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Malaysia’s Golden Screen Cinemas Celebrates 30 Years of Revolutionizing Local Exhibition

Variety logo Variety 3/8/2017 Patrick Frater
© Provided by Variety

Golden Screen Cinemas, the group that celebrates its 30th anniversary this year, has played an integral role in transforming the Malaysian theatrical business from backwater to vibrant regional leader.

“The late 1990s were a challenging time for the Malaysian film exhibition and the distribution industry as it dealt with the devastating effects of the Asian financial crisis that wreaked havoc with exchange rates, consumer demand, and the real estate industry,” said Sunder Kimatrai, executive VP, Asia Pacific, at 21st Century Fox, in December when accepting a second CineAsia prize for GSC, and naming its CEO Koh Mei Lee as exhibitor of the year. “When coupled with the effects of piracy, which dominated the marketplace, it made the jobs of those in the indust ry in Malaysia challenging indeed. Since then, the Malaysian cinema industry has turned around dramatically and has become a success story that other countries now look to emulate.”

GSC was founded in 1987 as Golden Communications Circuit, a joint venture between the Kuok family’s conglomerate PPB and Hong Kong’s once-powerful Golden Harvest. Initially, it operated a small chain of theaters leased from another great name in Asian cinema: Shaw Bros.

Ten years later, in January 1998, Golden Communications was merged with Cathay Cinemas to become the Golden Screen Cinemas group recognizable today.

A pattern for future development was set shortly after when, in 1999, the group opened its GSC Mid Valley multiplex at the Mid Valley Megamall in Kuala Lumpur. Not only was it Southeast Asia’s biggest cineplex, with 18 screens, but it also introduced the gold class auditorium, which offered more amenities, and ushered in GSC’s first international screens, dedicated to art-house, award-winning, and foreign-language films.

While GSC Mid Valley needed a facelift by 2016, those lines of development have been maintained as operations spread out from the capital into smaller cities, and as GSC began expansion elsewhere in Southeast Asia.

Overcoming the effects of the Asian financial crisis and squaring up to the piracy problem required a long-term approach to investment and operations — the company has more than 50 staff who are 20-year veterans, and 30 who have been with it the full 30 years while general manager Irving Chee has been with GSC since 1992 — as well as discipline.

That meant making the theatrical cinema experience widely available in Malaysia, and making the premium experience a must for consumers.

While virtually all theaters in Malaysia are now housed in mall developments, GSC these days operates three brands at different segments of the market.

Within Kuala Lumpur’s Mid Valley district, The Gardens is a showcase for the group’s top-end GSC Signature offerings, comprising two gold-class screens with full butler service, and five premier screens.

The GSC label is the widest spread, found at nearly 30 locations. Its multiplexes address the country’s predominantly young audience — some 80% of Malaysian cinemagoers are 15-30 — and at key locations they include the tech upgrades that youthful audiences are willing to pay for: THX, Dolby Atmos, and D-Box motion systems.

As multiplex cinemas have expanded into smaller towns, the company has introduced its stripped-down GSC Lite operations.

Growing theatrical cinema has not always been straightforward in a country where government policies have intruded. Malaysia’s compulsory screening regulations gives nearly all local films a right to a theatrical release lasting a minimum of two weeks.

As digital technology pushed down the cost of filmmaking, the number of locally produced films grew. That presented a double problem for exhibitors as low-cost, local movies threatened to crowd out the commercial Hollywood and Asian films that mainstream Malaysian audiences favor. And as exhibitors are obliged to open local films in each complex’s largest theaters, it also had an impact on cinema design.

GSC also has to deal with competition from the small screen. In the past few years, local pay TV giant Astro began offering local producers guaranteed TV play in exchange for shorter theatrical windows. That left exhibs playing large numbers of local films, which audiences knew would be imminently available at home.

Chief executive Koh says the problem of local film saturation has now lessened as producers have responded to weak results and scaled back production.

“Malaysia went through a difficult period when we converted to digital, local producers increased their volume, but not theatrical quality. There were up to 100 films a year at the peak. Now things have normalized at around 60 per year. We see how audiences behave. If a local film is good, word-of-mouth plays its part and the scores pick up in week two,” says Koh.

These days the company works more closely with local producers. A typical solution may be to agree on a smaller auditorium, but to hold the film for longer.

“Producers have learned to capitalize on all the windows,” says Koh.

GSC also responded by getting involved in production and stepping up its distribution role. Using a specially created fund, GSC has been involved as producer in half a dozen local films over the past five years. That is not many, but then the mission is to improve quality, rather than add to the volume. Local hit “Ola Bola,” in which GSC had a 20% stake, was a $3.6 million box office success, and helped lift the market share of local films to some 10% last year, compared with a more typical 5%.

Earlier, GSC Distribution (now known as GSC Movies) had struck partnerships to supply locally made Chinese-language movies to leading Malaysian broadcaster TV3. And in 2003 it experimented by opening up its e-cinema screen in Mid Valley to local directors as an alternative and cost-efficient platform for showcasing their movies.

While the Hollywood majors largely self-distribute, GSC Movies is a top distributor of local and imported titles, acquiring rights to up to 100 movies per year, about a quarter of all titles released in Malaysia. The emphasis is very much on the commercial English-language titles provided by the leading U.S. independents, as well as Chinese and Hong Kong movies, mostly handled by Hong Kong sales agents. Horror, action, and comedy are staples. Commercial fare is handled by GSC Movies and distributed nationwide, in GSC theaters as well as those of rival chains.

Arthouse and foreign- language titles, on the other hand, are kept exclusive for GSC’s international screens. The same is true of its Japanese anime titles, which are of growing appeal to Malaysian audiences.

GSC is expanding and packaging both its international and anime acquisitions. The company now runs half a dozen film festivals per year, mostly organized along national themed lines. And, with the flexibility of digital cinema, it is expanding its alternative content offering, such as concerts and live events. Newly popular are live anime concerts. Over two days in March 2016 Japanese school idol group Muse performed at concerts, which Mid Valley audiences lapped up.

Along the way to achieving its stated goal of “total movie entertainment in the best halls with the best customer service,” GSC has developed businesses in numerous sectors that complement the main exhibition and distribution thrusts, including food and beverage, advertising, and information technology.

In particular, GSC’s in-house IT provider has had to evolve with the changing habits of its young, tech-savvy patrons. It is barely 17 years since GSC introduced its SMS-driven booking service (iSMS). Now patrons are largely smartphone-equipped. The GSC app provides screening information, seat booking, and electronic ticketing. It is sufficiently flexible that it can be used to pre-buy concessions within GSC’s own multiplexes, yet also be sold as a tech solution (EASI Ticketing) to third parties such as concert promoters. Some 30% of the tickets sold in Malaysia are booked through mobile devices.

All-round skills can make GSC an attractive partner in other parts of Southeast Asia. The region is highly diverse, ranging from tiny and westernized Singapore to Cambodia, Laos, Myanmar, and Indonesia, which are far behind on the development curve.

In 2013, GSC acquired a 40% stake in Galaxy Studio, the leading local film industry player in Vietnam. That gives it a share of seven multiplexes with a combined 39 theaters in a country with a population of 90 million. The move would seem to pit the GSC-Galaxy duo against two South Korean giants, CJ-CGV and Lotte, which each control one of the country’s other major cinema chains. But, perhaps the greater challenge in Vietnam is to raise overall cinemagoing habits.

With theatrical cinema almost entirely wiped out under an earlier regime, Vietnam only got its first multiplex in the mid-2000s. And while attendance rates have risen, average visits stand at roughly 0.4 per person per year. Raising that could provide growth for all, and is a challenge that Koh and Chee relish.

“We are not passive investors,” says Koh, who expects to open her first multiplex in Cambodia by the middle of the year.

GSC is headed by the instantly recognizable duo of Koh and Irving Chee. She has responsibility for strategic matters, while he heads operations. Koh joined PPB in 1990 in its treasury department and subsequently set up corporate affairs and investor relations departments for the conglomerate. She is now responsible for the entire leisure business of PPB and took operational responsibility at GSC becoming its chief executive in 2002.

Chee joined GSC in 1992 after a stint at Shaw Bros. Both he and Koh are committee members of the Malaysian Assn. of Film Exhibitors, while Chee is also on the Compulsory Screening Committees, which sets release dates for local Malaysian movies.

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