Box-office receipts during the Mid-Autumn Festival, a three-day holiday this month, fell 15% compared with last year, despite moviegoers having an additional day off this year. The poor showing follows a similarly disappointing summer. Box-office receipts from June to August fell 4% from a year ago, according to Deutsche Bank . This is an abrupt change of sentiment from just the turn of the year. Goldman Sachs said in January it expected China’s box office to grow another 30% this year to $8.6 billion, after a nearly 50% gain last year. And the year did have a promising start, too. “The Mermaid,” directed by popular Hong Kong comedian Stephen Chow, raked in $527 million in the country, becoming China’s highest-grossing movie ever.
One key reason for this year’s surprise decline is that online-ticket vendors have cut back discounts.
Major Chinese tech giants including Alibaba and Tencent have poured billions of dollars into so-called online-to-offline services, which connect users to brick-and-mortar businesses, and selling movie tickets is one of their key battlefields. Their online-ticketing platforms gave out massive subsidies so cinemagoers were getting tickets for as low as $1.50. Around 60% of people in China now buy movie tickets online, according to film-research company EntGroup.
Things have changed, however, after two state-run industry groups said last year that online-ticket vendors could be blacklisted if they sell tickets below a minimum price set by the theater operators and movie studios. Regulators have also cracked down on “ghost screenings,” a common marketing strategy in which distributors buy bulk tickets to inflate box-office figures.
Analysts that were bullish at the beginning of the year have turned more downbeat. Nomura, for example, reduced the market’s overall growth forecast this year to 8%, from 25%, earlier this month.
Stocks that rode on last year’s movie boom have gotten beaten up. IMAX China , majority owned by IMAX Corp. , has fallen 35% from its peak in December. Wanda Cinema , China’s largest cinema chain, controlled by the country’s richest man Wang Jianlin, has nearly halved over the same period.
The full-house for China’s movie industry has turned out to be not that full after all.
Source: Wall Street Journal by Jacky Wong