Chapter 710

This rent increase is huge—10% means an extra thousand yuan for every ten thousand yuan.

With more cinemas, it becomes a significant burden; most cinemas have a minimum rent, ranging from 200 to 400 yuan per square meter per month in core business districts of first-tier cities.

The lower limit is 200 yuan, and a cinema hall typically occupies between 2,500 and 4,500 square meters, meaning the minimum rent for one hall is 500,000 yuan.

If we calculate the minimum increase of 10%, each hall's monthly rent rises by about 50,000 yuan, totaling an extra 600,000 yuan per year.

This is still very expensive for such a physical industry, especially since some rents have risen by 20%, plus additional costs for labor, water, electricity, property fees, and cinema maintenance.

But this is just the absolute minimum in core areas; not every cinema is located in the core of Beijing, Shanghai, or Guangzhou—some are in second-tier cities and beyond.

But with so many cinemas and over such a long time, your assets are stuck there and can't be moved.

Don't say Fang Hong has money and doesn't care about this—no industry can last long unless it's for market dominance or self-sufficiency.

He can hold out for a month, but can he keep showing mercy indefinitely?

"Is this rent hike happening industry-wide, or just to us?" Fang Hong asked.

"Only us—no one else is affected. They even said if we don't cooperate, they'll cut our water and electricity."

Chen Zhixi thought these real estate developers were utterly despicable, believing they had them completely cornered.

She added: "It's Wanda and Jack Ma behind this—they're a real estate company and a capital circle insider, respectively, both closely tied to real estate players."

Once these players act, it's no secret—it's easy to find out.

Jack Ma's business circle already knows many real estate developers, and some are very close to them.

Fang Hong nodded, expressionless—what's coming will come; if he lacked this composure, he wouldn't be where he is.

He asked again: "Besides rent, don't we also have a box office revenue-sharing model?"

"For a cinema with an annual net box office of 30 million yuan, they take 10% as their share," Chen Zhixi said.

Net box office excludes taxes—only 8.3% for fund and tax levies, which can't be counted in, or we'd make no profit.

That's why Wanda Cinema keeps making money—it has an advantage because they don't pay rent or even share revenue at all.

It's their own property—they have a natural advantage.

"So the revenue share hasn't changed—only our rent went up," Fang Hong said.

"Yes, they need cinemas to drive foot traffic—like Wanda Cinema: without content, their plaza foot traffic dropped over 30%. They still get a share of box office, so that won't change," Chen Zhixi knew this inside out.

Malls also need cinemas to drive foot traffic—many families come specifically to watch movies, then browse around afterward.

If you just shop, it gets boring.

"I get it—any rent hike starts next month. Tell them they can cut water and electricity all they want; if they raise rent, Shuijing Cinema Line cinemas will shut down instead—we'll all hold out, no big deal," Fang Hong wouldn't coddle their nonsense.

Better to stop operations entirely—none of us get to profit. If we close, they lose their share too.

Without cinemas driving foot traffic, crowds shift to competing commercial zones, also increasing the risk of tenants vacating those areas.

Cinemas are the essential engine of commercial zone traffic—a vital link in the entire business chain, ensuring steady footfall.

And cinemas in a commercial zone operate under an exclusivity agreement: only one cinema per zone.

Because foot traffic is limited, adding another might make survival impossible—though top-tier zones can accommodate three or five, only if traffic exceeds 50 million yuan annually.

That's the scale of an entire city—there aren't many.

"Then our losses will be huge," Chen Zhixi said.

Closing means not just lost box office, but ongoing expenses too—it triggers a chain reaction.

"Don't fear losses—the more you give in, the more they push. Stand firm. Be strong. Don't be afraid!"

"I don't care about the money—it's about not opening the door. Once you do, every other cinema line suffers. Cinemas are the final distribution channel; real estate players don't care. This weakness can't exist."

Fang Hong was thinking holistically—reducing revenue share already made survival hard; now, with these real estate players doing this, the entire film industry would shake.

Not to mention Principal has already compromised—if you accept rent hikes, you'll have to take it, and that pressure easily transfers to production: cinemas can't absorb losses alone.

Either raise ticket prices, or cut the share going to production!

Don't underestimate these people's lack of ethics—Lao Wang Zong and Jack Ma only wanted to target Fang Hong, but real estate players see profit and won't hesitate to push further.

"Alright, I understand," Chen Zhixi thought Principal was thinking far ahead.

Today's 10% increase—will tomorrow bring another 10%? Or will they raise rent for many cinemas? Hard to say.

"But let's not rush—we hold off on taking a stance for now, and wait to see how other cinema lines react," Fang Hong wanted to see if others panicked.

Other cinema lines would definitely panic when they heard this.

Previously, in Shanghai's JA district, the UME cinema's lease expired—the landlord raised rent from 3 million to 8 million yuan and increased the revenue share!

Negotiations collapsed, UME pulled out, and the space was converted into high-end dining, causing severe foot traffic loss.

This happens all the time—not just cinemas, every industry faces it. Offline can't compete with online, and people blame e-commerce for this.

Later they complain people don't go out anymore, malls are empty—how can you compete with online when rent is so high? These real estate players never think about sustainable operation—they just grab what they can.

"Will they side with us?" Chen Zhixi asked, puzzled.

"I don't know. Let's hold steady and wait," Fang Hong had his own agenda.

As they talked, Chen Zhixi's phone rang—she pulled it out, glanced, and smiled: "Speak of the devil—he's here. Xu Tianfu, head of Hengdian's cinema line, is calling."

"Answer it. See what he wants," Fang Hong smiled too—he must be calling about the rent hike.

They couldn't be calm—these guys feared rent hikes hitting their own cinemas, which would spike costs; they each manage hundreds of cinemas.

Chen Zhixi pressed answer: "Director Xu!"

"Director Chen, we heard real estate service providers are hiking rent for your cinemas—is that true?" Xu Tianfu asked.

"It's true. Fang Zong and I are just discussing it," Chen Zhixi didn't hide it.

"Tell Director Fang—he absolutely must not agree. These bastards are all scum—insatiable," Xu Tianfu cursed.

Clearly, they'd suffered under these real estate developers—constant rent hikes, threats to cut water and electricity.

They feared it would hit them too—Principal, who's so tough, can't even hold out—how could they?

"This situation is really hard for us too! We're right in the middle of summer blockbuster season—we need to sell more box office," Chen Zhixi didn't reveal the details of her talks with Principal.

The original intent was definitely to make them pay some kind of price.

Fang Hong gave her an appreciative glance. There were still a few matters they hadn't finalized with these theater chains — namely, introducing the Rabbit Ticket settlement system and the 15-day box office settlement issue.

This part hadn't been settled with the theater chains. Essentially, the chains didn't want to release the funds so quickly either; they still wanted to settle on the traditional cycle of several months.

Money in hand is, after all, working capital — no one wants to cough it up so fast.

Taking advantage of this incident to get it done, they would be the ones out in front, so these theater chains would have to pay some kind of price!

"This isn't just a matter for your company alone — it concerns the entire industry, the entire theater chain. As long as the Principal stands firm for us, we'll certainly remember the Principal's kindness. Before, when he asked us to lower the revenue split, didn't we go along with it?" Xu Tianfu was painting a rosy picture.

Fang Hong even laughed. Bringing up that matter — lowering the split was also beneficial for them, helping to create blockbusters.

He gave Chen Zhixi a look. Chen Zhixi took the hint and said, "We remember your good intentions too. It's just that there's something we need your help with."

"What is it? Tell us — if we can help, we definitely will," Xu Tianfu said.

"It's the 15-day theater chain settlement matter that General Manager Fang discussed with you before," Chen Zhixi said.

"That matter…" Xu Tianfu murmured, deliberating.

They weren't really willing to do this — money held in one's own hands always smelled sweetest.

Back when the Principal promised those producers 15-day settlement, their theater chain hadn't gone along. The Principal had said that even if the theater chains weren't that fast, their Rabbit Ticket could front the money first.

The Principal had discussed this with them before, but they hadn't really agreed, so Fang Hong could only resort to financial leverage.

"This doesn't really cost you anything — it just speeds up the settlement process. Of course, we won't make things hard for you either. Just settle as soon as possible if it's convenient," Chen Zhixi conceded a step first.

"I understand what General Manager Chen means, but this matter is of great importance — we need to discuss it carefully," Xu Tianfu said.

"The matter of raising the rent is also of great importance — we need to think it over carefully too," Chen Zhixi said, going along with the other's words.

This left Xu Tianfu completely at a loss for words. The implication was: if they didn't sign the 15-day fund-return agreement, they'd just hold the line.

If it really burns to the other theater chains, you can bear it yourselves — rent increases happen all the time anyway.

"General Manager Chen, that's not very fair of you," he said.

"General Manager Xu, who's really being unfair here? This time, our Jade Rabbit is taking enormous pressure to stand off against those real estate service providers, and you won't even agree to sign a 15-day fund-return agreement. If our own people don't stand united, how can we fight against those outside forces?"

Chen Zhixi's tone carried a kind of frustration at their inability to rise to the occasion. Then she said again, "Let me be straight with you. Our General Manager Fang said that cinemas are the core channel of film — there absolutely cannot be any weakness.

Even if you refuse to sign the 15-day fund-return agreement, we won't compromise. Even if we have to close every store, we absolutely will not compromise."

These words left Xu Tianfu both shaken and ashamed. He hadn't expected the Principal to have such extraordinary resolve and to keep the big picture in mind — even closing every store, he would fight those real estate service providers to the end.

If they showed weakness on this matter even one step, the other side would very likely push for more — it wasn't as if it hadn't happened before.

This was far grander in vision than Lao Wang Zong.

"Then let me discuss it with the old man!" Xu Tianfu still had some thoughts of his own.

The Principal himself could give his life for the theater chain merchants, yet these people only knew how to hide behind — especially Hengdian, such a leader, such a benchmark.

(End of this chapter)