Summer holidays may reboot Chinese film market

BEIJING - With the start of summer holidays in July, China's box office is expected to set a new record.

Chinese cinemas earned 1.2 billion yuan ($174 million) in ticket sales in the week ending July 10, according to China Film News.

The week's top three films, "Cold War II," "Big Fish and Begonia" and "Never Gone," are all Chinese productions. The films, which debuted on July 8, generated a collective 250 million yuan in ticket sales on their first day of release.

Sluggish Q2 market?

Last summer, three Chinese films rewrote the single-day box office record together on July 18 with 400 million yuan in sales. The record was previously held by American blockbuster "Fast and Furious 7."

Film companies are betting on this summer in part due to sluggish performance in the second quarter.

Though total revenue hit 24.7 billion yuan in the first half of the year, up 22 percent year on year, sales turnover from April to June was only 9.9 billion yuan -- a 32-percent decrease from the first quarter this year and 700 million yuan less than the same period in 2015.

"Going to the cinema has become a habit for the Chinese, both in major cities and small towns, which have been engines for film market growth. But audience sizes and consumer demand now seem to have peaked," said Zhang Yiwu, a literature professor at Peking University.

Shi Chuan, vice-president of Shanghai Film Association, said the drop in box office revenues might also be related to a clamp-down by authorities on sales fraud.

According to a statement issued in March by the film bureau of the State Administration of Press, Publication, Radio, Film and Television, film distributors admitted to having fabricated box office figures for domestic movie "Ip Man 3."

Chinese movies still lag behind in storytelling and production techniques, so they have a hard time attracting viewers with a growing appetite for high-quality movies, said Yin Hong, a film scholar and journalism professor at Tsinghua University.

Will momentum return?

Chinese film markets have flourished since market liberalization in 2003, when annual box office sales in China topped out at just one billion yuan.

In that year, authorities doubled the number of foreign films cinemas could show to 20 and allowed foreign companies to invest in Chinese cinema chains. China's film market has since posted average annual growth of 30 percent.

China has become the second largest film market, with box office sales reaching 44 billion yuan ($6.8 billion) in 2015, up 48.7 percent from 2014.

In February, Chinese cinemas pulled in a record 6.87 billion yuan in ticket sales, with monthly box office sales overtaking North America's for the first time.

These numbers have led to wide speculation that China's annual box office could go on to surpass North America's as soon as 2017.

The downturn in the second quarter has brought reason back to some film industry insiders as they start to re-appraise the feasibility of this goal.

The Chinese film industry has reached a transitional period, both with respect to audience growth and the competitiveness of film producers, so it is hard to predict whether this year's outcome will be favorable or not, Yin Hong said.

With the market off to a flying start in summer, the downward trend could be reversed, and the industry as a whole is expected to be revitalized, said Rao Shuguang, secretary-general of the China Film Association.

The latter half of this year and 2017 will be crucial if China's film industry wants to emerge as the world's top, said Guo Xiaoxian, chairman of Beijing Times Films Company, Ltd.

The country's huge population will continue to bring unimaginable market potential, said Zhang Yiwu.