Booming International Film MarketA prolonged downturn of Hong Kong film industry has been coincided with anemerging rise of the massive popularity of Hollywood movies and internationalfilms since the early 1990s. In 2017, foreign movies have accounted for 86% ofthe total market share in Hong Kong.Local FilmForeign FilmOverallSources： Hong Kong Box Office Limited1992 2017Market Share of Hong Kong Movie Market from 1992 to 2017 (in HKD)1.5Bn1.9Bn1.2Bn(79%)24.9M(14%)1.6Bn(86%)33M(21%)Film Industry Talents and Movie Establishments* From Recession to Steady GrowthNumber of Establishments and Persons Engaged in Motion Pictures and Other Entertainment Services*Establishments refers to cinemas or film-related companies (excluding civil service) established in Hong KongSource: CreateHK Hong Kong Film Industry Data Collection 2017 /Quarterly Report of Employment and Vacancies Statistics, Census and Statistics Department of HKSARNumber of Staff in Hong Kong Film-related Companies 21 - 50： 20% 50 or above： 5% Increasing attraction to foreignblockbusters also leads to anoutflow of Hong Kong local talentsto western countries. Two-thirdsof the film companies have 20 orless staff working in the business1-2075%A great hit by foreign movies was followed by a significant loss in film talents. Thenumber of filmmakers decreased by 29% from 1997 to 2018. Yet, the number of movie-related businesses is observed to have similar increase as in 1997 and is expected tofurther explode in the upcoming years.Four Pathways to the Next Golden EraTalentData-oriented MarketingCapital and ResourcesTechnology and theme Put emphasis on post-production and CG effect talents Leveraging CEPA advantages to achieve Globalization + localization Parallel development of Hong Kong local and co-production movies A sneak peek of movie audience profile across different dimensions through data analytics Bringing in new technology to movie industry Enhancing audience experienceDecline in Local Production Leading to a Big Gap in Talent SuccessionGiven the fact that Hong Kong international movie talents often started their careers in local TV production, a reduction in productionbudget led to a significant decrease in the number of local TV programs. Lacking intra-competition has led to a massive input of foreignprograms which jeopardizes manpower shortage and talent succession in the market.-15%-10%-5%0%5%10%15%20%DramasTalk ShowNews/Weather ReportFinanceKids/AnimationMoviesMusic/EntertainmentRTHKprograms Topical programHorse racing, documentaryForeignProgramLocalProgramBuilding Hong Kong as the Expert of CG Effect35% 25% 8% 63%2013 vs 2017 Airtime of Different Types of TV Programs (Weekly)2013 vs 2017(Local Program & Foreign Program)+16%-13%-50%-100%50%-46% -72%-55%-63%-19%-51%0%EducationGraduateCareerThree institutions majorly offer film and television degrees.Around 200 students graduated from related subjects.96% Film, television & new media Figures of graduates from City University is not available.Limited Education Platform Resulting in Small Talent PoolBuilding Hong Kong as the Expert of CG EffectAlthough the employment rate is high, the education platforms are too niche, resulting in a small pool of graduates to enter the industry as potential filmmakers.63% Performing Arts9% Media & BroadcastingSource: HK01Post-production Talents: Companies such as Digital Domain,Centro Digital Pictures Limited and VFXNova Digital ProductionsLimited are excellent post-production experts in the marketwhich has produced both local and international blockbusterssuch as “Iron Man 3” (2013), “The Guillotines” (2012), “Titanic”(1997) and “Shaolin Soccer” (2001) etc.Hong Kong-based visual effects company 2017 revenue of media entertainment segment almost reached HK $60M, which accounted for approximately 99% of the Groups revenue. Major businesses in this segment include Virtual Reality/Augmented Reality, Visual Effects Production and Post-Production 100+ nominations and award-winningfilms around the world:“Ready Player One” (2018), “Avengers: Infinity War” (2018), “Black Panther” (2018), “Shadow” (2018), “Outlander” (2014). Hong Kong well-known film animator whois named as “the Father of Shrek”. Bestknown co-directing production includes“Shrek the Third” (2007), “Kung Fu Panda:Secrets of the Furious Five” (2008) etc.Outstanding Portfolio and Achievements of Hong Kong Movie Post-ProductionBuilding Hong Kong as the Expert of CG EffectRaman Hui Shreks FatherGovernment Support： The Government has offered another $1 billion into the Film Development Fund to help local film industry thrive further in May 2019. It is suggested that, the Government can put more emphasis on post-production and CG support when allocating funds. Promote cross-border cooperation, especially with neighboring countries.Attracting Funding and Talents from Foreign Countries Building Hong Kong as the Expert of CG EffectSource: Hong Kong Film Development CouncilParallel Development of Hong Kong Movie ProductionMainland-Hong Kong co-productionTotal 191Hong Kong local productionShare of box officeTotal 118Hong Kong-Mainland co-production has successfully taken up aconsiderable share of 10% in the entire Hong Kong movie market, provingits popularity among local audience. Given its adequate funding andresources support, co-production projects gradually become themainstream movies in the market. 4%10%85%Hong Kong-Mainlandco-productionForeignproductionHong Kong local production 1% Otherse.g. small movie production, TV programSource: Hong Kong Box Office LimitedParallel Development of Hong Kong Movie ProductionTotal Hong Kong Box Office receipts (HKD in millions)Hong Kong-Mainland co-production has high popularity Co-production has become more successful, occupying a larger share in the movie market.2018 H12019 H1Co-productionLocal productionSource: Hong Kong Box Office Limited