5,328 Chinese Films and TV Corporations Go Out of Business
Sat, April 10, 2021

5,328 Chinese Films and TV Corporations Go Out of Business

A total of 5,328 Chinese language movies and TV firms have gone out of business as they revoked their enterprise registrations this year. / Photo by: Yulia Grigoryeva via Shutterstock

 

The impact of Covid-19 on the global film and entertainment industry may pale in comparison to the threat it poses to human life, but it still has a big effect not just on the industry but on the people whose livelihoods rest on film projects. Even the already lucrative and immense Chinese film industry was hit when major releases were delayed and movie theaters were closed.  

Covid-19 and its impact in the film and entertainment industry

A total of 5,328 Chinese language movies and TV firms have gone out of business as they revoked their enterprise registrations this year. The number is near twice the total 2019 tally. This is according to media outlet Vox.

Cinemas have been shut since the first month of the year with no revenue streams and high expenses. Some companies have also started to lay off their staff. The largest multiplex cinema CGV, for instance, has laid off about 30% of its employees.

From January to February, there were only less than 8,000 registrations of companies that are related to the movie theater industry, a 25% decline compared to the same period last year. The country’s national box office is also close to zero. Even the pre- and post-production of many ongoing projects were delayed and film crews have suspended their work due to the pandemic.

A shift to digital

Administrative body State Council-backed paper Economic Daily advised that the near-term solution would be to shift towards digital. “It is necessary to attempt to establish online virtual experiences” to deal with the risks in the TV and film industry, it said. The shift to a digital platform is believed to continuously improve online satisfaction and participation.

Responding to the news, a top comment on Chinese microblogging platform Weibo stated that the only ones that will be affected are those in the mid-stream production and not the big stars upstream. The comment also pointed out how the downstream (cinemas) will encounter privations and hardships. Unemployment is also to be expected in all areas of the industry.

 

A top comment on Weibo stated that the only ones that will be affected are those in the mid-stream production and not the big stars upstream. / Photo by: Casimiro PT via Shutterstock

 

State Council’s official announcement

State Council, the chief administrative authority of the People’s Republic of China, has formally announced that leisure and entertainment venues, including game halls or cinemas, should remain closed for now. The World Health Organization has warned that the influx of large numbers of people to mass gathering could give rise to public health risks. “All countries with community transmission should seriously consider postponing or reducing mass gatherings that bring people together and have the potential to amplify disease,” WHO states.

Major cinema chains in the country, such as Dadi and Hengdian, have paid the salaries of their employees but others may only manage to pay about 70% of the minimum wage. Instead, some advertisements promote the rental of empty cinema halls as a backdrop of those who want film-themed wedding photoshoots. A local media station has reported that renting the theater in a second-tier city could cost $85 for the whole day or $14.2 for an hour. It shows how theater managers are fighting for the survival of their businesses, too.

Box office revenue in China

In 2012, the box office revenue of the country amounted to 17.07 billion yuan and it grew to 21.77 billion the following year. In 2017, China’s box office revenue surpassed 29 billion yuan and, in the following years, 44.07 billion (2015), 45.71 billion (2016), 55.91 billion (2017), 60.98 billion (2018), and 64.27 billion (2019). As of January 2020, 1 yuan was equivalent to approximately US$0.14 or €0.13. The survey was conducted in the China region by database company Statista.

China became the second-largest film market in the world in 2018 as the volume of movie ticket sales grew. Among the most successful movies in China last year were Pegasus with revenue of 1,726.4 million yuan, The Bravest (1,703.18 million yuan), Better Days (1,556.18 million), and Fast & Furious Presents: Hobbs & Shaw (1,434.24 million).

 

 

Ticket sales, by performance type

The entertainment and film industry represents one of the most promising and exciting fields in China for the future of Foreign Direct Investment in the country. In 2013, theaters accounted for 38.7% of the overall ticket sales in the entertainment industry, followed by touring performances (36.3%), large-scale music festivals (12.6%), and stadiums (12.3%). This is based on the market overview of Brandeis School of International Business in Massachusetts and professional services firm Dezan Shira & Associates.

China’s film and TV industry: contribution to the domestic economy

Key findings from Oxford Economics moreover show that the Chinese film and TV industry made a direct contribution to the gross domestic product of the country worth 312 billion yuan in 2017 alone. The components are film exhibition (20 bn yuan; 6%), film production and distribution (14 bn yuan; 4%), other TV services (115 bn yuan; 37%), free to air TV broadcasting and in-house production (80 bn yuan; 26%), cable TV broadcasting and in-house production (43 bn yuan; 14%), IPTV (11 bn yuan; 4%), and over the top (29 bn yuan; 9%).

In the same year, the film industry in China supported 262,000 jobs, including the 81,000 in film production and distribution and 181,000 in film exhibition. The key driver of growth in the film industry is cinema attendance. A total of 1.62 billion cinema tickets were sold in 2017 compared to the 1.37 billion cinema tickets in 2016.

New technologies have influenced the way television media is consumed. Internet Protocol Television (IPTV) includes the distribution of traditional TV content over the internet. Film and TV attractions are drivers of tourism growth in the country in the past two decades. Many TV programs and film locations became famous tourist destinations in the country.

The road ahead of the TV and film industry in the country may not look all bright with more people binge-watching during the lockdown in China. After the coronavirus hiatus, though, some TV productions and films are already making their partial restart. Not all of them are already back at work but they can restart. Some people in the industry have also used the quarantine time to finish or rewrite their scripts for most of the Chinese shows so they can gradually get back on track.