T

he cinema industry needs to be more competitive as it is dominated by a single company, a report highlighting unfair practices in the movie distribution business concludes.

Economic observer Faisal Basri suggested the film distribution sector should operate through tenders to enforce good business practice.

"Better regulation of the movie distribution business is also required," he said Thursday.

The Business Competition Supervisory Commission's (KPPU) preliminary investigation found movie producers were overly dependent on the country's largest cinema network, Cineplex 21, as a result of an alleged lack of healthy competition.

According to the KPPU, Cineplex 21, which is owned by PT Nusantara Sejahtera Raya (NSR), an affiliate of diversified business conglomerate Subentra Group, will cast movies out of its network if film producers provide copies to other distribution networks.

"Producers can only provide a limited number of film copies. Therefore, it is considered costly to provide copies to networks that have a smaller market share," said KPPU head of business monitoring M. Noor Rofieq in a meeting with more than 30 movie industry players and academics on Thursday.

The producers can obtain a break-even point in their profit margins faster if they use the Cineplex 21 network, says the KPPU report.

In 2008, Cineplex 21 had 74.9 percent of the cinema industry market share, with a total of 379 screens, of which 213 were located in Greater Jakarta and the rest in other regions. This percentage excludes cinema networks that are affiliated with Cineplex 21, the report says.

The non-Cineplex 21 networks have 25.1 percent of the market share, with 127 screens across the country.

The KPPU report singles out Cineplex 21's alleged unfair practice of not allowing other cinema networks to get copies of the movies until Cineplex 21-affiliated theaters have finished screening them.

"Other cinema networks only have the right to screen movies after Cineplex 21 has screened them," said Noor.

Cineplex 21 screened all 87 films produced in the Indonesian movie industry last year, while other networks could only screen 11, says the report. Most producers acknowledged they had to spend at least Rp 20 million (US$2,000) per film copy, out of the Rp 5 billion to Rp 10 billion they already spent on production costs.

Because Cineplex 21 has the dominant market share, Noor said, producers are reluctant to provide film copies to other cinema networks.

"Most movie producers prefer Cineplex 21 because it provides better images, segmentation, number of screens and number of film copies. It has the largest audiences too."