A plot twist for Chinese movie theatres
A big slump in ticket sales causes growing anxiety for Hollywood studios
BEIJING— At the Wanda Imax theatre in Beijing’s bustling Central Business District, shopping mall patrons passed the time on couches in the lobby as they waited to meet friends on a Wednesday afternoon — but many weren’t there to see movies.
Some in fact, like 21-year-old Tian Zhuanghui, said a lack of good films has kept them away from the multiplex.
“I watch movies a lot less now,” Tian, a recent university graduate, said with a shrug. “I just don’t have the desire to anymore. The excitement is gone.”
Tian, who prefers fantasy and science fiction pictures, is far from alone in her waning interest. Her sentiment reflects a surprising plot twist in the world’s second-largest film market: a dramatic box-office slowdown.
Ticket sales in China during the last six months have been down by10 per cent compared with the same period last year, according to EntGroup, a Beijing-based research firm. That’s a striking turnaround for a country that saw a nearly 50-per-cent jump in box-office receipts in 2015 to $6.78 billion, growth that led many people to believe mainland China would overtake the U.S. and Canada as the world’s No. 1market as soon as next year. But a weak summer season has dampened the hype.
Movie ticket receipts are weakening even though cinema chains are still building theatres at a rapid pace.
The headwinds have caused growing anxiety in an increasingly globalfocused Hollywood, which has placed big bets on the burgeoning appetite of Chinese consumers for entertainment. U.S. studios are increasingly gearing their would-be blockbusters to appeal to audiences in China and making deals with local companies to improve their chances.
Experts have scrambled to explain the phenomenon, citing a poor film lineup, a lack of discounts from online ticket sellers and increased government scrutiny of phoney boxoffice statistics.
The slowdown has sparked a sharp reaction from some Chinese investors eager to court Hollywood. Wang Jianlin, chairman of cinema and real estate giant Dalian Wanda Group, tried to quell concerns last week during a speech to Hollywood. Wang stressed that the box office would continue to show strong growth throughout the next decade, despite the current hiccups.
“I believe any pessimism about China’s film market is inaccurate,” Wang said, according to an English language transcript of his speech. “As China continues its urbanization, as the number of shopping malls grows, and as the income of the Chinese population rises, China’s film market will maintain a fast growth rate over the next 10 years.”
Nonetheless, it’s become clear that the torrid pace of the last several years is not sustainable. Wang said China’s box-office sales should increase as much as 15 per cent annually during the next decade, meaning the industry could reach $30 billion (U.S.) by 2016 — three times the size of North America ($11.1 billion in 2015).
Analysts blame the slowdown partly on a leap in prices consumers have to pay for tickets sold online. For years, tech companies such as Alibaba Group and Tencent offered aggressive subsidies, discounting tick- ets as much as 50 per cent in order to fight for market share. That practice has been cut back significantly now that the ticket sellers are under increasing pressure to turn profits. The average ticket price in China is about $5, compared with $8.51 in the U.S.
Industry observers also single out the past manipulation of box-office statistics by private companies that inflated the successes of their movies in previous years. In March, Chinese regulators launched an investigation into online ticket sellers to find out whether they had inflated the sales numbers for the martial arts movie Ip Man 3, starring Donnie Yen and Mike Tyson.
The crackdown on the practice by China’s government regulators raised questions about the reliability of the overall statistics for the Chinese market. The sudden sluggishness may reflect greater transparency in the market and could cause headaches for investors and studios.
“It may cause some short-term dislocation,” said Marc Ganis, co-founder and managing director of Jiaflix Enterprises, which helps studios distribute movies in China. “This is significant and meaningful, but it ought not to reduce the interest in the Chinese market.”
Then there is the issue of quality, or lack thereof. China needs better movies in order to draw the masses to cinemas. Wanda Group’s Wang, along with many analysts, said the box-office boom inspired a wave of investment in pictures that were rushed to market in order to take advantage of the upswing. While the industry fielded a couple of homegrown blockbusters including The Mermaid ($526 million in China) this year, there were a number of movies with major stars that did poor business, such as the comedy Papa, historical adventure Xuan Zang and the war flick Brothers.
Lawrence Wang, China regional manager for cinema technology provider Vista Group, said sacrificing quality has backfired.
“Because the market is crazy, people are thinking any film can make money,” he said. “But it’s an illusion. The audiences there have their own taste, and they can tell if the film is not good.”
Hollywood itself may be partly responsible for the stalled growth in China. Last year’s box-office boom in the world’s most populous country was partly fuelled by American blockbusters, such as Jurassic World and Furious 7, films that have been in short supply this year.
Movie producers and studio executives downplayed the long-term significance of the China slump, but acknowledged that studios have to do a better job of studying the tastes of Chinese moviegoers. To many, China remains an enormous untapped opportunity. People there see an average of less than one movie a year, whereas their U.S. counterparts buy almost four tickets each annually. Analysts and executives hope Chinese per-capita attendance grows as more of the population has access to local movie theatres.
“The audiences there have their own taste, and they can tell if the film is not good.” LAWRENCE WANG VISTA GROUP