China’s media and entertainment industry is predicted to grow at a 17% annual rate until 2015, significantly faster than the country’s economy overall. Part of that surge is driven by box-office revenues. China recently surpassed Japan as the world’s second movie market and it will move past the U.S. to claim the number one spot by 2020.
China is also predicted to become the second biggest advertising market next year. This is driven by an increase in disposable income combined with the surge of digital consumption. In 2010, Chinese spending on entertainment and recreation was $350 billion. This jumped the following year to $547 billion.
Two major reasons for this:
Economic: where the growth of the middle class corresponds to the growth of disposable income, which means that all leisure activities, such as cinema, TV and the Internet are booming.
Cultural: where the Chinese government has put emphasis not only on economic development of the domestic market in general but also on the development of Culture as a business in particular. One by-product of this emphasis is China’s determination to become the world’s leader supplier in 3D and smart TVs.
Which is The Biggest Opportunity for 3D in China, Film or Television?
The answer is definitely films in the coming years. 3D in cinemas is booming in China but 3D in TV is at a very early stage. There is only one dedicated TV channel in China, although the government has plans to launch another 10 3D channels in the next four years.
As 3D films are extremely popular, we expect to see 3D content to appear on television and especially on tablets and online VOD platforms very soon. But currently, there is a marked lack of content for all those ancillary distribution channels.
China is Currently Building Digital Screens With 3D Equipment at an Amazing Rate
Driving this box-office bonanza is a tremendous increase in the number of cinemas and multiplexes, largely due to a construction boom in commercial property. Last year, there were 800 new theaters and 3030 screens added, an average of 8.3 new screens a day, for a total of 2800 movie theaters and 9286 screens across the country. Analysts expect that number to rise to 12000 by the end of next year. 85% of those theaters are digital and are well equipped to screen 3D product and 3D films are achieving astonishing results in China.
Of the current total of 9286 screens in China, 5355 are capable of screening 3D, second only behind the U.S. but gaining rapidly. For IMAX, China is the fastest growing market in the world. A total of 92 IMAX screens have been contracted to date with 95 currently in operation. RealD, Expand, Dolby and MasterImage 3D also have a rising number of 3D-capable screens around the country.
When the first imported 3D film (Journey to the Center of the Earth) was released in China in 2008, there were only 80 3D screens in China. More screens were built in 2009 but in 2010, when Avatar was released, the 3D phenomenon really took off in China. Avatar had a box-office of 1.4 billion Yuan in China (approx. $200 million), a new record in Chinese box-office history. Avatar was swiftly followed by other Hollywood 3D titles such as Alice in Wonderland and Clash of the Titans, both of which made more than 1 billion Yuan in China.
Now that 3D movies were so successful, China started building modern theaters with digital screens and purchasing equipment to show 3D films at an amazing rate, so that, by the end of 2010, these were more than 2000 3D screens in China, 20 times more than three years previously.
In 2011, Transformers 3, Kung Fu Panda and Chinese film The Flying Swords of Dragon Gate were huge successes, and more and more 3D screens were built so that, by the beginning of 2012, there were 3000 3D screens, which represented a third of all the movie screens in China. It is generally acknowledged that the number of 3D-equipped cinemas will continue to rise at a remarkable rate and there are now one or two Chinese films like Painted Skin 2, which are generating box-office revenues to compare with Hollywood successes as Titanic.
Home Grown Movies vs Imported
In most countries, the revenues accruing from a film are split between box-office from theaters, home video revenues and television. In the U.S., only 27 % of that total comes from theatrical box-office with 39% coming from home entertainment and 34% from television. In China, however, 94% of the total comes from theatrical box-office with TV and home entertainment currently being very minor contributors.
According to SARFT, by the end of 2012, the total box-office movies in China will be $2.4 billion, of which 3D will account for about 28% of total box-office and rising.
However, Painted Skin 2, which was released only in 3D, was the exception rather than the rule as most other Chinese films released in 3D failed to attract audiences despite lengthy black-out periods for foreign movies and protectionist measures such as releasing The Amazing Spider-Man and Dark Knight Rises on the same day.
The domestic film business is central to the new government’s goal of boosting Chinese cultural influence overseas. Although from a business point of view, Xi Jinping and the new government may want to allow more foreign products into China, there will be great political pressure to focus on home-grown movies.
And yet, despite the government’s protectionist measures, Chinese films have had disappointing results in 2012. Even this week, two expensive, large-scale Chinese historical epics, Back to 1942 and The Last Supper, have been comprehensively beaten at the box-office by Ang Lee’s Life of Pi.
One Undeniable Factor in This Equation: There is a Hunger for 3D Films in China
Life of Pi is in 3D. By far this year’s most successful Chinese production, Painted Skin – The Resurrection was released only in its 3D version, grossing over $100 million and breaking all records for a domestic movie.
The Reason 3D is So Popular in China
Chinese people are very willing to test new things. They love innovation and cinema-going for the younger generation is rather like New Yorkers going to see a Broadway play. They want to make the experience as unique and remarkable as possible and 3D supplies that experience, that thrill.
There’s no question: Chinese consumers welcome 3D and the cinema chains and distribution companies play their role in catering to this demand. Even the government has played its part by easing import restrictions for films in 3D. Watching a movie in 3D is more spectacular than 2D and with the quality of 3D now attaining new heights, whether originally shot in 3D like Life of Pi or films like Transformers, skillfully converted by companies by Legend3D, this love affair between the Chinese audiences and 3D films looks poised to continue for many more years.