Is China slowing down?

The Chinese box-office is up by 21% in the first 6 months of 2016 compared to the same period of last year when it amounted $3.22B. Last year it surged by 49% to $6.78B for the year.

So, are Chinese movie tickets sales slowing down?

It should be taken into account that in the first 6 months of last year Furious 7, Avengers: Age of Ultron, and Jurassic World, which together grossed $860M were released, whereas this year the top 3 Hollywood releases, Zootopia, Warcraft, and Captain America: Civil War grossed $647M . In total, imported films have seen only 5% growth year-on-year, whereas domestic films have fared better, with receipts growing 33% from $1.5 billion to $2 billion in the first half due mostly to the exceptional results of The Mermaid, which grossed about $527M.

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‘The Mermaid’ grossed $527M in China.

Therefore, so far we can’t claim any “conclusive change” in the general growth trend in the market, but a shift related to the titles that have been released so far in 2016 compared with 2015.

In addition, it should be taken into account that the 6-month average CNY to USD rate has fallen from 0.1608 to 0.1529 or 4.91%.

What we can claim for sure by now is that Chinese moviegoers have different tastes. For instance, Warcraft grossed $221M and only $46M domestically, on the contrary Star Wars: The Force Awakens grossed $124M in China and $937M domestically.

There is another big difference. Movie tickets are relatively more expensive in China than they are in the US, at least in the cities. The price of 2 tickets to the movies in Beijing is 元117 (元117) or $18 (about the same price of monthly utilities in a luxury studio in downtown) even though the average price is starting to slip — down about 2.5% to $5.36. IMAX and 3-D premiums are continuing to hold up and driving overall revenue. Also, another opportunity is given by the fact that movie tickets are usually cheaper when purchased online in advance.

All in all, China saw a 40% growth in screens, now totaling about 32,000 or about 23 every million people but box office was up 48% in 2015.

To sum up, there is still room for substantial growth in terms of exports, due also to their greater openness to welcome foreign product, however the Chinese market is now already mature enough to be worth of being considered in terms of major investments in local productions, co-productions, as well as joint ventures and stable distribution partnerships.

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