The Vietnam Competition Authority (VCA) has announced that it is officially investigating a class action law suit brought against distributor-exhibitor MegaStar Media by six local cinema operators.
The six local companies – Galaxy Studio, Saigon Films, 212 Movies, Saigon Movies Media, Dong Nai Publishing Movies Centre and Hanoi Movies – are alleging that MegaStar is using its dominant position in the market to enforce unfair distribution terms.
A joint venture between US-based Envoy Media Partners and Vietnam’s Phuong Nam Corporation, MegaStar distributes product for UIP, Disney and Summit Entertainment on an exclusive basis, along with some Fox titles on a non-exclusive basis. The company is also an exhibitor and has opened a string of state-of-the-art multiplexes in Vietnam.
The VCA launched a preliminary investigation in May, which has now turned into an official probe to last six months. It’s understood that the six local cinema operators are protesting MegaStar’s introduction of a minimum rental fee per ticket sold, as opposed to a revenue split.
As some of the exhibitors are from poorer parts of the country with lower average ticket prices, they claim that they can’t make a profit on foreign movies under those terms.
Since its launch in Vietnam in 2006, MegaStar has introduced international distribution practices to the country and kickstarted the modernisation of the exhibition sector with features such as first-rate dubbing and subtitles, Dolby sound and 3D. This contributed to growth in Vietnam’s total box office from an estimated $2m in 2005 to around $12.3m in 2009.
MegaStar CEO Brian Hall declined to comment on the case. “Out of respect for due process, MegaStar has chosen to not comment to the media on specifics of the case, so that the relevant government authorities can investigate the facts without having to sort through various publicly expressed opinions and comments,” said Hall.
Hollywood movies have a large market share in Vietnam, although the local production sector has been reviving in recent years and accounts for around 15%. Films from other parts of Asia, including Hong Kong, Korea and Thailand, are also released in Vietnam.