My goal is to build a major entertainment business. I already have media with newspapers, magazines, and TV stations, so I need to develop other sectors of the industry, like music, films, and animation."

"The more complete the industry chain, the higher the resource utilization rate, the faster the profits, and the stronger the comprehensive competitiveness and risk resistance."

"Even just to support the development of my other companies, entering the film industry is necessary."

"Then, looking at the future of films, while the current Hong Kong market isn't big, it will grow as people's living standards improve and demand for entertainment rises. In the long run, entertainment will explode and thrive for decades to come."

"Look at it now—even though the Hong Kong film market isn't large, the global film market is huge."

"If I want to enter the global market, I need a foundation. I need to build my company first, then I can compete with the global giants. A skyscraper starts at the ground level, so I'll start with the Hong Kong market."

Xia Yu paused and noticed the look of realization on Li Qi's face. He gently stroked her cheek and added, "And there's one more crucial point—the film industry has a unique cultural aspect. The U.S. uses Hollywood for cultural influence worldwide, an invisible yet profound and extensive impact."

"But let's not delve into that; it's complicated. When you realize it later, you'll understand."

Xia Yu smiled at Li Qi.

"Hmm, hmm! I don't understand, but I'll support whatever you do!" Li Qi smiled sweetly, expressing her unwavering support.

Xia Yu smiled back and couldn't help but lean down. Li Qi instinctively closed her eyes…

With Xia Yu's orders, his assistant mobilized other companies to assist, especially with Jiuding Publishing's help, gathering information swiftly.

Within two days, compiled information about the Hong Kong film industry and Siyuan Films was neatly bound and placed in front of Xia Yu.

Xia Yu brewed some tea and leisurely began reading.

As his fingers turned the pages, Xia Yu absorbed a wealth of information, gaining a clearer and more direct understanding of Hong Kong's film industry.

Contrary to his expectations, Hong Kong's film market wasn't as small as he thought.

In 1977, the total box office revenue in Hong Kong was nearly HK$200 million! 

However!

Local films only accounted for about HK$70 million, roughly 35% of the market! The remaining 65% was dominated by foreign films, including American, British, Japanese, and Taiwanese productions.

In 1977, the top-grossing film was the Taiwanese film *Heroes of Jianqiao*, with a total of HK$11.59 million in just 13 days! 

The second was also Taiwanese, *Southern Fist, Northern Viper*, grossing HK$8.24 million over 37 days. 

The fourth was another Taiwanese film, *James Bond's Sea Fortress*, with HK$5.27 million.

Only two local films made it into the top five—*Pretty Detective*, which ranked third with HK$7.7 million, and *Mr. Funny Money*, fifth with HK$5.05 million.

This year, with three-quarters of the year passed, the market has shrunk significantly compared to 1977.

The highest-grossing film so far is the Hui brothers' *The Contract*, with HK$7.82 million. 

The second film only grossed HK$4.12 million, still from Taiwan. 

The third and fourth films are also Taiwanese, grossing HK$4.01 million and HK$3.96 million, respectively.

It's clear that the Hong Kong film industry is struggling; its golden age is yet to come. 

This year's total box office might barely reach HK$150 million, a 25% decrease from last year!

No wonder Shaw, who's been in the industry since the 1920s, is considering quitting film production and focusing solely on his cinemas.

If Xia Yu didn't know the future potential, these numbers would have discouraged him. 

But he knew better—this is the perfect time to enter!

If films aren't profitable, then cinemas will be! 

No matter the film's success, owning cinemas is almost guaranteed profit!

Currently, the cinema industry heavily favors the cinema chains with guaranteed minimum fees. 

For example, if a film guarantees HK$2 million in a week, the cinema takes it all if the weekly box office meets the target. 

If it exceeds, the extra is shared between the distributor and producer. 

If it falls short, the producer owes the difference.

Because of this, cinema chains wield significant power, and production companies often bow to them. Many films end up shelved because producers fear losing even more money due to low box office returns.

Despite this, some cinemas, especially the smaller, independent ones, can still struggle without sufficient business.

"Knock, knock, knock…"

Xia Yu drummed his fingers on the table rhythmically, deep in thought.

"It seems the best entry point is through cinemas. Once I control the cinemas, I gain the power to dictate terms. Otherwise, I risk being boycotted by established players like Shaw and Golden Harvest."

"Yes, the cinemas are the way in. With control over cinemas, everything else becomes easier."

The film industry revolves around three pillars: production, distribution, and exhibition. 

Though cinemas are the last link, they hold the most weight and influence.

Cinemas require heavy investments, making it difficult for new players to scale up. 

But for Xia Yu, who understands Hong Kong's real estate market, investing in cinemas means securing valuable assets and building a solid base for his entertainment empire.

Acquiring cinemas would be profitable in the long run, especially when paired with a strong film production company.

For production, acquiring or investing in a company is simple! 

Take Siyuan Films, for instance.

Founded in 1973 by Wu Siyuan, the company has produced eight films over five years, with varied but overall profitable results. 

Based on its current size and influence, it's valued between HK$5-6 million.

However, if *Drunken Master* succeeds, Siyuan Films' value would soar.

The company boasts two key directors—Wu Siyuan and his mentor Yuen Wo Ping. They have a full range of film production talents, though perhaps not all at peak skill.

With such potential, Siyuan Films is a worthy acquisition.

Now, it's time to explore the cinema market.

Currently, Hong Kong's cinema count has drastically reduced from its peak of over 180 in 1969 to just 80 in 1978.

The top five chains own 55 cinemas, with the remaining 25 being independents.

The top five chains are Shaw, Golden Harvest, Twin South, Lee Sound, and Amuse.

Shaw owns 16 cinemas, mainly showing their films, and their network extends across Southeast Asia, making them a dominant force with over 130 cinemas.

Golden Harvest runs 19 cinemas but has many small venues, with 11 being franchises, focusing mainly on their productions.

Twin South is left-leaning, with 11 cinemas, mainly showing Chinese and select foreign films, posing high entry barriers for commercial films.

Lee Sound operates 4 cinemas, backed by a powerful family with interests in transport and real estate.

Lastly, Amuse, owned by Jiang Zhijiang, specializes in Western films and has strong international distribution ties.

After careful review, Xia Yu zeroed in on Amuse. 

Jiang Zhijiang, a notable figure, could be an asset. 

Acquiring Amuse and additional independents would establish a solid presence, rivaling Shaw and Golden Harvest.

Moreover, Jiang's connections could aid Xia Yu's future international ambitions.

With this strategy set, Xia Yu was determined to move forward.