China to overtake US box office next year: PwC Outlook 2016

As early as next year, China’s cinema box-office is expected to overtake the US for the first time, said Oliver Wilkinson, managing director of strategy at PwC Singapore.

China’s box office revenue grew 49 percent last year to $6.3 billion and is expected to grow to $10.3 billion next year. In comparison, the US is expected to slip from $10.3 billion in 2015 to $10 billion next year.  

China’s growth, added Wilkinson, is not only due to major US blockbusters targeting China, but also thanks to “huge rollouts of domestic Chinese films and better quality domestic TV”.

The report has found that Hollywood’s share of the Chinese box office has slipped to 38.4 percent in 2015 (from 45.5 percent in 2014).

The prime reason however that revenue is continuing to increase very sharply is that new cinemas are opening at a ferocious rate across the region, especially in China. In early 2014 there were reported to be just under 19,000 screens in the country and by the end of 2015 that number had shot up to almost 32,000.

Cinema box office growth in China

Overall, box office revenue across Asia-Pacific will be $21.11 billion in 2020 up from $13.7 billion in 2015.

Cinema advertising goes up

As a result, cinema advertising will likewise continue to rise, although will continue to be “only a fraction of box office revenue”. It is expected to reach $616 million in 2020, up from $460 million in 2015, at a 6 percent CAGR, but despite this growth its share of total cinema revenue will continue to fall.

Theme parks to generate more revenue

An increased interest in the movies has paved the way to the success of film-theme theme parks. According to PwC, Warner Bros has been enjoying notable success with its The Wizarding World of Harry Potter theme park in Japan. While, Universal Studios Japan in Osaka attracted 11.8 million visitors in 2014.

Teething problems aside, there has been considerable interest in Shanghai Disneyland and the report’s authors confidently expect more film studios to launch theme parks in China.

Live events rise and rise

The success of digital distribution platforms such as Spotify and Netflix has sparked fears that people will abandon experiences and “hunker over their smartphones”. These fears have proved completely unfounded, said Wilkinson.

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Total live music revenue in Asia Pacific was reported at $2.86 billion across the region in 2015, up from $2.40 billion in 2011. By 2020 the live market is forecast to be worth $3.50 billion, rising at a 4.1 percent CAGR.

This is in happening as digital revenues is expected to overtake physical recordings by 2018 in the region. By 2020 digital recorded music revenue will be $3.46 billion (rising at a 7.9 percent CAGR), and it will account for some 63 percent of total recorded music revenue. Physical recorded music revenue in 2020 is forecast to be $2.07 billion, shrinking at a -9.3 percent CAGR.

“Just as cinema is doing well, people are choosing to enjoy content and entertainment in live groups,” he said. “Live events too are not tailing off, and are expected to continue to grow.”

Tomorrow: Adspend growth across internet, TV, mobile and print