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Chinese language cinema

How bubble burst on China’s cinema industry ‘boom’

Ticket promotion scams and increased internet streaming of films among factors that have led to fall in box office takings on the mainland

PUBLISHED : Thursday, 29 December, 2016, 1:49pm
UPDATED : Thursday, 29 December, 2016, 1:49pm

For a while China’s cinemas were the biggest hit in town.

Box office takings in the world’s second-biggest film market grew at more than 40 per cent each year from 2010, according to a report by the Beijing Morning News, profiting from the country’s growing middle class and an influx of capital.

China was even expected to overtake the United States in ticket sales in 2017.

But after increasing by nearly half last year, growth in film takings is expected to slow to less than 35 per cent in 2016, as ticket promotion scams and changes in audience tastes take their toll.

As the year started, the industry had hoped takings would reach 60 billion yuan (HK$67 billion) for 2016, building on the 44 billion yuan recorded a year earlier.

Chinese box office hits the buffers

Hopes were bolstered by the success in the first half of The Mermaid, a sci-fi, eco-themed fantasy by Hong Kong film star Stephen Chow Sing-chi.

Cinema audiences wanted more this year – they are clearer about their taste in films
Wang Zhonglei, Huayi Brothers entertainment company

Box office sales totalled more than 1 billion yuan during Christmas week, helping 2016’s takings reach 44.5 billion yuan as of December 23, and surpass last year’s Christmas week total of 44 billion yuan. Analysts anticipated that the box office revenues in 2016 would reach about 45 billion yuan, according to Sina Entertainment News.

Tong Gang, deputy head of the State Administration of Press, Publication, Radio, Film and Television, which oversees the film industry, blamed the decline on the yuan’s depreciation, the Xinhua news agency reported.

But analysts say there are other forces at play.

Part of the slippage is due to the dubious practice of “ticket subsidies”, the money that film producers and distributors pay to online platforms to sell tickets at a discount to inflate sales, according to Caixin magazine.

The film administration body banned distributor Beijing Max Screen from releasing films for a month after it was discovered to have doctored ticket sales for Chinese martial arts film lp Man 3 in March.

Chinese holiday box office takings down as movie bubble bursts

The distributor admitted to buying up US$8.61 million of tickets to its own film after the release took a blistering US$71.5 million in its first three days, according to Xinhua.

The industry has had to compete with online video streaming sites for ever-pickier audiences, and try to stay afloat as investment sinks, according to industry observers.

“In 2015, people still treated the cinema as a place mainly for entertainment and did not care much about the actual content of films they watched,” Wang Zhonglei, head of the Huayi Brothers entertainment company, told Oriental Outlook magazine. “But they have wanted more this year – they are clearer about their taste in films.”

The number of filmgoers buying tickets dropped about 12 per cent in the third quarter, heading for the first decline since at least 2011, according to data from the official China Movie Data Information Network.

Ticket sales dropped 10 per cent in the second quarter compared with the same time a year earlier, data from box office tracker EntGroup showed.

Film administration body chief Zhang Hongsen said the quality and standard of Chinese films could not meet the rising demand of domestic audiences and the industry should “promote the spirit of craftsmanship”, Xinhua reported.

Chinese box office growth slows as movie fans turn to online streaming

Others see the slower growth as a chance for the industry to “start to return to rationality”.

China’s richest man, billionaire Wang Jianlin, owner of the Wanda Cinemas chain, said the boom of the last few years was not real.

“As big as the slump in China’s box office sales seems, this is actually the real situation of the Chinese film industry,” Wang said.

“I said in 2015 that the bubble would burst if we deducted all the ‘ticket subsidies’.

“How is it possible for the film industry to grow at more than 40 per cent growth for three years in a row when the country’s economy is expanding at about six per cent annually?”