HONG KONG (Reuters Breakingviews) - The plot should improve for China’s silver screen in 2017. Ticket sales are on track to grow at their slowest pace in a decade in 2016, to a bit more than $6 billion. The picture could then brighten as a promising slate of films wins back moviegoers and investors.
Not even Matt Damon battling monsters in China was enough to jolt the country’s stalling movie sector. “The Great Wall” raked in a respectable $61 million during its December opening weekend, data from Box Office Mojo shows. But that means little for overall box-office sales: growth will slow to a low single-digit percentage for all of 2016, compared to the previous year’s 48 percent expansion, analysts at Nomura reckon.
One simple explanation is that 2016’s movies just weren’t very good. The highest-grossing films were local hit “The Mermaid” and Disney’s “Zootopia”. A year earlier, moviegoers went crazy for imported blockbusters like “Furious 7” and “Avengers: Age of Ultron”.
Less subsidies and a crackdown also played a role. Online sites, including those backed by web giants Alibaba, Baidu and Tencent, discounted heavily to grab market share. Cinemas and studios also subsidised tickets to boost audiences and generate buzz. But consolidation among ticketing sites has cut subsidies. After scandals involving sold-out midnight shows at five times normal prices, and other oddities, new laws have also curbed producers artificially inflating ticket sales.
As of Dec. 22, shares of China’s three major production houses had all slumped by over a third in the year to date, versus an 11 percent decline in the wider market. The hardest hit is Shenzhen-listed Wanda Cinema Line, controlled by China’s richest man, Wang Jianlin, which has shed over $10 billion in market value.
This has at least taken some of the hype out of movie stocks. By mid-December, Wanda Cinema Line was trading at 31 times expected earnings, versus a fantastical 68 times in January 2016. And there is a strong pipeline to lure moviegoers back, including new installments to already popular franchises like “Fast and Furious” and “Transformers”. For investors, souped-up cars and alien robots could be the heroes that save Chinese cinema.
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