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China's Christmas field workplace plummets 23% as cinemas drive costs to report highs

Moviegoers queue in front of advertising posters for Chinese New Year movies in Shanghai, China, February 1, 2022.

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BEIJING — Chinese consumer spending on films plummeted last week during the Lunar New Year holiday as cinemas hiked prices to record highs.

The seven-day holiday, which ended on Sunday, is usually the busiest week of the year for new film releases in China, the world's biggest box office. Eight Chinese-made films debuted this year.

However, according to online ticketing site Maoyan, the holiday's total box office of 6.04 billion yuan ($951.1 million) represented a 23% decline compared to 7.84 billion yuan in the same period in 2021 .

The data showed that tickets were, on average, 8% more expensive this year than last year. The average price per ticket in a day during the holiday reached 56 yuan ($8.80), the highest price recorded since 2017.

"Many consumers complained that it was unaffordable for the whole family to watch a movie," said Gao Huan, general manager of Beijing-based consultancy Alvarez & Marsal. "Cinema-goers, especially those who are less willing to pay, have actually chosen to stay at home over going to the movies."

Covid-related travel restrictions and quarters lockdown have weighed on Chinese consumer spending over the past two years.

Total tourism consumption during the holiday was 289.12 billion yuan, down 3.9% from 2021, according to the Ministry of Culture and Tourism, well below pre-pandemic levels and about 56.3% of tourism consumption in 2019, as data show.

Ting Lu, chief economist for China at Nomura, pointed out that this year's decline in the 2021 Christmas box office, when the Lunar New Year coincided with Valentine's Day, starts from a high level.

Covid-related restrictions and generally weak consumer demand made it even harder to keep ticket sales so high, he said in a note. "Anecdotal evidence shows that in anticipation of much weaker sales than last year, cinemas may have deliberately increased ticket prices to offset the expected profit drop."

In addition to a global increase in inflation, prices for consumer goods in China have risen slightly. But a roughly 1% year-over-year increase in consumer prices last year is well below the 8% rise in movie ticket prices.

This year's Lunar New Year box office of around 6 billion yuan was slightly higher than the 5.9 billion yuan recorded for 2019, the data showed. Cinemas were essentially closed during the 2020 holidays as seven films delayed their releases due to the coronavirus pandemic.

Films made in China dominate

Two years into the pandemic, China's cinemas have had to deal with temporary lockdown measures and changes in film availability.

Films made in China have increased their share of the local market thanks to government policies restricting the distribution of foreign-made films while supporting domestic titles. The gap widened during the pandemic, with the share of foreign-made films falling to about 16% since 2020, according to official Chinese data, from well over a third in previous years.

The increasing share of locally produced content could negatively impact China's overall box office, Gao said. "Theatres have a lot more pressure to break even," she said, noting they might have to look for other revenue streams or raise ticket prices.

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The top-grossing film during last week's holiday was the newly released Watergate Bridge, a sequel to last year's top-grossing film about Chinese soldiers fighting American troops during the Korean War.

Another new release, a Chinese comedy titled Too Cool to Kill, ranks second by gross box office, according to Maoyan data.

Foreign films that made it into Chinese theaters last year included Fast and Furious 9 – which ranked fifth at the box office nationally – as well as Dune and the James Bond film No Time to Die. . But no Marvel superhero film has come to China since 2019.

The China Film Administration announced in November that it aims for domestic films to take at least 55% of the local annual box office and for about 50 Chinese-made films to gross at least 100 million yuan a year.

— CNBC's Sarah Whitten contributed to this report.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of "F9" and owner of Rotten Tomatoes.

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