Last year, China recorded a decline in box office growth
BEIJING: China’s movie box office sees a dip in revenue growth last year. It recorded a 9 per cent growth to US$8.9 billion (RMB60.98 billion) in 2018 compared with 13.5 per cent growth in 2017.
Although the expansion would be considered impressive in most markets, it represents an ongoing slowdown for China, the world’s second-largest film territory and a continual source of growth for Hollywood for the better part of a decade.
Over the past three years, drawing conclusions about China’s box office growth has been complicated by Beijing’s decision to include new service fees in official revenue totals.
In 2016, China’s box office experienced a shock correction, with growth plummeting to just 3.7 per cent from a roaring 48 per cent rate in 2015. Perhaps in response, at the start of 2017, China’s media regulator quietly began including service fees charged by online ticketing companies when reporting box office figures. Given that nearly 90 per cent of all film tickets are sold over such platforms in China, including the fees represented an instant jolt to official box office tallies.
The move was somewhat controversial, though, as the service fee revenue goes to technology companies rather than entities traditionally associated with the film industry, like studios, distributors and theatre chains. Many viewed the move as an effort to juice official growth numbers.
At the end of 2017, state regulators included the fees in the official full-year box office total (RMB55.9 billion, or US$8.6 billion at exchange rates at the time) but subtracted it from the growth rate, which resulted in a reported expansion of 13.45 per cent rather than 22.3 per cent (including the fees).
For 2018, regulators included the fees for calculating both the full-year box office total and overall growth rate. They did not mention that the rate used for 2017 did not include the fees, however, presenting this year’s 9 per cent growth rate as a year-on-year comparison to the 13.5 per cent rate for last year (without fees) rather than 22.3 per cent (including the fees).
The 2017 decision to include the online service fees created unavoidable distortion, and perhaps it’s unsurprising that Beijing decided to bend the numbers to its benefit, suggesting a modest recovery in 2017 — rather than another spike — followed by a softer decline in 2018. Notably, though, no caveats or asterisks have accompanied any of the official box office reporting from Beijing state media.
However it’s framed, 2018 was a strong year for many of China’s biggest domestic film studios though. Chinese-made films claimed 62.2 per cent of total ticket sales in 2018, a big jump from the local industry’s 53.8 per cent share last year.
A breakdown of revenue for US film imports versus movie product from other international territories wasn’t included in the official state data released thus far, but the Hollywood majors are expected to have logged a significant decline in the Middle Kingdom this year.
According to early reporting from regional box office tracker Artisan Gateway, revenue from US studio films released through China’s quota system was down 16.5 per cent in late December. The slide is all the more notable given that the North American box office soared to an all-time record total of US$11.9 billion in 2018 — suggesting product quality alone can’t explain the downturn in China.
The five biggest films at China’s box office last year were local blockbusters ‘Operation Red Sea’ (US$532 million), ‘Detective Chinatown 2’ (US$496 million), ‘Dying to Survive’ (US$452 million), ‘Hello Mr. Billionaire’ (US$367 million) and Hollywood’s solitary top-five contender ‘Avengers: Infinity War’ (US$349 million).
Back in 2013, China overtook Japan to become the world’s second-biggest theatrical film market. Since then, analysts have continually revised their forecasts for when the Middle Kingdom will unseat North America as the worldwide number one. During China’s roaring industry growth of 2014 and 2015, the date was often pegged at 2017 or 2018. Lately, most research firms place the occasion much further out — a November report from Ampere Analysis scheduled China’s ascendance for 2022.