Cinema box-office revenue in China has been growing significantly during the past 10 years at an average increase of 35.5 percent each year. This year will be no different with box-office revenues already amounting to $1.8 billion in the first half, an increase of 33 percent for the year, according to a new Cinema Intelligence report from information and analytics provider IHS Inc.
China’s box-office earnings in 2012 grew to $2.8 billion, up 30 percent from $2.1 billion in 2011, and far more than the $1.7 billion in 2010, according to data from the State Administration of Radio, Film and Television. The revenue jump this year allowed China to become the second-largest cinema box office market in the world, overtaking Japan and narrowing the gap with the United States.
For this year, the Chinese box office will follow a similar pattern seen during the last 10 years, and will continue at a 30 percent-plus growth curve. The number of admissions has also increased year-over-year with 470 million people buying tickets in 2012, up from 414 million people in 2011. So far in the first half of 2013, 300 million Chinese have been to the movies.
Foreign power expands
Foreign films accounted for more than half of the market share in China in 2012, with $1.4 billion, or 51.5 percent, of box-office revenue. This compares to $1.3 billion, or 48.5 percent, generated from domestic films. Domestic film grosses were down from 53.6 percent in 2011 and 56.2 percent in 2010.
The primary reason for the increase in share of foreign films is the result of the import quota for foreign films—mostly from Hollywood—being raised from 20 to 34 films in early 2012. Interestingly, domestic films in the first half of 2013 outpaced foreign films, taking 63 percent market share, led by the China-Hong Kong co-produced film “Journey to the West: Conquering the Demons,” that generated $200 million on its own. However, some big Hollywood blockbusters are lined up for the second half of this year.
Underscreened for a big country
Given the high population of China compared to the number of cinema screens that exist in the country, the country is grossly underscreened. For example, if China had the equivalent number of screens per million citizens as the United States, the country would have more than 133,000 screens. Instead, the country has only 16,412 screens—both film and digital—and a network of more than 30,000 rural screens using low-end technology.
In 2012, 880 new cinemas opened for a total of 3,832 screens—all digital—or an average of 10.5 new screens per day. Many of these new screens were mainly concentrated in Tier 2 cities, or secondary provincial capitals; and in Tier 3 cities or county-level city capitals. Another 419 cinemas were added in the first half of this year corresponding to some 1,962 digital screens.
Still, China's cinema market has some way to go before reaching maturity. But this also represents a huge opportunity for the country, specifically in the Tier 2 and 3 cities where the main targets for expansion reside.
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