MBO Cinemas' CEO prioritises customers' convenience

MBO Cinemas' CEO prioritises customers' convenience

CEO of MBO Cinemas Lim Eng Hee.

MBO Cinemas has been slowly but steadfastly climbing the steep hill of success especially since the acquisition of Big Cinemas back in 2012. Now one of the top three largest cinema chains in Malaysia, MBO shows no sign of slowing down as it plans to open up more new locations in the near future.

Cinema Online recently had the chance to talk to CEO of MBO Cinemas Lim Eng Hee, where he spilled his thoughts on alternative methods of enjoying content amongst the younger generation, customers' convenience and venturing into distribution.

Lim at his MBO Cinemas office.

Cinema Online: How has MBO Cinemas grown over the years and what are the future developments in store?

Lim Eng Hee: At the start of 2014, we had 26 locations and 185 screens and we shut down 2 of these locations (10 screens) so we closed the year with 24 locations and 175 screens. We have, since end March 2015, opened a new location at Imago Mall so we have 25 locations and 183 screens. We now have presence in almost all the states except for Kelantan, Terengganu, Pahang, Penang and Perlis.

Of the remaining states, Penang remains an interesting state for us. Not because I was born there but I do see there are opportunities especially in the future development corridor, where the second bridge lands in Batu Kawan. We're very careful in terms of where we're going to go into; which development and location. We foresee that more cinemas will open in the coming years for MBO. We would like, ideally, to get to having around 300 to 330 screens in Malaysia over the next 5 years.

The latest MBO Imago Mall has a distinctively fresh and unique look, is that the future look for MBO outlets?

In terms of the look and the theme, we're going forward with a very modern, very fresh, very bright concept. It is relevant to our core target audience, who are between the ages of 13 to 29 years old. Some very specific theme like the LEGO concept at Citta Mall, can still work but that's more skewed toward the much younger set.

When you go around looking at international cinema circuits, they tend to have one look only. There's a lot of consistency so the brand recall is very high and people tend to mention the cinema circuit's name when wanting to go watch a movie versus the location. Imago was a very well thought through strategy for us, as we are able to showcase how the new MBO is going to look like. Next one is Sungai Petani, which will have a slightly different look, something we would like to introduce to our cinemas in secondary cities whereas Imago's look would be used for the larger cities locations.

MBO Citta Mall features a children's theme.

MBO Imago Mall KK with its unique design.

How is MBO Cinemas faring with other cinema competitors out there and what makes it different?

In terms of differentiation, we put together various initiatives to position ourselves differently from our competitors. One of our strongest point is we have a very robust and interesting loyalty program, which people join for free and the rewards are aplenty. Membership has surpassed the half million mark, and growing with our sights set on passing the million member mark by end of 2015.

We're the only cinema company that doesn't charge a fee when you book online. When we started there was a small charge but shortly after that we removed it for the sake of convenience for customers who purchase online. And for enhancing our customer service levels.

For blockbuster movies, (at bigger locations on opening week,) we also provide screening every 20 minutes. This makes it convenient especially for a group outing of five to six people, even if someone in the group is late, it eliminates the need to rush as they just have to wait no more than 20 minutes for the next screening. If we could do 10 minutes we would but it's impossible, the movie length makes it too challenging to accomplish this feat. I believe no one else is doing this and we do it because I we look at it from the customers' point-of-view. This is not a gimmick; this is simply looking at the customers' convenience.

We also introduced packs: tickets and combo in one go. It can be purchased at the box office counter so the customers don't have to queue again at concessions. This, again, helps saves time. We don't aggressively look at discounting ticket prices but we do package it for the convenience of the customer. If you aggregate it together, the customers are saving some money there as well.

For 3D and 2D movies, the ticket prices are identical. We sell 3D glasses for only RM3, which you can take home and take it with you the next time you watch another 3D movie. This works out cheaper for the customers as well as more hygienic. It's always a brand new pair that the customers get, we buy it pre-packed and that's what we give out.

Everything that we do, we are focusing on how we consolidate our position. We are the number three cinema company in Malaysia in terms of cinema screen and locations, as well as the amount of market share of the Box Office. In 2014, our return of revenue per screen was higher than in 2013 even though we had less screens, because we still maintain our market share in the growing market. We grew about 6 percent last year, even with 2 cinemas and 10 screens less. Growth cannot be purely driven by new builds. As a business we have to ensure we create a healthy growth rate in all areas of our business.

Do you think the rise of movie leaks and piracy will affect the cinema business? And if yes, how are exhibitors overcoming this?

I think it's all about the cinematic experience. Today a large percentage of our target audience will access content via streaming; and they connect with each other from different locations but still watching the same content. It becomes an anti-social social event. But if they like what they see, they then go to the cinema. That becomes the real social experience. So it becomes more of a social outing amongst the group of them.

For more than a hundred years, the industry has been doomed to die. From the advent of video everybody says the movie industry will die but the Box Office keeps growing. What we have to do as responsible exhibitors is make sure nobody is recording in our cinemas; as the source of piracy especially these days when some tent pole releases are being released in Asia ahead of U.S. release dates.

Lim posing with the official Storm Trooper given by Disney which is given to exhibitors around the world.

Are there any plans for MBO Cinemas to also venture into movie distribution like how the other cinemas are doing?

All the major MPAA studios have their presence in Malaysia and together they bring in close to a hundred titles a year. Then there are already people actively buying independent international films, independent Asian films, or for that matter, all the Asian films because there are no big studios from Asia represented here. Also, you have the Wajib Tayang and the local productions.

When I look at the landscape, that's probably 50 percent more distributor than what is needed for this territories. Taking into consideration we only have 52 weeks a year and we are releasing more than 200 titles. It's more than what is needed for a healthy cinema programming and that is why the Box Office cannot grow as healthily as how it grows in China, Vietnam, Thailand, etc. There every good film gets a good run but here a film gets bumped off because there is too much content coming through.

So we have no intention to be a distributor. I myself have been a distributor and I understand the uniqueness of being a distributor and exhibitor, as well as the challenges.

With the plethora of movies in cinemas, which are the ones you are looking forward to?

I like "Mad Max" so I am looking forward to that. I've been a comic book fan since I was a kid, so am definitely looking forward to DC and Marvel titles. That will be "Batman v Superman: Dawn of Justice" next year. This year, it's "Ant Man", "Fantastic 4' and of course the recently released "Avengers". The "Star Wars" franchise has always been interesting to me because I grew up during the first movies in the 1970s: episode 4, 5 and 6. Now, they're doing 7, 8 and 9, the images have been quite interesting for me.

There are also a couple of animation movies that are interesting. One of them is Pixar's "Inside Out". I have watched the whole movie as it was screened at CinemaCon in Las Vegas last month. It's complex in a nice way. So I will still catch it in the cinemas when it releases in Malaysia.

A still from Pixar's "Inside Out".

Care to tell us more about yourself? We would like our readers to know a bit about your background and how you ended up in the movie business.

I came from the amusement park industry. Back in 1992, when Sunway Lagoon opened, I was involved in that project. I left Malaysia in 1999 to go to Vietnam and work for a group who had a park there, and managed it. In 2002, we decided to sell it to the local partner because we had a difference. The investors then wanted to venture into a new business and since they found another partner, who is a third-generation cinema operator in America, who wanted to build cinemas in Vietnam, we went into the business then. I stayed on to run the business for my investors and that's how I ended up in it.

The good thing is one of the 2 Chairmen I worked with in VN came from the studio side of, the business – The Distribution side of things and he taught me how to run a distribution business. During that time in VN, we managed to acquire the exclusive distribution rights from a few MPA Studios for their films in Vietnam. I was representing their studio as a distribution agent there. That's when I realized that if you represent studios for its titles its fine, but to buy films, that's a whole different story [laughs].

We opened the first cinema in Hanoi, 8-screens, back in April 2006. Today it still is the number one cinema in Vietnam and has expanded to 10-screens.

So I spent my years building out our cinema business and also building the industry, and we finally put the company put it onto the market at the end of 2010, sold it to a strategic buyer in July 2011.

I planned to return home to New Zealand, where my family had migrated from Vietnam to in 2002, but along the way, the investors into MBO managed to get me to involve in their investment in Malaysia.

And that's how my adventure in Malaysia started.

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