China’s movie theaters thrive as economic gloom descends. Hollywood is missing out

By Laura He and Carina Cheng, CNN

Hong Kong (CNN) — China’s economy may be in the doldrums, but its movie theaters have enjoyed a record-breaking few months as young women flocked to see home-grown films.

Box office receipts totaled 23.44 billion yuan ($3.2 billion) between June and September, the highest amount for that period in history, according to data from Dengta and Maoyan, China’s two major box office tracking apps.

The boom was mainly thanks to a red hot summer. Ticket sales for the traditional high season between June and August soared to a record 20.6 yuan ($2.8 billion), smashing the previous summer peak of 17.8 billion yuan ($2.4 billion) recorded in 2019.

More than 570 million people flocked to cinemas in the past four months, and most of them were women.

For the top five movies, 61% of the viewers were women, the highest percentage on record, according to Dengta, which is backed by Alibaba (BABA). About half of the viewers were between 20 and 29 years old.

The box office record is a rare bright spot in China’s economy, which has lost momentum after an initial rebound when consumers emerged from three years of draconian Covid-19 curbs. History shows that movies tend to thrive during tough economic times, as they offer escapism for a relatively small price, analysts said.

“Consumption is way down [in China] for things like housing or cars,” said Stanley Rosen, a professor of political science and international relations at USC’s US-China Institute.

“But they can afford to go to the movies. And that takes your mind off some of the depression,” he said.

China’s gross domestic product grew just 0.8% in the second quarter, compared with the previous three months. The all-important property market, where Chinese households store 80% of their wealth, has continued its slump. And people are hoarding cash amid rising uncertainty about the future.

Rosen drew an analogy between the situation in China and the United States during the Great Depression in the 1930s, when the Americans also “had no money,” but box office takings were tremendous for films featuring stars like Fred Astaire and Ginger Rogers.

Pure escapism

While “Barbie” and “Oppenheimer” have dominated the global box office in recent months, the most popular movies in China were all homegrown films: crime thriller “No More Bets,” romantic mystery “Lost in the Stars” and epic fantasy “Creation of the Gods I: Kingdom of Storms.”

Perry Peng, a 23-year-old gallery assistant in Shanghai and a cinephile, says she’s been “amazed” by the quality of Chinese films she’s seen over the summer.

“We’ve not seen such excellent domestic movies for a long time. We are surprised they can be that good,” she said, adding that she’s also enjoyed “Oppenheimer” and “Barbie,” which was distributed by Warner Bros, like CNN part of WarnerBros. Discovery.

Her favorite this year was “Creation of the Gods I: Kingdom of Storms,” a martial arts fantasy based on 16th century Chinese fiction.

“I’ve been a big fan of American and European movies,” Peng said. “But I suddenly felt China seemed to have its own Lord of the Rings.”

She says that her generation, born after 2000, has increasingly become the “main force of consumption.” And there has been a shift in what and how they consume.

“We want to live in the moment, not thinking about the future,” Peng said. “Some of us don’t even want to make social security payments. We just want to enjoy life while we can and seize the day.”

Pency Peng, Perry’s sister who works in the finance industry in Hong Kong, said movies are cheap and allow her to forget about her troubles even if just for a little while.

“Things like houses and cars are really too far away for us, or it feels like they are something that’s beyond our control,” she said. “Our lives are already so miserable, why can’t we enjoy things that make us happy?”

The sisters live in some of China’s most cosmopolitan cities, but analysts say it is the audiences in smaller cities and towns that have grown the most this year.

“The economy is in trouble,” said Xuguang Chen, a professor at the School of Arts at Peking University. “From the consumer’s point of view, going to a movie is more suitable for the consumption of low- and middle-income audiences.”

The improved quality and range of movies offered this summer have helped, Chen said.

“No More Bets,” the biggest summer money maker with 3.52 billion yuan ($480 million) in sales, has an anti-fraud theme that resonated with lower-income audiences, he said.

Powered by women

That China’s recent box office boom has been driven by women is surprising given the gender imbalance in the country. The ratio of men to women was 104.7 to 100, according to 2022 statistics.

The highest percentage of women viewers — 67% — was recorded by “Lost in the Stars,” which had a feminist message and reflected real-life events.

“Men may outnumber women in China, but the latter group’s increasing spending power justifies further investment aimed at serving them,” Kevin Tran, a senior analyst at Morning Consult, wrote in a report last month.

“With Hollywood currently struggling to reclaim the box office dominance in China it previously relied on, studios would benefit from appealing more to the country’s women,” he said.

So far this year, American films accounted for only about 14% of China’s box office, the second largest in the world, according to CNN calculations based on Dengta data. If that trend persists until the end of 2023, it would mark Hollywood’s lowest annual share in more than a decade, excluding the pandemic years.

Hollywood’s share has gradually fallen in recent years due to tightening censorship, worsening bilateral relations, rising nationalist sentiment fueled by state propaganda as well as competition from locally produced films.

Tran said international studios should consider targeting Chinese women more heavily in marketing campaigns for romantic comedies, musicals and other genres they favor.

“In the year ahead, some studios may become more bullish on catering to female moviegoers given that fewer women in China are marrying, likely leaving them with more time for leisure activities like moviegoing,” he added.

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