One of the things we have learned in representing companies involved in China’s film industry is that it is the theater owners who seem to make the most money from films shown in China.
But Just last week China’s government film agency mandated that the share of film ticket sales be lowered for theater owners. In a post entitled, Beijing’s (Bloodless) Boxoffice Battle, Rob Cain (whom I had the pleasure to meet last month at the 2011 US-China Film Co-Production Summit), writes of this change and how it came about.
Producer Zhang Weiping had demanded that China’s theater owners raise their minimum ticket price from 35 y to 40 yuan and lower their after-tax share of ticket sales from 57 percent to 55. Cain described Zhang’s reasoning as follows:
Zhang was looking to protect the nearly $100 million that’s been invested in The Flowers of War, his latest collaboration with his mega-director partner Zhang Yimou. The film, which stars Christian Bale, is the costliest in Chinese history, and is set to open wide next week. Under the existing structure distributors receive only 39 percent of each dollar, or yuan, of ticket sales, and after the distributors’ cut producers get substantially less than that.
As Zhang Weiping put it, “For producers in China, the only way to get a return on investment is through ticket sales. Ancillary products do not sell well. Raising ticket rates could help keep movies from being fast food and junk food.”
China’s State Administration of Radio Film and Television (SARFT) quickly stepped in and issued a document “On Promoting the Coordinated Development of Movie Making, Publishing and Releasing,” mandating that “cinemas can get no more than 50% of the box-office revenues from a first run movie. Cain rightly describes this new mandate as “a major victory for film producers and distributors” and sees this “7 point bump in their share” as having the potential to “spell the difference between profit and loss for many Chinese films.”
If you are interested in China’s film industry, I strongly recommend you check out Chinafilmbiz.
