Chinese film authorities are financially aiding domestic theaters and films to help the local industry better cope with stiff competition from Hollywood.
The Managing Committee of the National Film Development Fund released a policy on Thursday that said it will return all or part of the committee's 5 percent cut of box office revenue to theaters that show more domestic films.
The committee, affiliated with the State Administration of Radio, Film and Television ― the industry's top regulator ― collects 5 percent of every film's box office revenue to support public services.
According to the new policy, theaters will get the 5 percent back if more than half of their yearly revenue comes from domestic films. They will get 80 percent out of the 5 percent box office revenue back if domestic films rake in 45 to 50 percent.
Theaters whose yearly box office has less than 45 percent coming from domestic films will not get the bonus, unless the domestic films' revenue sees some growth over the previous year.
The policy is widely believed to encourage theaters to show more domestic films, which have not performed very well this year at the box office.
"Surely it is good news for theaters," said Chen Zheng, manager of Saga Cinema in Beijing. "It urges us to think about how to better promote Chinese films and balance their screening schedules with that of Hollywood ones."
It is not an easy mission, though. Statistics from the administration show that by October, box office revenue so far this year is 12 billion yuan ($1.93 billion), and only 40 percent of it is from domestic films.
According to Liu Hui, deputy general manager of Beijing UME Cineplex, domestic films so far this year have grossed about 40 percent of their entire box office of 2012. UME's two theaters are among the most frequently attended cinemas in Beijing.
More fierce competition is imminent, when this year the quota of foreign films in Chinese theaters has increased to 34 from the original 20, and their box office share has jumped to 25 percent from 13 percent.
"The really important thing for local filmmakers to do is to make quality films," Liu said. "If your films are good enough, we will give you more screens, whether there is a bonus for that or not.
"The new policy does encourage us to screen more local works, but if they cannot attract viewers, we will not let our theaters remain empty just to win the bonus."
The committee will also award domestic 3-D or films screened on giant screens. The films could be those shot with 3-D cameras or transformed into the format afterward. The giant screen format includes both Imax and the local equivalent, Dmax.
A local 3-D/Imax or 3-D/Dmax film will be awarded 1 million yuan if it grosses 50 million to 100 million yuan; the bonus will be 2 million yuan if the film grosses 100 to 300 million yuan; and films that earn more than 500 million yuan at the box office, such as Painted Skin 2, will be awarded 10 million yuan.
Senior producer Ben Ji said he believes that the most direct effect the policy brings to the film industry is the growth of budgets because both 3-D and the giant-screen-released films require more money to make.
Liu, of UME, worries that the policy may cause an instant mania of special-format films, while not all stories need to be presented in 3-D or on big screens, but she hopes ultimately the market will eliminate the inferior works.
"Those who turn to the technology only for the bonus's sake need to think before they act. Chinese viewers have seen really good films before, such as Avatar. They will not be fooled. They will vote by tickets."
Both policies work for all Chinese films screened since Jan 1.