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Industry Report: Europe and the rest of the world

Will China be the El Dorado of World Cinema?

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- With 2 billion euros of box office sales in 2012 Chinese cinema has climbed the global rankings. But despite now being the second largest film market in the world, it is still lagging far behind the 8.1 billion euros sales of the US. Does annual growth of over 30% make for a promising market?

Will China be the El Dorado of World Cinema?

With 2 billion euros of box office sales in 2012 Chinese cinema has climbed the global rankings. But despite now being the second largest film market in the world, it is still lagging far behind the 8.1 billion euros sales of the US.  Does annual growth of over 30% make for a promising market?

Cinema numbers to increase tenfold within 10 years

Growth in the Chinese film industry has been shored up by an active policy of cinema construction, with an ever-greater number of cinema venues appearing in the big cities: numbers have soared from 1,300 cinemas in 2002 to over 13,100 in 2012, and while the pace may have slowed in the big cities of late, mid-sized towns are now taking up the baton.

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The number of screens per inhabitants (one screen per 100,000 people in China compared to one per 12,000 in France) remains low, which leaves further scope for development, especially when we consider the rising popularity of the cinema in China. The middle classes for example – a pool of some 200 million potential cinema-goers – are spending increasing amounts of time at the cinema over the weekends and during holiday periods, which simply wasn’t the case some years ago.

745 Chinese films produced in 2012

With an output of around one hundred films in 2002 and 500 films in 2010, China stepped up to produce an impressive 745 films in 2012 - more than 2 films per day - which earned it a place among the biggest film producers worldwide (India produced over 1,000, Nigeria 900 (only on video), USA 700, … France 279 see Unesco). This has been achieved, moreover, at a time when film production is plagued with difficulties and hampered by obstacles of all kinds: censorship, piracy… not to mention fierce competition from mainly American blockbusters.

Low-quality production is having a negative impact on ticket sales 

Whilst the number of film screenings has risen by over 65% (with 20 million screenings in 2012), the mere 24% increase in audience numbers (totalling 460 million cinema-goers) isn’t quite as impressive. This differential has led to a dip in the number of viewers per film screening: 23 audience members per screening in 2012 against 32 in the previous year. While there are several possible explanations for this drop in numbers, the most likely reason is institutional: Chinese films that premiere at international festivals are then subject to censorship back in China as a result of the politically sensitive subjects they cover or the “morally inappropriate” scenes they contain. The result? A third of film productions don’t make it to the big screen. Of the 745 films shot in 2012, only 227 were distributed.

Fierce international competition 

Chinese producers must also contend with fierce competition from international and notably American films. In fact, US productions appeal to a whole host of cinema-goers who eagerly await new Hollywood films. In terms of box office sales, only 3 Chinese productions made the cut of the 10 most popular films in China in 2012, and in terms of total revenue, 34 foreign films, mainly blockbusters made in the US, accounted for over 50% of income (in France, American films hold 45.3% of the market share while French films hold 40.2%). It is a challenging context and strict quotas remain in place in China via the State Administration of Radio, Film and Television, more commonly known as “SARFT”, even if the latter are loosening their grip to some extent: 34 foreign films made it to cinemas in 2012, compared to the 20 of previous years.

Pursuing dual policies of co-production or acquisition 

An open approach to international co-productions – which are not subject to the quota rules – is an attempt to entice producers and foreign artists onto Chinese soil. In Tianjin in August 2012, for example, the American producer, James Cameron - extremely popular in China thanks to Titanic 3D and Avatar - created a joint venture called the Cameron Pace Group China with a local film group. The producer Jean-Jacques Annaud, meanwhile, shot his latest, co-funded film in China. But financial operations are in no way limited to the small scale: following the acquisition of AMC Entertainment for 2.6 billion dollars in May 2012, Dalian Wanda Group, one of China’s largest cinema property owners, became the world’s biggest cinema chain operator. This means that a Chinese company now controls the second largest cinema network in the US.

A conditional future

These policies show that the Chinese market is making genuine efforts to find a balance between fuelling the momentum of its national - albeit protected – production, and ensuring the appeal of its international offering so as to satisfy consumers with a strong interest in cinema. It remains to be seen whether striking such a balance is possible given the aspirations of Chinese society, not to mention the need for the industry to remain competitive on an international scale.

(Translated by Michelle Mathery)

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