Screen villains

More calls to crack down on box office fraud

Tang Wei

Doesn’t add up: Tang’s Tale of Three Cities lost out to patriotic flick

If something is too good to be true, it generally is. So last August, when a propaganda flick that received a less than glowing reviews came to dominate the Chinese box office, many were suspicious. Even more so because it was showing on fewer screens than other blockbuster films in the same period.

The film in question was The Hundred Regiments Offensive, a military epic produced by a group of state-owned studios and investors. It scored only 4.5 stars out of 10 on the popular film review site Douban but managed to rake in over Rmb410 million ($63 million) in box office receipts. The film’s backers have cited patriotism as being key to its appeal. After all, Regiments was released in the same month that China was celebrating the 70th anniversary of Japan’s defeat in World War Two (see WiC295).

The numbers nevertheless looked odd. The romantic drama Tale of Three Cities, which starred actress Tang Wei, was released in the same window as Regiments, with about 7% of screenings across the country. However, Tale of Three Cities took just 1.54% of box office sales. Regiments was said to have taken 30% of total ticket sales in China during the same period from just 10.12% of screen showings.

“How does a film that has such negative word of mouth and is being shown on so few screens manage to become the ‘unexpected’ hit in the box office?” Tencent Entertainment asked sarcastically.

Still, the news was hardly surprising given that Chinese cinema is notorious for dirty dealings. The Chinese media had, for example, given a lot of coverage to cinema operators’ weird ticketing practices back in 2011 when The Founding of a Party was released to commemorate the 90th anniversary of the Communist Party of China. Moviegoers discovered that tellers would only sell them tickets to the propaganda film but then manually write the name of whatever movie they wanted to see on the same ticket.

And last week, Huxiu, a tech portal, ran another in-depth exposé on the industry. Citing insiders, the article goes as far as to suggest that cinema operators have “stolen” as much as one tenth – or Rmb4.4 billion – of the country’s total box office receipts last year.

Some simple maths first. About 8.3% of cinema ticket sales go to the government as taxes; cinema chains, meanwhile, get to keep 53% and what’s left goes to producers and distributors. (According to Huxiu, Hollywood blockbusters currently get a maximum of 25%, but often in reality much less thanks to rigging by cinema owners.)

The most straightforward way to embezzle sales, says Huxiu, is by not logging them at all. It is commonplace for cinemas – citing problems with the ticketing software – to offer handwritten tickets to moviegoers. This way, the sales don’t even get registered in the system, meaning they aren’t reported to the government, distributors or Hollywood studios.

In fact, some unscrupulous cinema bosses have two different ticketing systems: one that is the government-approved system, the other using their own software. This way, the theatre can hide the entire transaction if they use their own system. And as the ticket looks legitimate it doesn’t raise red flags with government officials.

Theatre owners might also bundle the tickets with popcorn and fizzy drinks. Even though an agreement on the minimum ticket price is usually put in place, it is entirely up to the cinemas to determine how the costs are split between the tickets and snacks in the bundle. So for a combo they can set the price for the ticket low (at the industry’s minimum price) and allocate the rest as food and beverage sales, which goes straight to the cinema operator’s bottom line.

“One ticket and one bucket of popcorn sell for Rmb80, but theatres said the film ticket only costs Rmb30 and the other Rmb50 are for popcorn. How can you reason with them?” laments Huang Ziyan, vice president of Le Vision Pictures.

Despite such antics, many studios and distributors find themselves having to put up with it because they are at the mercy of the cinema bosses, who ultimately decide the number of screens that are allocated for a film. “We distributors have to have a good relationship with theatres in the long-term and we are not law enforcers, so we cannot do that much to fight them,” adds Huang from Le Vision. “The only thing we can do is to close one eye.”

The government, meanwhile, has repeatedly promised to better regulate the industry. Last year the the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) instructed its movie regulator to check ticketing systems and forbid cinemas to use unapproved software.

With China’s global box office share set to overtake the US as soon as next year, the stakes have become much higher. That’s why in a high-level meeting this month, SAPPRFT again vowed that it will use “iron fist” measures to crack down on box office fraud.

That said, many believe SAPPRFT is better at regulating script content than ticket sales. And the crafty cinema bosses tend to be one-step ahead. “When it comes to their own self-interest, Chinese people’s creativity knows no end,” Huxiu mocks.

Still, China needs to get rid of such dodgy practices in order to promote a vibrant film industry, it argues. “Only a healthy film market can bring about more and better-quality films. Regulation-wise, there needs to be stricter law and regulations to police the cinemas,” says the portal.

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