China Box Office: A Record Set, A Scandal Brews, and Accounting Rules Change

This post comes courtesy of our content partners at China Film Insider.

After three chaotic days of five wide-release Chinese New Year (CNY) films jockeying for the hearts and wallets of Chinese moviegoers, a clearer picture of the holiday’s box office winners and losers has begun to emerge.

Journey To The West: The Demons Strike Back (西游伏妖篇)
Journey To The West: The Demons Strike Back (西游伏妖篇, pictured at top), a sequel to the massive 2013 hit Conquering the Demons, was quickest out of the gate, and the combination of Tsui Hark as director, Stephen Chow as producer, and a story familiar to Chinese audiences of all ages propelled the comedy to an all-time single day record at the box office on its opening Saturday and a three-day total of RMB 728 million (USD 105.9 million).

After last Saturday’s smashing debut, local pundits were quick to draw comparisons to The Mermaid. After three days, however, The Demons Strike Back is already lagging behind The Mermaid’s RMB 770 million (USD 117.4 million) and that difference will continue to widen throughout the rest of the holiday.

In the end, The Demons Strike Back will likely gross just over half of The Mermaid’s RMB 3.39 billion (USD 526.8 million) total.  The biggest culprit? Audience reception and word of mouth. Culling together average user ratings from China’s major online film portals (Douban, Maoyan, Gewara, and Mtime), The Demons Strike Back scored just 6.9/10 compared to The Mermaid’s 8.0/10.

Additionally, against its own competition, The Demons Strike Back’s user scores average close to the bottom of the year’s CNY wide releases (See chart above), and that will cause the film to lose its dominant screen share in the coming days.

And while no one should scoff at a final tally in the vicinity of RMB 1.8 billion (USD 260 million), after record-setting pre-sales and opening day numbers, The Demons Strike Back could have reached greater heights with a more positive reception.

Kung Fu Yoga (功夫瑜伽)
Conversely, the Jackie Chan-starring Kung Fu Yoga (CFI review here) is on the rise thanks to surprisingly strong word of mouth. A USD 65 million China-India coproduction, hoping to capture both markets, Kung Fu Yoga debuted in third place on its opening Saturday behind both The Demons Strike Back and the freewheeling kung fu comedy, Buddies In India, but quickly leapfrogged to second place and is projected to take the top spot on Tuesday and throughout the rest of the holiday. The film grossed RMB 390 million (USD 56.7 million) in just three days.

Unfortunately, Kung Fu Yoga’s coup looks like something to file under “all is maya,” as its reported earnings are drawing accusations of fraud. Data from Maoyan’s real-time box office tracking app indicates Jackie Chan’s Sparkle Roll (Yaolai) Cinema Line, which operates 49 cinemas across 19 Chinese cities, allotted nearly 40 percent of Saturday’s showtimes to Kung Fu Yoga, hugely disproportionate to its 17 percent nationwide average. This manipulation in box office receipts follows hot on the heels of Chan and Sparkle Roll’s recent collaboration on Railroad Tigers, which exhibited similarly shady numbers.

Last March, after the box office scandal involving the distributors of Ip Man 3, Chinese officials threatened a swift crackdown on subsequent parties caught in the act, but the emergence of evidence pointing first to Wanda and now Sparkle Roll rigging the system without suffering even a wrist-slap, creates the possibility for future such manipulation and calls into question the whole system’s integrity.

Even more baffling in Sparkle Roll’s (and, by association Chan’s) decision to place their film under this kind of spotlight is the fact that Kung Fu Yoga would have likely overtaken Buddies In India and The Demons Strike Back even without deceptive measures.

Buddies In India (大闹天竺)
In third place and CNY’s biggest loser by far, Buddies In India (reviewed here) has been well-thrashed by moviegoers and critics for overt sexism and shallow cultural stereotypes, as well as first-time director Wang Baoqiang’s ineptitude behind the camera. Heavily subsidized tickets and Wang’s devoted following in the lower-tier Chinese cities thrust Buddies into a second-place debut on Saturday, but the film’s standing has plummeted due to toxic word of mouth, and will likely end the CNY holiday behind even the local animation, Boonie Bears: Entangled Worlds. Currently, Buddies In India stands at RMB 382 million (USD 55.5 million).

Duckweed (乘风破浪) and Boonie Bears: Entangled Worlds (熊出没·奇幻空间)
The holiday’s biggest winners both find themselves unsurprisingly at the bottom of the box office charts after their first three days in cinemas, but positive word of mouth will catch up and give Duckweed and Boonie Bears far more powerful legs than the films currently sitting atop them. Through the third day of the Chinese New Year, Duckweed grossed RMB 183 million (USD 26.6 million) and Boonie Bears earned RMB 160 million (USD 23.2 million).

China Debuts New Box Office Reporting System

Easily as important as the performance of any of these films, while the box office exploded over the weekend, Chinese film officials quietly announced major changes to the national box office reporting system.

From Saturday, January 28 onward, all box office grosses will now include the RMB 3-5 service fee that is charged to consumers for each ticket purchased online.

Such a sweeping change will not only cause headaches for beleaguered number crunchers such as this writer, who will henceforth need to draw box office comparisons between current films and ones released using the old reporting system, it is sure to break the brains of Hollywood studio accountants, because the added box office revenue from the service fees goes directly to third-party ticketing apps and will not be included in their 25 percent revenue-sharing agreement. (Yeah, no. Email me and I’ll walk you through it.)

Officials believe this shift will help realign the discrepancy between last year’s total box office growth (3.7 percent) and the larger growth in moviegoing attendance (8.9 percent), a difference compounded by the drop in average ticket prices due to heavy subsidies. Skeptics, however, suspect the government of attempting to pad slowing box office growth and create the illusion of a robust industry (thinking in this direction also points toward a possible reason why Wanda and Sparkle Roll are not penalized for inflating their numbers).

As a quick illustration: last Saturday’s total daily box office hit a record RMB 755 million (USD 110 million) before taking into account online ticketing service fees, but with fees included, the count would have climbed to RMB 797 million (USD 116.1 million).

That means RMB 42 million (USD 6.1 million), or 5.5 percent of the daily total, went straight to the coffers of online ticketing apps. Distribution and production companies will receive nothing out of that pot.

Regardless, for now, some local outlets have started reporting grosses both with and without the additional service fees until the old system has been completely phased out, and CFI readers will continue to see grosses without service fees included unless specifically noted.

Images: edn.vn, China Film Insider