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China is on a cinema-building binge

The growth in movie theaters is frenetic, with plenty of room for expansion, but it's not clear how much that might help Hollywood.

March 06, 2011|By David Pierson, Los Angeles Times
  • "Avatar" is promoted at a Beijing cinema in 2010.
"Avatar" is promoted at a Beijing cinema in 2010. (Liu Jin / AFP / Getty Images )

Reporting from Shengzhou, China —

Not long ago when Zhang Guomiao wanted to see a film, he'd head for the village square. There, itinerant cinema operators would unfurl a canvas screen, set up some static-filled speakers and show a grainy movie in the open air.

"We had to bring our own stools if we wanted to sit," said Zhang, 47, who remembered chickens clucking by his feet and neighbors talking loudly. "You couldn't hear much of the movie."

These days he visits a new seven-screen multiplex outfitted with plush seating, 3-D screens and popcorn imported from the U.S. The rice farmer went with friends to see the best-picture Academy Award nominee "Inception," marveling at the science-fiction thriller's special effects, throbbing soundtrack — and the clean cinema floors.

Chinese cinemas: A March 6 article about China's fast-growing cinema industry said the movie "Avatar" was a Warner Bros. film. The movie was released by 20th Century Fox.

"The movie was very hard to understand, but the cinema was very comfortable," Zhang said. "As a farmer, I thought it was very luxurious."

Across China, millions of people like Zhang are experiencing modern cinemas for the first time. State-of-the-art theaters are replacing dilapidated movie houses not only in wealthy urban centers like Beijing and Shanghai but in outposts like Shengzhou in central Zhejiang province, which has grown into a bustling city of about 800,000.

Over the last four years, the number of screens in China has doubled to more than 6,200, a figure that's projected to double again by 2015. Box-office receipts hit a record $1.5 billion last year, according to the State Administration of Radio, Film and Television.

That's still well behind North America, where there are more than 40,000 screens and box-office revenue was $10.6 billion in 2010.Still, China is already considered the world's No. 4 movie market, behind only North America, the European Union and Japan. And with only one screen for every 220,000 Chinese residents, exhibitors have plenty of room to grow.

"China's cinema industry is practically going from two tin cans and string to an iPhone 4 in one fell swoop," said Rance Pow, president of Artisan Gateway, an entertainment consulting firm.

The cinema-building binge is powered in part by ideology. The Communist government is a major investor in film production, distribution and movie houses. Film is a way to strengthen state influence at home and export Chinese culture abroad.

Movies are "part of a country's soft power," said Han Sanping, the head of state-owned China Film Group.

Still, the main drivers are practical. Unlike in the U.S., where DVD sales can account for as much as 40% of a film's revenue, rampant piracy has forced studios here to depend almost exclusively on domestic box-office receipts. Bankrolling more pictures and boosting profits requires more screens.

Then there's boredom. As Chinese workers grow richer and have more leisure time, they're itching for something to do. The typical ticket costs about $5, slightly less than what many new college graduates earn per day. Still, Chinese movie fans have shown a willingness to pay a premium for better sound, a better picture and swanky venues to hang out with friends.

"There really wasn't much to do here" before the multiplex opened in Shengzhou, said Wang Jinjin, a 24-year-old employee at a local pharmaceutical company. Wang, who earns about $400 a month, said he's visited the theater three times within a few weeks, treating his girlfriend to a ticket, popcorn and bottled water each time. He particularly liked the special effects in Sony Pictures' horror sequel "Resident Evil: Afterlife."

Hollywood movies consistently draw big crowds here and capture upward of 40% of annual ticket sales. Warner Bros.' "Avatar" is the top-grossing film of all time in China, topping $200 million at the box office.

But just how much Hollywood will benefit from China's ambitious cinema expansion remains to be seen.

The Motion Picture Assn. of America has complained for years about strict government limits on the number of foreign films that can be shown in Chinese theaters, which in turn encourages piracy. Warner Bros., a pioneer in cineplex building in China, pulled out in 2006 when Beijing banned majority ownership of cinemas by foreign firms.

The U.S. scored a victory when the World Trade Organization ruled that China must end the government's monopoly on the distribution of imported books, movies and films by March 19. But that ruling said nothing about the film import quota, which remains intact for now.

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