China Film Industry Report 2010

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Background

2009 is a booming year for the Chinese film industry.  In 2009 the China box office does not only continue the two-digit growth rate since 2003; it has also raised the box office growth up to 43%.  In 2009, as the world’s economy suffers a global downturn, China film market’s performance has proved right that movie business can benefit during times of recession.

The main reason behind the rapid growth is the increase of the country’s cinemas and screens.  In many major Chinese cities, cinema-going has become a new lifestyle of the country’s burgeoning middle class.  As a result, the movie-going population has also largely increased.

Besides the growth in the exhibition sector, the industry has seen major increases in production, distribution and film financing.  With the expansion of the market and the influx of capital, the China film industry sees a bustling and prosperous year in 2009.

Box office

The 2009 China box office revenue reached RMB6.206bn, a 43% increase on the box office revenue in 2008, which was RMB4.341bn.  The result is seen as a nice surprise for the industry, which previously estimated that the revenue reach RMB5bn.  Looking ahead in 2010, the first two months of 2010 continue the strong performance in 2009.  EntGroup estimates that the 2010 China box office revenue will reach RMB10bn, and the revenue will reach RMB20bn, by the end of 2012.
In terms of box office takings of individual films, 2009 is also a record-breaking year.  The highest-grossing record in China was RMB360m, set by Titanic in 1998.  The 11-year record was broken in 2009 with three films each grossing more than RMB400m:  2012, Transformers: Revenge of the Fallen, and local blockbuster The Founding of a Republic.  The three films, as well as 18 other films, that made more than RMB100m, have raised the bar for blockbusters in Chinese film market.
However, the box office takings are unevenly distributed with many blockbusters hits dominating the market, while only a few films reaching mid-sized box office gross (RMB50m to RMB100m).  The theatrical market is heavily dependent on blockbusters.

Production

In 2008 the total film production volume is 456 films, which is an increase of 56 films, or 12.3% increase on the production volume of 2008.  However, among the 456 films, only 130 films get to be released in movie theaters, means more than two thirds of them could not be released in cinemas.  The quantity of film production and the quality of films is still imbalanced.

Film Financing
Film financing is one of the major industry changes in 2009.  Enterprises or private investors from outside of the film industry stepped into film production and began to develop their film business.  These investors have become new backers of Chinese film production. 

State-owned film companies such as China Film Group, Shanghai Film Group and Changchun Film Group continued to invest and produce films in 2009.  On the other hand, several state-owned media companies stepped into film production, such as Shanghai Media Group (SMG), Jiangsu Broadcasting and Television Group and Hunan Broadcasting and Television Group.

In terms of private enterprises, new companies include Perfect World Media investing in Sophie’s Revenge, LeTV Entertainment investing in Kungfu Cyborg and Beijing Galloping Horse investing in Hua Mulan.

In 2009, the Chinese film industry has also begun to seek financing from the capital market.  Huayi Brothers Media went public in Shenzhen Stock Exchange in Oct 2009 and becomes the first film company listed in China’s stock market.  After Huayi Brothers, China Film Group, Shanghai Film Group and Bona International Film Group and Enlight Media have also announced their plans in the stock market in the next few years.

Distribution

As the only two companies authorized to distribute foreign films, China Film Group and Huaxia Film Distribution remain two leading film distribution companies in China.  As China Film Group also co-owns two cinema circuits, its exhibition resources give China Film Group extra advantages, thus remaining the biggest distribution company in China, leading other companies by a large margin.  Huaxia Film Distributions stands second.

3D screening has become a major film distribution trend in 2009. Several Hollywood films were introduced to China in 3D screens only, and they have performed remarkably in box office takings.  China Film Digital, the company authorized to take charge of distribution of all 3D films, has made an impressive progress in its market share among all distribution companies.

Polybona Film Distribution remains the leading distribution company among private distributors.  The company released several local hits in 2009 such as Bodyguards and Assassins and Overheard.  Huayi Brothers Media has released four films, including blockbuster The Message, and took the second place.  Enlight Media took the third place with six releases.

Exhibition

In 2009, China adds 142 new cinemas and 626 screens to its exhibition sector of the industry, making a total of 1687 cinemas and 4723 screens.  Among the existing 26 cinema circuits, 14 circuits have grossed more than RMB100m ($14.64m) in 2009.  Wanda Cinema Line takes the lead as the top cinema circuit in 2009, grossing more the RMB800m.

Following are China Film Stellar Cinema and Shanghai United Cinema Chain, taking 2nd and third places respectively. China Film Stellar takes in more than RMB500m in 2009 while Shanghai United grossed more than RMB400m.
In terms of the performance of individual cinemas, there are 17 cinemas grossing over RMB40m.  In 2008, only 7 cinemas reached the RMB40m mark.  Among the 1687 cinemas, Feiyang Cinema in Guangzhou is the highest-grossing cinema in 2009, taking in over RMB80m.

In 2009, Major investors of cinema development are China Film Group Corporation, Wanda Cinema Line, Stella Megamedia, Jinyi Cinema Chain, Dadi Century Films, UME, Broadway Cinemas and Korean CGV Cinema.  Orange Sky Golden Harvest and Huayi
Brothers Media are two new comers in cinema investment.  Orange Sky Golden Harvest entered into cinema investment and development in early 2009. Besides developing multiplexes in major Chinese cities, it has also acquired several individual cinemas or multiplexes.  As for Huayi Brothers Media, after entering the Shenzhen Stock Exchange in October, the company also announced to develop its cinema investment and management business. 

On December 2009, China’s film authority the Film Bureau announced a policy to subsidize cinema businesses in small to mid-sized cities on their digital screening facilities.  The policy has widely boosted the development of cinemas in China’s 2nd and 3rd tier cities. These cities are expected to see a rapid growth on cinema business in the next few years.　

Table of contents
 
I. Research background
II. Research Scope
III. Methodology
IV. Introduction to online survey
V. Definitions
VI. Summery
VII. The Report
 
1.Industry chain of Chinese film industry
2.Current situation of Chinese Film Industry
2.1 Governmental support: Film industry as national strategic industry
2.2 Economic Growth: continual GDP rise
2.3 Social change: a new cinema-gong population
2.4 New Technology
3.2009 box office
3.1 2009 box office revenue and other revenues
3.2 2009 global box office ranking: China ranks No. 9
4.Production
4.1 overview and analysis
4.1.1 2009 annual production analysis: 456 films
4.1.2 Popular genres: action, comedy
4.1.3 Local films’ market share: 56.6%
4.1.4 Trends and development of digital films
4.2 Co-production films
4.2.1 Definition
4.2.2 Co-production patterns
4.2.3 Application and procedures
4.2.4 Co-production policies
4.2.5 Performance of co-production films
4.2.6 co-production trends
4.3 Film Financing
4.3.1 Introduction: film financing channels in China
4.3.2 Government Funds
4.3.3 Joint investment
4.3.4 Private equity or debt financing
4.3.5 Pre-sales
4.3.6 Bank loans
4.3.7 Venture capital
4.3.8 Product placement
4.3.9 private film funds
4.3.10 stock market listing
4.3.11 new trend of film investment
4.4. Analysis on investment returns
4.4.1 main source of revenue: theatrical revenues
4.4.2 11 risks of film investment
4.4.3 Case study: Painted Skin
4.5. Major production companies
4.5.1 China Film Group Corporation
4.5.2 Shanghai Film Group Corporation
4.5.3 Huayi Brothers Media
4.5.4 Bona International Film Group
4.5.5 Beijing New Picture Films
4.5.6 Enlight Pictures
4.5.7 Orange Sky Golden Harvest
4.6 Major new production companies
4.6.1 Beijing Perfect World Media
4.6.2 Beijing Galloping Horse Pictures
4.6.3 LeTV Entertainment Investment Ltd
4.6.4 DMG Entertainment
4.6.5 Shengshi Films
4.6.6 HG Film and TV Productions
4.7 Production trends analysis
4.7.1 No more capital shortage
4.7.2 High box office does not guarantee profit
5. Distribution
5.1 Distribution structure and models
5.1.1 Distribution structure
5.1.2 Four distribution models
5.2 Current distribution market
5.2.1 Market shares: China Film Group takes the largest share
5.2.2 Concentration rate: 75.7%
5.3 Film revenue division scheme in China
5.3.1 Development of the scheme
5.3.2 Current policy and practice
5.4 Major Players
5.4.1 Four types of distribution companies
5.4.2 China Film Group
5.4.3 Huaxia Film Distribution
5.4.4 Polybona Film Distribution
5.4.5 Huayi Brothers
5.4.6 Shanghai Eastern Film Distribution Ltd
5.4.7 Enlight Pictures
5.4.8 China Film Digital
5.5 2009 Distribution Trends
5.5.1 Distribution gaining importance
5.5.2 The influence of exhibitors
5.5.3 The false box office figure incident
5.5.4 Digital distribution: future trend
5.6 Distribution case studies
5.6.1 Bodyguards and Assassins
5.6.2 A Simple Noodle Story
6. Exhibition -- cinema circuits
6.1 Introduction to Chinese cinema circuit system
6.2 Market landscape of cinema circuits
6.2.1 Top 10 cinema circuits
6.2.2 Concentration rate analysis
6.3 Major cinema circuits in China
6.3.1 Wanda Cinema Chain
6.3.2 China Film Stellar
6.3.3 Shanghai United
6.3.4 Beijing New Film Association
6.3.5 China Film Southern
6.3.6 Guangzhou Jinyi
6.3.7 Zhejiang Time Cinema Chain
6.3.8 Liaoning Northern
6.4 Ranking of Chinese cinema circuits
6.5 Current situation
6.5.1 Polarized market
6.5.2 Uneven distribution of cinemas
6.6 Future trends
6.6.1 faster development in 2nd and 3rd tier cities
6.6.2 Forming a new landscape of cinema chains
7. Exhibition -- cinemas
7.1 Cinema development 2009
7.1.1 The increase of screens 2009
7.1.2 The growth of digital screening
7.1.3 The growth of 3D screening
7.1.4 The development of IMAX screens
7.2 Cinema market landscape
7.2.1 Distribution of cinema profits
7.2.2 Ticket prices
7.2.3 Top cinemas by ranking
7.3 Regional analysis
7.3.1 Most profitable province: Guangdong
7.3.2 Most profitable City: Beijing
7.4 Cinema investment analysis
7.4.1 Policy support: Digital cinema development in 2nd and 3rd tier cities
7.4.2 New investors and influx of capital
7.4.3 New investment trends
7.5 Cinema investment and management companies
7.5.1. Ranking by screen count
7.5.2 Wanda Cinema Chain
7.5.3 Dadi Cinema Circuit
7.5.4 China Film Group Cinema Investment Ltd
8. Movie seasons and time slots
8.1 2009 monthly box office analysis
8.1.1 Box office index by month
8.1.2 Release months of blockbusters
8.2 Major movie seasons and time slots in China
8.2.1 Summer season
8.2.2 National Day Holiday season
8.2.3 Year-end movie season
8.3 Characteristics on release date arrangement in China
8.3.1 Movie seasons are not evenly distributed
8.3.2 Room for short-holiday seasons
9. Imports and exports
9.1 Chinese film exports in 2009
9.1.1 International sales and market share
9.1.2 Chinese films winning international awards in 2009
9.2 Imported films in China
9.2.1 Revenue-sharing films, flat-fee films and special imports
9.2.2 Procedures of film imports in China
9.2.3 Foreign film box office performance
10. Post-production
10.1 Post-production market
10.2 Major post-production companies
11. Movie-going survey China
11.1 Introduction
11.1.1 Movie-going behaviors
11.1.2 Movie-going preference
11.1.3 Lifestyles
Appendix 1 2009 theatrical releases: local films
Appendix 2 2009 theatrical releases: foreign films