A Look Back at Q1 in China’s Film Industry

The Box Office Continues Its Slide

China’s total box office revenue in the first quarter of 2017 fell 1 percent year-on-year to RMB 14.45 billion ($2.1 billion) according to data from Beijing Weying Technology. The slide in box office receipts marks the first first-quarter decline in five years for China’s once-booming film industry and comes despite another red-hot Lunar New Year holiday for local productions as well as the addition of online ticketing surcharges to official box office grosses.

New Accounting Rules Help Pad Statistics

Starting January 1, Chinese regulators introduced new accounting rules stipulating all box office grosses will now include the RMB 3–5 ($0.50–$0.75) service fee that is charged to consumers for each ticket purchased online. The added box office revenue goes directly into the coffers of third-party ticketing apps and is not divided among distributors or exhibitors.

Officials believe this shift will help realign the discrepancy between last year’s total box office growth (3.7 percent) and the larger growth in moviegoing attendance (8.9 percent), a difference compounded by the drop in average ticket prices due to heavy subsidies.

Skeptics, however, suspect the government is attempting to pad slowing box office growth and create the illusion of a robust industry. The result is akin to including the foam from a fountain soda in calculating the volume of the drink, and left some industry observers screaming, “Why don’t you just add the cost of popcorn to the box office too!”

A New Film Law Comes Into Effect

Last month, Boxoffice magazine outlined China’s first ever film promotion law, which went into effect on March 1, 2017. Some of the adopted measures included incentives to protect domestic output, a streamlined censorship process to decrease the threshold for market entry, and stricter penalties for parties caught manipulating box office numbers. In mid-March, 326 cinemas throughout China were publicly named for falsifying data and subsequently fined and/or suspended from conducting business, signaling that authorities are indeed serious about the crackdown.

A Tale of Two Halves

At the end of March, imported films accounted for 46 percent of all box office revenue year-to-date. However, huge imbalances lie behind that seemingly equitable market share. Before February 10, local-language films dominated screens thanks to the Lunar New Year holiday, accounting for 85 percent of all ticket sales. The script flipped, however, with the release of xXx: Return of Xander Cage, and Hollywood imports have led the daily box office charts ever since. Hollywood’s reign over the market is likely to continue throughout the second quarter with Fate of the Furious, Guardians of the Galaxy, Vol. 2, Pirates of the Caribbean: Dead Men Tell No Tales, and Transformers: The Last Knight all receiving release dates.

Top 10 Films in China (Q1 2017, Local Currency)

Kung Fu Yoga: RMB 1.753 billion

Journey to the West: The Demons Strike Back: RMB 1.657 billion

xXx: Return of Xander Cage: RMB 1.128 billion

Resident Evil: The Final Chapter: RMB 1.112 billion

Duckweed: RMB 1.049 billion

Buddies in India: RMB 758 million

Logan: RMB 730 million

Kong: Skull Island: RMB 723 million

A Dog’s Purpose: RMB 596 million

Some Like It Hot: RMB 548 million

Data provided by Weying Technology

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