China Gets Creative in Boosting Box-Office Returns

(WSJ) China’s once-torrid box office continued to cool in the first three months of the year, but the extent of the chill is being masked by a new way of counting ticket sales.

China’s film and media regulator has quietly begun including the fees charged by online ticketing firms in reporting box-office figures—a significant number in a country where an estimated 70% of the tickets are bought online.

Under the new method, China’s box-office revenue fell just 0.1% to 14.5 billion yuan ($2.10 billion) for the first quarter from the same period a year ago. The State Administration of Press, Publication, Radio, Film and Television confirmed to The Wall Street Journal that this figure includes online-ticket-service fees.

Without the fees included, China’s box office would have fallen by nearly 1 billion yuan, or 6.2%, Beijing-based research firm EntGroup said.

The government agency didn’t respond to a request as to why it made the change, which follows the dramatic slowdown in China’s box-office growth last year. Online sales comprise less than 20% of tickets sold in the North American market, according to estimates, and service charges for those sales aren’t included in the box-office tallies.

EntGroup Vice President Hou Tao, whose company is a leading source of box-office data, said his firm proposed the new method to better reflect “the amount of money that consumers spend” going to the movies.

Mr. Hou said including the fees also helps the government keep tabs on this expense “to make sure that consumers are charged reasonably.”

One Beijing cinema manager said authorities may have changed the method to make the slowdown in box-office growth appear less severe than it is. He disagreed with Mr. Hou’s reasoning the move is needed to help officials keep a lid on exorbitant service fees.

“If they really just want to show that part of revenue, why can’t they release it separately,” said this person, who requested anonymity for fear of angering regulators.

China posted a 3.7% increase in its box office last year as ticket-selling firms cut back on discounts and authorities cracked down on “ghost screenings,” in which film backers bought seats to make their numbers look better.

For the previous five years, China had averaged annual growth of 34%.

This year’s box office is being dragged down mainly by a lack of must-see films, particularly domestic Chinese releases, said Huang Guofeng, analyst with Beijing-based data company Analysys International.

“Content production has always been a weak spot for us,” he said.

Still, Mr. Huang said he sees growth of 10% this year to about $7.3 billion, citing expected blockbusters yet to be released, including “The Fate of the Furious,” the eighth installment in the popular action series starring Vin Diesel that hits theaters this weekend.

North America is still the leading film market, with a box office of $11.4 billion last year.

Source: Wall Street Journal

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