SARFT Intervenes Percentage of Box Office

2011/12/6 10:16:00 (Beijing Time)   Source:CRI    By:

The battle between the top eight cinema chains and Zhang Weiping, CEO of New Pictures has been one of the most talked-about issues in China's film industry.

The issue started when Zhang demanded to raise the minimum ticket price of the blockbuster movie "The Flowers of War" from 35 yuan to 40 yuan without negotiation.

On top of this, Zhang also asked cinemas to reduce their after-tax share from 57% to 55%.

But a document named "On Promoting the Coordinated Development of Movie Making, Publishing and Releasing" issued by The State Administration of Radio, Film and Television (SARFT) on November 30 seemed to put an end to the problem.

The first suggestion in the document reads "In order to balance the benefit distribution between production companies, distributors and exhibitors, referring to international conventions, cinemas can get no more than 50% of the box-office revenue in the first run in the future." (The number is 57% currently.)

If this suggestion becomes policy, mainland production companies will gain more benefit and lower their risks. Many famous producers gave a welcoming applause to the suggestion. Li Xiaowan, producer of the movie "Baby in Love" said, "Our film industry is reaching international standards. Our production companies will be highly motivated to make better movies."

But another suggestion listed in the document led to an outcry from cinemas -- in order to promote the sustainable development of cinema construction, we suggest the annual property rent for cinemas should be less than 15% of the annual box-office revenue. The contract between the parent theaters and franchisees should last at least three years. Film critic Guo Xiaoping said "These two regulations are heavy blows to cinema investors".

An anonymous expert explained that the suggestion is to suppress the rapid expansion of new cinemas. "The relevant authority may think theater construction in the Mainland is out of control right now. There is too much hot money invested into cinema-building and this causes blind competition within the industry."

While the producers are enthusiastic about the suggestions, theater managers are not so happy.

One industry insider said future cinemas need to be cautious and rational in their development and movie makers should question the quality of their productions which is the key element to increasing revenue.

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