All is not rosy on China's silver screens

A Wanda Cinema in Dalian shows new movies to greet Spring Festival. Wanda Cinema Line earned 3.16 billion yuan last year. China's largest movie theater chain by box office revenue, the company has been approved by regulators and is currently in line for an IPO. Provided to China Daily

Large audience numbers at cinemas in both large and small cities show moviegoing is a popular pastime for people in China, now the world's second-largest film market.

Box office revenue hit 21.77 billion yuan ($3.6 billion) in 2013, up 27.51 percent year-on-year, according to statistics from the State Administration of Press, Publication, Radio, Film and Television, the government watchdog for the film and TV series industry.

But the rosy figures cannot cover some potential problems that come with the development of the country's movie industry.

The continued expansion of movie theaters serves as a major engine for ticket sales growth alongside increased moviegoing by the general public.

An additional 5,077 screens were added in China last year, pushing the total to 18,195 at the end of 2013, according to the state administration.

The number of moviegoers grew by 32 percent, from 462 million in 2012 to 612 million in 2013, according to EntGroup Consulting, a Beijing-based entertainment industry consulting firm

"The constant increase of screens was the primary driving force of box office receipts last year, but the driving factors will become more diversified in the future, including better-quality movie productions, and more professional marketing strategies and promotional methods," said Yang Shuting, a senior analyst with EntGroup Consulting.

The top three private film companies took almost half of the domestic film market share last year, according to statistics from the StateOffice of Government Fund of National Film Development.

Of the 21.77 billion yuan box office take, 12.77 billion yuan was generated by domestic productions, representing a year-on-year growth of 54.32 percent, up from 48 percent in 2012, according to official statistics.

Huayi Brothers Media Group earned 3 billion yuan in box office revenue last year, up 39 percent year-on-year. It accounted for 25 percent of the country's movie market, followed by Beijing Enlight Media Co Ltd, with 2.3 billion yuan, and Le Vision Pictures (Beijing) Co Ltd, with 1 billion yuan in ticket sales.

"The distribution of a couple of movies that were extremely successful in ticket sales was critical for the business performance of the top three private film studios last year," said Peng Kan, research and development director of the Beijing-based consultancy company Legend Media.

Journey to the West: Conquering the Demons, the highest-grossing film of the year, was distributed by Huayi Brothers and took in 1.25 billion yuan at the box office. Another two productions that made it onto the top 10 highest-grossing films list were produced and distributed by the company — Young Detective Dee: Rise of the Sea Dragon and Personal Tailor.

Enlight Media had success with So Young and American Dreams in China, while Le Vision Pictures earned fame with its Tiny Times series.

"Producers dependence on blockbusters became stronger than in the previous year, and medium-budget productions fell in numbers compared to 2012, which is not healthy for the companies themselves or the industry," Peng said.

Medium-budget productions are usually genre films and, in Hollywood, an individual studio would produce 16 to 20 such films every year, a scale that brings stable profits to the studio, Peng said.

In contrast, high-budget films come with high risk and take up too much of the capital and resources of a studio, making it more susceptible to market uncertainty and less capable of fostering new talent on its filmmaking crews or developing new subjects for films, according to Peng.

Moreover, for emerging studios like Le Vision Pictures, which was established in 2011 and made it to third place on the list last year, its advantages haven't been fully exploited due to the studios' lack of quality content.