China to be No. 1 film box office by 2021, report says

Recent slowdowns in China’s box office may prevent it from becoming the world’s biggest box office until 2021, according to a new Price water house Coopers report.

China’s box office performance last year was “much softer” than anticipated — with totals in 2016 decreasing 3.7 percent year-on-year, after a decade of doubledigit growth — despite a 51 percent revenue increase in the first quarter of the year, according to the report by the global accounting firm.

The PwC report cites a lack of compelling domestic movies coupled with more stringent accounting practices to tamp down box office fraud as contributing reasons for the slowdown. It noted that the State Administration of Press, Publication, Radio, Film and Television’s moves to issue fines to anyone found guilty of box office fraud.

“Many of [of these actions] have led to some inflated revenue results in 2016 and prior until the issue is cleaned up,” Matthew Lieberman, advisory marketing leader at PwC, said in an interview. “That’s why we’re seeing a growth rate not growing as significantly. Related to that [the government] was really cutting down on box office fraud — this should actually boost box office over the long run, but in the short term there are going to be some corrections.”

The report — Global Entertainment and Media Outlook 2017-2021 — said that while China’s domestic box office may eventually generate more domestic box office revenue than the US does, as yet there is “no sign that the dominant global position of the Hollywood studios is under any kind of challenge”. This is due in part to the worldwide appeal of US movies that tend to do even better internationally than they do at home, the report said.

“Chinese films have very little appeal outside their local markets. That is one reason why Chinese

Chinese companies are continuing to invest so heavily in the US cinema sector.” Global Entertainment and Media Outlook 2017-2021

companies are continuing to invest so heavily in the US cinema sector,” according to the report.

“I think what we’ve seen as a result is that Chinese film companies recognize that there is this limitation, hence all the investments we’ve seen by many of the largest Chinese film companies in US and other foreign companies so that they can have access to producing and licensing films that are not only Chinese-made in order to diversify their portfolio,” he said.

But the rapid increase in the number of movie screens across China — which already has more movie theaters than any other country in the world — will be a boon to box office revenues, the report said. There are expected to be about 80,000 movie screens by 2021, twice the number there were in 2016, and around two times what the US will have by 2021.

Aynne Kokas, author of the book Hollywood Made in China, said in an interview that a key driver in screen growth comes from movie screens being built in thirdand fourth-tier cities, which will allow greater penetration into markets that don’t see as many audiences flocking to theaters as studios find in first and second-tier cities.

But she cautioned that even growth in third- and fourth-tier cities should come with a caveat: “There is less data to predict box office outcomes there than in first and second tier cities” and “the preferences in third and fourth tier cities tend to skew more toward domestic content.”