China’s box office takings surged 20 per cent year-on-year in the second quarter, with Hollywood and Bollywood riding to the rescue of the ailing Chinese film industry.
The authorities had relaxed restrictions on foreign films in an effort to avoid the first annual box office drop in over 20 years. That helped US blockbusters such as Fast and Furious 8, and Pirates of the Caribbean: Dead Men Tell No Tales, as well as India’s Dangal become the top three grossing movies from April to June.
Fast and Furious 8 registered Rmb2.67bn ($390m) of the quarterly total of Rmb12.7bn ($1.9bn), or 21 per cent — equivalent to the entire growth in film revenues for the quarter, according to figures from China’s State Administration for Film Television and Radio.
Pirates of the Caribbean was released simultaneously in the US and China at the end of May, a first for a Hollywood film, and appears to have benefited from a more relaxed approach to films depicting ghosts and zombies, which have been banned in China in the past.
Dangal, a sports drama led by Indian studio Aamir Khan Productions, became the highest grossing non-Hollywood foreign film in China to date, coming in second in the quarter with Rmb1.29bn in revenues.
The uptick in takings is a bright spot in an otherwise gloomy picture for Chinese film demand, which was once forecast to overtake the US box office as early as this year, but began to slide in 2016. Following galloping growth, including a 49 per cent rise in 2015, last year saw year-on-year growth of just 3.7 per cent, while the first quarter of 2017 saw box office decline of 7 per cent.
Despite the latest 20 per cent boost, China may still see its first drop in ticket sales in more than 20 years in 2017, said Lei Ming, chief executive of ABD Entertainment in Beijing, who said overall growth was “still a concern”.
Mr Lei said that part of the problem is that China’s domestic film industry has been unable to generate hits, so regulators have to make a choice between allowing in more foreign films or watching the box office fall. Out of the top 10 selling films in the second quarter, only two were made at home, he said.
“In the past few years, China box office always maintained to strike a balance between domestic and foreign films — each taking about 50 per cent of sales, but this year, this may not be the case any more,” he said. He added that Chinese regulators had scrapped the annual “domestic film industry protection month” — usually July or August — in which only Chinese films are allowed to be shown in theatres.
In a report published in May, consultancy PwC said China was now unlikely to overtake the US before 2021 at the earliest, forecasting compound annual growth of 11 per cent.
PwC listed a “lack of compelling local films in terms of quality and fewer discounted tickets”, but also a crackdown on inflated revenues, as the reasons for lacklustre film takings.
The second-quarter rise will be good news for cinema companies such as Wanda Cinema, the largest owner of cinemas in China and part of the real estate conglomerate Dalian Wanda Group. Due to flat film revenues last year, it reported only a 7.5 per cent year-on-year increase in annual net profit to Rmb1.3bn — its first single-digit annual increase and the lowest since Wanda Cinema Line first published net profit figures in 2011.
Other companies have also been badly hit by stagnant revenues. Huayi Brothers Media, China’s largest private film producer, saw its first drop in net profit last year since it went public in Shenzhen eight years ago — down 17 per cent from the previous year to Rmb808m.
Alibaba Pictures Group, the film arm of the ecommerce group, recorded a loss of $141m last year, blamed mainly on marketing expenses.