Can China’s Silver Screen Mount a Comeback Post-COVID?

Few industries have been as badly affected by COVID-19 as the film industry. Months of enforced lockdowns across the world have resulted in film shoots being suspended, projects cancelled, premiers delayed and cinemas shuttered, leaving Hollywood with a reported $20 billion black hole in its pocket.

In China, the world’s largest film market worth a reported $3.1 billion (200 billion yuan) in ticket sales, the effects of closed cinemas have been severely hard hitting. IMAX China Holding Inc, the Chinese arm of the billion-dollar entertainment empire, recorded half-year revenue of just $6.7 million, down 89 percent year-on-year, and an adjusted net loss of $15.5 million earlier this week. Overall ticket sales for the country have also reached record lows during the first half of 2020, dropping by a whopping 97.4 percent.

In such tough economic conditions, many cinemas had been forced to find innovative ways to make money, from becoming makeshift convenience stores, to studios for photoshoots. But over the past few weeks, Chinese cinema owners and goers have rejoiced as many have started to reopen again. On July 20 all cinemas in low-risk areas started opening their doors, and as of July 30, over half of all cinemas in the country were in operation, although all endearing to strict rules such as lower capacity and no concessions.

For industry experts however, the excitement of reopening has been tempered with fear as to the long-term impact of coronavirus on movie consumption in China, and whether new regulations to keep film goers safe will halt them from returning to the silver screen for good.

Changing film habits

Just like in much of the world, the way Chinese consumers watch movies has been changing in recent years, thanks to the influx of streaming services that have made watching movies from the comfort of your own home even easier than before.

The onset of coronavirus has accelerated this trend greatly, with the enforced lockdown in many Chinese cities coinciding with a jump in subscriptions for streaming platforms. According to a report released during this year’s Shanghai Internet Summit, China’s online-video viewers reached 850 million by March, accounting for 94.1 percent of all netizens in the country.

One of the biggest benefiters of this change was China’s own Netflix-like streaming platform iQiyi. The Baidu-backed company reported in May rises in first-quarter profits of 9 percent year-on-year to $1.1 billion (7.6 billion yuan), and membership revenue for the second-quarter increasing by 35 percent year-over-year to 4.6 billion yuan. Similar increases have been recorded by China’s other two big streaming services, Tencent and Youku, making film-industry experts worried that having sampled the convenience that streaming platforms provide, few would then want to return to a busy cinema.

There was also the question of how the new regulations put in place to protect viewers would affect attendance numbers. Although the 30-percent capacity could be argued as aiding in a more enjoyable cinematic experience, this, coupled with a lack of adjacent seating for friends and family, no snacks or drinks to enjoy with your movie and having to wear a mask for its entirety had cinema owners nervous they may not have been able to pull in the punters they most desperately needed.

How have sales been?

Despite the pessimism greeting the new measures, fans have been far from discouraged. According to Beacon, a movie-information tracing service operated by Chinese internet giant Alibaba, box office sales since reopening have been encouraging.

Between July 24 to July 26, cinemas across the country grossed nearly $13.3 million (93 million yuan), an increase of more than four times the total amount earned from ticket sales in the first three-days of reopening. Cinemas have consistently reported sell out-attendances thanks to screening a diverse selection of movies for eager film-buffs, including new releases, Chinese classics and former Oscar winning titles.

Pre-booking tickets, fewer services and social distancing has done little to deter visitors, with Beacon reporting nearly 4.2 million visits to cinemas during their first week of opening. Those who have attended the reopened cinemas have generally voiced their support for the new measures on social media sites, simply thankful that another piece of ordinary life has once again resumed.

Future less certain

For the cinemas themselves however, bigger tests lie ahead. Industry experts are worried that while an initial bounce in sales was to be expected, problems such as having to socially distance from family and loved ones at the cinema could take their toll on numbers. “Although a recovery is underway as the virus abates, a shortage of film supply and the ‘don’t sit next to each other’ policy will make it hard for the industry to rebound any time soon,” said Wang Dong, a Beijing-based independent industry analyst.

While adjacent seating should subside overtime, a shortage of films could be a very serious problem. While Chinese cinemas at the moment are surviving on nostalgia to appease fans by re-releasing classics, data for first week ticket sales showed Sony’s Vin Diesel comic book flick Bloodshot and Robert Downey Jnr’s animal talking fantasy Dolittle­—both new releases in China—grossed the highest ticket sales of any movie released.

With much of Hollywood still locked down as the US deals with increasing numbers of COVID-19 cases, few new American blockbusters are likely to be released in China this year, making it even more difficult for cinemas to reach the 45 billion yuan in box office sales they need to survive.

However, if Hollywood is unable to come up with the goods, there is every chance Chinese cinema could step in to fill the void. With a recent surge in cases subsiding over the country, filming has started to return, albeit with much smaller crews. These productions could offset the loss of any Hollywood blockbuster, with the quality and storytelling of Chinese productions vastly improving over the past few years, as demonstrated by the strong showings of domestically-made Wolf Warrior 2, The Wandering Earth, and animated classic Ne Zha—which all grossed more than Hollywood’s Avengers: Endgame at the Chinese box office.

The success and survival of China’s cinemas therefore is entangled with a number of issues, both domestically and globally. But if cases continue to fall in China as they are, and restrictions are relaxed, there is every chance China’s silver screens can mount a comeback worthy of any blockbuster by the end of the year.