China’s Box Office 2012 Re-Cap: Another Stellar Year

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By Robert Cain for China Film Biz

2012 was one of the most eventful years I can remember in my 20-plus years working in and following the Chinese film business.

It was the year in which China surpassed Japan to become the world’s second largest movie territory.

It was a watershed year for investments from China into North American entertainment (more on this below) and from North America into China. IMAX continued its bold theater expansion, opening its 100th screen in the PRC, and Fox bought a stake in producer-distibutor Bona Group. Both IMAX and Fox were rewarded with superb returns this year on their China investments.

It was also a year of contrasts and contradictions. Consider:

2012 was the year when Hollywood showed that it can dominate the Chinese market, with a 63 percent market share in the first six months. It was also the year China’s filmmakers proved they can dominate their market too, notching two of the year’s three biggest hits—Lost in Thailand and Painted Skin: Resurrection—and three of the top four if we include CZ12’s revenues into the first week of 2013. All of these films were $100 million-plus grossers.

2012 was the year China’s government finally capitulated to years of WTO pressure by expanding its import quota and increasing foreigners’ revenue-share allowance to 25 percent. It was also the year SARFT aggressively protected China’s domestic films via extended foreign film blackouts and manipulation of release schedules to prevent Hollywood from exceeding its “allowed” share of the market.

It was a year when China’s film czars issued repeated warnings and censorship dictums to reinforce the Communist Party’s chaste rules of on-screen propriety and its strict prohibition of films that challenge the legitimacy of the Party’s autocratic rule. It was also the year when the country’s giant government-owned TV network, CCTV, aired a national broadcast of the U.S. film V for Vendetta, which details and glorifies the actions of a terrorist who violently overthrows a totalitarian regime.

It was a year when a Chinese company, Dalian Wanda Group, became one of America’s biggest theatrical exhibitors through its acquisition of AMC Theatres. It was also a year in which Chinese films dismally failed to attract American audiences, with the top ten Chinese language releases in North America—several of them huge hits in China—collecting a combined gross of barely $1.75 million at U.S. multiplexes.

Above all, it was a year of enormous growth. Let’s break down the numbers.

SARFT announced last week that China’s theaters earned a total of 17.07 billion RMB in movie ticket revenue in 2012. Using an average currency exchange rate of 6.31 RMB per dollar, this works out to $2.71 billion dollars, good enough for a 31 percent increase over 2011. That’s the ninth year in a row that China has logged a 30 percent or better increase (as measured in U.S. dollars).China v U.S. BO CAGR 2003-12

Source: Pacific Bridge Pictures research

During the past decade China domestic films revenues have grown at a compound annual rate of 40 percent. Had the North American market grown by the same rate it would now be a $190 billion industry. Unfortunately for those of us in Hollywood, North America has grown at the sluggish pace of just 1.8 percent annually, less than one-twentieth the growth rate of China, so we are in jeopardy of being surpassed by China—even if its growth slows considerably—in just five to seven years. At that point China will account for one in every four dollars of worldwide ticket sales.China Pct of WW BO thru 2020

Source: Pacific Bridge Pictures research

2012 saw five new film releases go on to gross $100 million or more in China, more than reached that mark in all of China’s combined prior history. Three of those five films are of Chinese or China-Hong Kong origin and one, Lost in Thailand, will become China’s highest grossing film ever with a total of at least $215 million. I believe this qualifies as the highest gross ever for a film in a single territory outside of North America.

China Top 15 Grossing Films 2012

Source: Pacific Bridge Pictures research

To make the list of the top 15 films in 2012 required a $50 million gross; in 2011 the threshold was $30 million, and in 2010 it was $23 million.

Foreign films took more than half of all ticket revenue, reportedly the first time this has happened in China in a decade, according to SARFT. The vast majority of this share went to Hollywood movies. But Chinese films fought back and gained share in the second half, with purely domestic films capturing 20 percent and China-Hong Kong co-productions taking another 25 percent. If SARFT succeeds in its future manipulations of the market, foreign films will never again capture more than half of China’s ticket revenue.Share of 2012 China BO by Film Country of Origin

Source: Pacific Bridge Pictures research

Of course, had China allowed in more American films, the US share would have been greater. The average American release earns six times as much in China as the average Chinese film, and quite a few US (and other foreign) films are shut out of the market due to censorship concerns and quota limitations. Had China completely eliminated its import restrictions in 2012, and had it not instituted blackout periods, there’s little doubt that non-Chinese films would have easily taken at least two-thirds of the box office.Average China BO per Film by Country, 2012

Source: Pacific Bridge Pictures research

Action and adventure remain the top drawing genres, expanding their share from 30 percent of revenues in 2011 to 44 percent in 2012. Romance surpassed science fiction as the second most popular genre, as several love stories, most notably Titanic and Painted Skin 2, drew large numbers of moviegoers to theaters. Animation’s share dropped from 15 percent in 2011, when Kung Fu Panda 2 set records and some very tough comps, to just 9 percent in 2012. Sci-Fi fell even further, from 17 percent of receipts in 2011 to just 5.5 percent in 2012. Comedy rose by 2 points to 9 percent in 2012, largely on the back of mega-hit Lost in Thailand.

Share of Box Office Receipts by Genre, 2012

Source: Pacific Bridge Pictures research

Chinese audiences spend on movies far out of proportion to their incomes, and the extraordinary growth there shows little sign of slowing down. China added more than 3,800 new movie screens last year to reach a total of 13,118 screens by year’s end.  If we factor in the massive skimming that takes place at China’s ticket counters, total box office last year was probably closer to $4 billion than to the officially reported $2.7 billion figure.

China’s new status as the world’s second largest box office territory will be short-lived because China will soon surpass North America, and in 15 years or so it will dwarf the United States in importance to the global film industry.

Chinese filmmakers still have much to learn, but they will be backed by the full weight of the Chinese government in protecting their interests and helping them to compete. The successes of Lost in Thailand and Painted Skin: Resurrection demonstrated that Chinese audiences prefer mediocre local films that are at least “good enough” to better quality foreign language movies. And with government support, more and more Chinese films that are “good enough” will appear. The window is closing on Hollywood’s prospects in the PRC, and only those companies that remake themselves as more China-oriented producers will stand a chance of benefiting from the future’s biggest growth opportunities.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at and at

China’s Box Office: An Excellent 2012 So Far

by Robert Cain for China Film Biz

July 8, 2012

Thanks mainly to stellar attendance for Hollywood-made films, China’s box office racked up growth of 41 percent (as measured in US dollars) for the first half of 2012, with aggregate ticket sales of more than $1.25 billion through the weekend ending July 1. If China’s usual annual pattern of higher second-half ticket sales holds this year, the July-December period will account for around 60 percent of total revenue, and the year-end tally will exceed $3 billion.

China’s revenue growth continues to dwarf that of the U.S. and most other international territories. Even if the PRC’s blistering growth cools to just half of its current pace, it will supplant North America as the world’s largest box office market by 2020.


Note: India is excluded due to lack of reliable data.

Through the end of June, 2012, 8 films crossed the $40 million box office threshold, as many as reached that level in all of 2011. Only one non-Hollywood picture, the Hong Kong-China co-production Painted Skin: The Resurrection, cracked the top 10 films, at number 7.


Foreign films took more than two-thirds of all ticket revenue, a first-half record, and for 23 straight weeks from mid-January through late-June, Hollywood films topped the charts. But Chinese films will likely regain share in the second half, with Painted Skin 2 continuing its record-breaking run, and such highly anticipated releases as Feng Xiaogang’s 1942, Wong Kar-wai’s The Grandmaster and writer-director-producer-star Jackie Chan’s Chinese Zodiac coming to Chinese theaters later this year. Image

Action and adventure remain the top drawing genres, with more than 40 percent of revenues. But romance surpassed science fiction as the second most popular genre, as several love stories, most notably Titanic and Painted Skin 2, drew large numbers of moviegoers to theaters. Animation’s share has dropped from 15 percent in 2011, when Kung Fu Panda 2 set records and some very tough comps, to just 7 percent so far in 2012.


Two unmistakable trends in 2012 are the emergence of the female moviegoing audience as a major force in China, and the failure of Chinese filmmakers to connect with their own domestic audience. Romances and romantic comedies captured 28 percent of ticket sales in the first half of 2012, up from just 7 percent in 2011. Even if we take the outlier Titanic 3D out of the mix, romance/romantic comedies still more than doubled their market share in 2012. Domestic Chinese films (excluding co-pros), lost nearly half their market share, dropping from 25 percent in 2011 to just 14 percent in the first 6 months of 2012.

The challenge for Chinese filmmakers is simple: make better movies, target them better to the tastes of Chinese audiences, and do a better job of marketing them. China is and will remain the greatest growth opportunity for producers worldwide. Everyone should study the success of Painted Skin: The Resurrection, and the rest of the top-grossing Chinese language films, for lessons about what Chinese audiences want.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at and at

China’s Box Office: A Very Good Year So Far

by Robert Cain                                                                                                           November 7, 2011

China’s theatrical movie business has continued its decade long boom in 2011, with box office receipts through the end of October running 30 percent higher year-on-year than at the same point in 2010. At $1.6 billion for the year so far, China is surprisingly close behind Japan, and it appears increasingly likely that the People’s Republic will vault ahead next year to become the world’s 2nd largest film territory after the U.S.

According to data from the State Administration of Radio, Film and Television (SARFT), China’s box office has increased by an average rate of nearly 40 percent annually since 2001, a pace more than four times faster than the country’s overall economic growth rate.  Even if growth slows significantly, China will probably pass the U.S. within a decade to become the world’s most important film market.

China vs. U.S. – Historical and Projected Box Office, 2004-2020

Source: SARFT, MPAA, Pacific Bridge Pictures projections

Chinese filmgoers have demonstrated a strong preference for Hollywood films over home-grown ones, with the 35 U.S.-made releases accounting for more than half of all box office receipts. Films from Chinese producers accounted for just 25 percent, and China-foreign co-productions—most of these made with Hong Kong partners—accounted for another 18 percent of revenues. The average U.S. film grossed $22 million, while the average Chinese film grossed just $6 million.

Share of China Box Office receipts by Film’s Country of Origin, Jan-Oct, 2011

Source: SARFT, Pacific Bridge Pictures analysis

The market has broadened considerably this year, with 29 films having reached the 100 million RMB ($15 million) threshold so far, compared to 17 films for all of 2010. Leading the way are Transformers: The Dark Side of the Moon, at $165 million, and Kung Fu Panda 2 at $92 million. The highest grossing Chinese language film is the government-backed historical epic The Beginning of the Great Republic, at $62 million.

As in prior years, action-adventure, sci-fi and animation are the most popular genres in 2011, capturing almost two-thirds of total market share. Romances, comedies, thrillers, historical epics and dramas have been far less successful, with each of these genres drawing only about 5 to 7 percent of the market.

Share of China Box Office receipts by Genre

Source: Pacific Bridge Pictures analysis

Among U.S. suppliers, Paramount is the clear leader in China this year, due mainly to the huge success of Transformers 3. Disney and Sony are neck and neck for 2nd place, with Warner Bros and Universal a bit further behind, and Fox last among the majors with only a 3 percent market share. Despite all the noise it has made about its China adventures, Relativity has generated almost no interest for its films among Chinese moviegoers, with less than 1 percent of the box office.

Although American films are generating huge ticket sales, little of this money actually makes its way back across the Pacific. Under China’s quota system foreign-made films receive only modest flat-fee deals or, at best, about 15 percent of total receipts for those lucky enough to get one of the 20 annual revenue-share slots. So from the roughly $800 million in Chinese box office receipts earned so far in 2011 by Hollywood movies, just $100 million or so will go to their U.S. suppliers, with theater operators and major Chinese distributors China Film Group and Huaxia keeping the rest.

Given China’s massive potential and anemic growth in the U.S. market, it is surprising to note how little Hollywood’s studios have done to position themselves in what will soon be the world’s largest movie territory. None have mounted serious co-production operations, and tiny Hong Kong will likely earn more in China this year than all of Hollywood’s producers combined. A void exists in the market, a shortage of quality films and the expertise to make them. Hollywood can fill that void.

Of course, the Communist party administrators who oversee China’s film industry aren’t exactly eager to see Hollywood further extend its dominance over their cultural industries. Americans who wish to stake a claim in China’s movie gold rush will do well to get in now while it is still early, and to invest in building bridges with government officials, distributors, and others who hold the keys to the middle kingdom’s burgeoning box office riches.

Rob Cain is a film producer and entertainment consultant who has been doing business in China since 1987. Rob can be contacted at