|
 Ticket sales dropped 10 percent in the second quarter of the
year versus 2015, the first dip in around five years and a far
cry from stellar growth at the start of the year. July sales
slumped further, data from box office tracker EntGroup showed.
Stalling sales suggest belt-tightening by China's consumers is
hitting even small luxuries and everyday discretionary spending,
a concern for the Hollywood producers wooing China and for
Beijing as it struggles to stoke domestic demand.
"Cinema tickets are expensive and now there are lots more places
to find movies, so everyone is choosing to stay at home and
watch films online," said Zhang Fuling, 25, a service worker at
a state-owned firm in Shanghai.
Zhang is not alone: visits to cinemas fell 15 percent in July,
after growing more than 50 percent last year and at the start of
2016. Average ticket prices have also dropped to the lowest
level in more than five years.
Some analysts point to a recent crackdown on producers
subsidizing or buying up unsold tickets to inflate box office
sales as also weighing on the sector, though similar campaigns
failed to dent growth in 2014 or 2015.
With China's official data viewed with scepticism by some
economists, any indicators that may offer a snapshot of the
state of the real economy are eagerly watched.
Increasing domestic consumption is key to Beijing's efforts to
rebalance the world's second biggest economy away from its
long-running reliance on trade and government spending.
STAYING HOME
Stalling cinema ticket sales are not the only red flag that
consumers might be feeling the pinch.
Outbound tourist numbers are also set to flatline this year,
according to China National Tourism Administration (CNTA) data.
Outbound tourists - another bellwether of consumer strength -
had risen steeply for years and were up 16 percent in 2015.
"If you can rule out other drivers then you'd have to say it's a
sign that consumers are becoming more cautious," said Matthew
Hassan, senior economist at Westpac, referring to the weaker box
office and tourist numbers.
Westpac's own China consumer sentiment index fell in July.
"Aspects of the survey around job security, around savings
behavior do look a lot more conservative, and it may be that
there has been a budgetary tightening in the consumer sector,"
said Hassan.
Chinese retailers have also cut staff and seen inventories pile
up, luxury sector growth has dried up, and fast-food giants such
as KFC-parent Yum Brands Inc and McDonald's Corp are grappling
for growth.
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BOX OFFICE BUBBLE?
Cinema ticket sales have a history of resilience even in the face of
slowing economic growth. The U.S. box office boomed in 2009 after
the financial crisis as people looked to the silver screen for an
affordable two-hour escape.
In China, even as the country faced its slowest growth in a quarter
of a century, cinema ticket sales shot up at the start of the year,
with record numbers flocking to see movies like quirky romantic
comedy "The Mermaid", driving it to break China's all-time box
office record.
Industry insiders, however, said some of that growth was artificial,
driven by cut-price deals and producers buying up or subsidizing
tickets.
"Local film investors had been buying up lots of tickets for their
own films, stoking a film market bubble," said Song Yuxing, an
academic and independent film maker. He added slower economic growth
was also a drag on domestic films getting made.
Cinema operators such as Wanda Cinema Line Corp, China's largest,
have seen the impact. Wanda's box office sales were up 12.8 percent
in the second quarter of the year, versus 61.4 percent growth in the
first three months.
To be sure, the Chinese box office has raked in $4.5 billion so far
this year and is expected to soon challenge the U.S. market for the
crown of the world's biggest.
The United States has five times as many cinema screens per person
as China - leaving plenty of room for growth.
"The Mermaid", car-chase action flick "Furious 7", local hit
"Monster Hunt" and Walt Disney Co's animation "Zootopia" have seen
big returns in China over the last two years.
The dip could also be short-lived, with some saying there had simply
been a lack of recent blockbuster hits.
"A lot of domestic films lately haven't really gone down well and
lots of viewers feel there isn't much worth watching," said Wang Xin,
a box office worker at the Stellar International Cineplex in central
Shanghai. She added many people were also bringing ticket coupons to
get discounts.
"The trouble is, if there aren't any good films on offer then
getting a discount doesn't really make a difference."
(Reporting by Adam Jourdan and SHANGHAI newsroom; Editing by Alex
Richardson)
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