UK researcher Screen Digest has mapped the use of local and overseas movie content in China with the help of local interview data from a subsidiary or TV ratings researcher Nielsen, and predicts the Chinese Cinema market will reach $720 million by 2010. It also points out that China is already the third largest film-making country after the US and India.
The Chinese film industry has experienced a period of rapid growth since the government began relaxing its regulations in 2001, with box office revenues tripling to $336 million in 2006. The number of modern screens will increase in line with the revenue growth ‘ almost doubling from 2,940 in 2005 to 5000 in 2010.
The report also clearly shows the rise and rise of Chinese created film content as overseas movies have fallen to under 50% of the total market and Chinese movies have risen from 30% of the market in 2000 to 55% in 2006. The report also shows that most Chinese age groups have no preference over Chinese created content to US and other overseas movies.
The report points out that the Chinese government has only partially liberalized the market to allow foreign investment and says that a full relaxation of restrictions is going to be a crucial part of realizing the potential of the market.
Warner Brothers International Cinemas invested heavily in China when it entered in 2003 only to pull out three years later having conceded the battle against the challenges of government control and investment regulations, the report reminds us.
However, on the flip side, the relaxation of restrictions has allowed the Chinese film production industry to experience a boom, and China is now the third-largest film producer in the world, after India and the USA.
The second key obstacle for film producers and distributors in China is piracy. Estimates put Chinese video piracy rates at 95% at the end of 2005, a major challenge for any company trying to make a profit from film. Major Western film releases are often available to the home movie fan a month before they’ve been released.
The report identifies a “Cinema Class” of urban, middle class consumers who can afford the high ticket prices of 30 to 80 Yuan ($3.50 to $10) for a standard seat and 120 Yuan ($15) for a VIP seat, some of whom go to see a film at one of China’s new modern cinemas on average seven times a year.
This group is currently estimated to represent only 19% of the population, yet the appetite for films across the entire Chinese population is potentially huge. If the average number of cinema visits per person in China was increased from 0.14 times a year where it currently stands, to one a year, China would be the third largest market for cinema in the world, after the USA and Japan.
Screen Digest worked with Nielsen NRG who carried out primary research with urban Chinese cinema-goers for the report.
The report shows that the half of the survey respondents spend almost two hours of salary per month to pay for Cinema tickets and unlike Western audiences 42% of Chinese plan their Cinema trip a week in advance. Comedy is the most popular genre, especially romantic and action comedies
China is the last big market for Cinemas and the big issue elsewhere is that audiences per sitting are falling. This means that China is investing in a technology that is marginally in decline in the developed world and perhaps ready for rapid decline. Our thoughts are that the decline will become markedly obvious in time for China to slow down its government supported proliferation of Cinemas, over the next few years.