Strong revenue growth continues in China's cinema market

Competitiveness of domestic films has enhanced significantly 

Shanghai, 17 June 2019 - Data in PwC’s Global Entertainment & Media Outlook 2019 -2023 indicates that China’s cinema segment is still growing at a very brisk rate.  China is expected to become the largest cinema market in the world by 2020. In 2018, China’s box office revenue grew by 9.1%, and total revenue was US$9.9 bn. As a result, strong growth is expected to continue over the next five years at a compound annual growth rates (CAGR) of 9.4%, with revenue to reach US$15.5bn by 2023.

The growth in China’s cinema market has benefited from box office growth and rising ticket prices. In 2015, China was the leading global market in terms of admissions and cinema visits, and since then, has continued to rise. In 2016, China had the highest screens in the world. The number of screens is expected to rise at a CAGR of 4.65% and expected to reach75, 406 by 2023. However, the difference in ticket prices between China and the U.S. is still relatively large. The Outlook projects the national average was US$5.1 per ticket in 2018, on track to reach US$5.7 by 2023, while the average price in the U.S. is expected to rise from US$9.3 in 2018 to US$9.6 in 2023.

In terms of content, the competitiveness of domestic films has improved significantly. The “80/20 rule” is at work. From 2018 to May 2019, more than 700 movies were shown domestically and among them -45 movies raked in more than RMB500mn each. During this period, the films shown accounted for 72% of  total box office revenue. Among the 45 films shown, 27 were produced domestically and accounted for 45% of total box office revenue, while 18 foreign films accounted for only 27%. At the end of 2019, when China celebrates its 70th National Day, the Outlook data predicts a large number of films with related nationalistic themes will prove popular in box office sales and domestic films will draw more attention than ever.

Frank Lin, PwC China Entertainment and Media Partner, says, "The competitiveness of Chinese film has enhanced, and the new generation of directors are becoming the backbone of the market. ‘Content is the king' again - quality content is the core driver of ticket sales. The celebrity effect is in decline, while the word of mouth effect is on the rise."

The internet is influencing the film market in many ways. In 2018, 84.5% of movie ticket purchases in China were made online. Meanwhile, the competition among cinemas continues to intensify. Judging from the number of cinemas that closed and opened in 2017 and 2018, this is causing a market reshuffling of cinema operators. In 2018, the number of cinema closures in fourth-tier cities was a lot greater than that of 2017, whereby in comparison, there was a decline in the number of newly opened cinemas in China. This fact reflects the intense competition among cinemas.

Jane Kong, PwC China Entertainment and Media Partner, stated, “The internet is still bringing great benefits to the domestic cinema market. The popularity of online ticket purchases increased transparency in box office numbers. Online marketing channels were concentrated in ticketing platforms, social media and video websites, not forgetting the influence and importance of short video platforms increasing movie marketing for the cinema industry.”

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Sharon Zhu

Manager, PwC China

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