China box office surges nearly 50% in first half of 2015

Mainland China’s box-office receipts jumped nearly 50% in the first half of 2015, powered by Hollywood tentpoles “Furious 7,” “Avengers: Age of Ultron” and “Jurassic World.”

About $3.3 billion in tickets were sold in the first six months of the year, according to figures from film industry consulting firm Artisan Gateway. That’s a leap of 48.9% over the first half of 2014. Imported films accounted for 52.5% of ticket sales. 

“It’s a huge increase and really hit-driven, though the average earnings [per film] are not going up so much,” said Artisan President Rance Pow. “In the second half of the year, we expect to see growth more in the 30% to 35% range.”

To protect and nurture domestic filmmakers, China continues to limit the number of foreign movies allowed into the country annually, and regulators have in recent years sought to maintain an approximately 50-50 box-office split between imported and homegrown fare. Thirty-three foreign films have been screened in China year to date, by Artisan’s count.

So far in 2015, big American productions such as “Jurassic World” have enjoyed simultaneous or earlier Chinese release dates, boosting their performance. In some cases, the favorable treatment has been underpinned by some Chinese self-interest; for example, state-run China Film Group itself invested in Universal Pictures’ “Furious 7,” giving authorities a stake in its success.

Whether Hollywood productions will continue to enjoy such favorable dispensation in the second half of 2015 remains to be seen. The market is currently in the midst of its traditional summer “blackout” period for foreign films, meaning movies such as Paramount's “Terminator Genisys,” which arrives in American theaters on Wednesday, will get lagging dates in China, which could sap audience interest. Disney’s “Inside Out,” which has sold $185 million worth of tickets in North America, has not been released in China.

Authorities have other means to tamp down the receipts of foreign films besides delaying their release dates; they can limit the number of screens a movie plays on or schedule several Hollywood productions on the same weekend in a “divide and conquer” strategy.

“Normally, at this time of year, we start to see ‘management’ steps,” said one film industry executive, who asked not to be named due to the sensitivity of the subject. “They start playing around with things when foreign films surpass 50%” of the total box office.

But Chinese companies are increasingly pursuing tie-ups with American studio productions, giving Chinese firms even more of a vested interest in the mainland performance of Hollywood fare. E-commerce giant Alibaba’s new film and TV arm, Alibaba Pictures, recently announced its first investment in a Hollywood film, Paramount Pictures’ “Mission: Impossible – Rogue Nation,” the fifth installment in the Tom Cruise action series. That movie is scheduled to arrive in U.S. theaters on July 31.

Stan Rosen, a USC professor and expert on Chinese movies, said such deals bode well for U.S. productions in China and could even lead to a relaxing of China’s quotas limiting foreign film imports.

“The 10% investment by China Film Group is one reason why ‘Fast and Furious’ was given such as large number of screens and also why they made sure it stayed [in theaters] long enough to make $390 million,” Rosen said. “As China invests more in Hollywood films, they will make it easier for Hollywood films to succeed in the Chinese market.

The top 10 films year to date are: “Furious 7” ($391 million); “Avengers: Age of Ultron” ($236 million); “Jurassic World” ($203 million, still in release); “The Man From Macau 2” ($157 million); “The Hobbit: The Battle of the Five Armies” ($124 million); “Dragon Blade” ($120 million); “Wolf Totem” ($112 million); “San Andreas” ($100 million); “Wolf Warriors” ($88 million); and “Stand by Me Doraemon” ($86 million), according to Artisan data.

Six of the top 10 were foreign films. Of the four Chinese-language films in the top 10, three were co-productions  (“The Man From Macau 2” and “Dragon Blade” with Hong Kong and “Wolf Totem” with France). Only one film, “Wolf Warriors,” was a 100% mainland production. 

China’s movie market is still only about 60% as large as North America’s, where about $5.5 billion in tickets have been sold so far this year, an increase of 7% over 2014. But China’s massive population, rising disposable incomes and theater-building spree mean it is likely to become the biggest market in the world by the end of the decade.

The country continues to add screens at a rapid pace; it just passed 27,000 screens and should hit 30,000 by year’s end, Pow said. But that’s still behind the nearly 40,000 screens in North America.

The average ticket price in China stands at about $6, but is facing downward pressure from the proliferation of online ticketing platforms that offer discounts and group pricing. “We believe the average ticket price is going down, but admissions are still going up, so we haven’t reached a point of diminishing returns yet,” Pow said.

Of Hollywood’s major studios, Universal Pictures is having the strongest year so far in China, Artisan said, with about $600 million in sales from three releases: “Furious 7” (which now stands as the top-grossing film of all time in China), “Jurassic World” and “Unbroken.”

Disney is in second place, with $411 million, thanks primarily to “Avengers: Age of Ultron,” “Big Hero 6,” and “Cinderella.” Warner Bros. is ranked third, followed by 20th Century Fox.

Sony has had two films on the mainland so far in 2015 -- “Chappie,” which screened on the mainland months after its stateside release -- and "Annie." Paramount has had no releases in China so far this year, but expects “Terminator” and “Mission: Impossible” to generate substantial returns.

As for Chinese studios, Bona Film is leading the pack with $330 million in earnings including the Chow Yun-fat casino caper “The Man from Macau 2” and the war film “The Taking of Tiger Mountain.” LeVision Pictures has fared decently, taking in $148 million on films including the love story “Silent Separation,” the animated “Boonie Bears 2” and the second installment in the “Dad, Where are We Going?” series based on the reality TV show of the same name.

Besides a strong appetite for Hollywood sci-fi, action, superhero and animated films, Chinese audiences have shown an interest in other imported fare this year, flocking to the 3-D Japanese cartoon “Stand By Me Doraemon,” which has become the second-biggest animated film in China ever, behind only “Kung Fu Panda 2.” The British production “Paddington” and the Indian movie “P.K.” also were surprise hits.

“Chinese audiences’ tastes are broadening,” Pow said.

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