China to overtake US in box office revenue next year: PwC

09 June 2016

China, and not the United States, is projected to be the leader in box office revenue in 2017, according to PricewaterhouseCoopers.

The PwC projections were released on Wednesday in the new "Global Entertainment and Media Outlook 2016-2020: A World of Differences" report.

If they materialise, it will mark the first time that the US has not been the top revenue driver in an entertainment and media segment. The Chinese box office is expected to generate $10.3 billion next year, while the US will be at $10.1 billion. By 2020, the Chinese box office will reach $15.1 billion versus just $11 billion in the US.

Matt Lieberman, director at PwC, told CNBC that it is seeing Chinese general audiences especially look for fantasy, animation and family-friendly movies.

China's restrictive media environment does pose some issues. It currently only allows 34 non-Chinese movies a year, meaning that Hollywood will have to compete with other global producers to get into the country.

As a result, Deborah Bothun, global leader in entertainment and media and US leader of entertainment, media and communications at PwC, said there will be more American media companies seeking out Chinese media partners to help them navigate the rules. Already the Chinese digital-savvy middle class has been attracting many US media companies, including Vice Media and The Hollywood Reporter.

"Because of the genre and content restrictions, there are opportunities to be on the ground, but (media companies) need to work with someone local to understand restrictions," Bothun said at an event for the report.

There's also the issue that the Chinese box office has a less generous revenue split with media companies than existing deals in the US.

China gave up 25 per cent of box office revenue in 2016, up from 13 per cent the year before, according to Lieberman. However, most deals in the US are around 50 per cent. There are also issues around tracking and auditing Chinese box office receipts, he added.

On the flip side, there's also a huge opportunity for Chinese media companies to expand in the US. As a result, Chinese media companies are seeking opportunities to expand into the US Lieberman said because of the country's rules on media, it has a wealth of family-friendly content it can export.

"Expats from China are driving the trend," Lieberman said. "They want to see content from China."


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