Box Office Manipulation on the Decline

One of the banes of the film production experience here in China (as well as for those foreign studios that have a stake in the revenue of their imported films) has always been that even after all the approvals and permits have been issued – and even after a movie has seen a successful release – producers could not be sure that the box office data they were receiving (and a correct share of the profits, therefore) was accurate. Over the years, there have been reports that theater operators have employed different ways to adjust the data, including selling tickets for one movie but leading patrons to another, creating handwritten ticket, or simply not reported the data from their machines.

This major and legitimate concern has informed many a co-production contract, ordinarily prompting the foreign side to seek most of their recoupment from securing the rights in territories outside of China, while completely foregoing a revenue share of their picture in China.

However, a quiet revolution in this sector of the industry has been underway recently. And on January 24th, SAPPRFT issued a circular entitled, “Technical Requirements and Methods of Measurement for Cinema Ticket Management System,” which implements a new standard on the technicalities of managing cinema ticket sales aimed at stopping tax avoidance and the falsifying of movie ticket numbers.

As if to underline the point, in late January, the China Film Association and the China Film Producers Association announced that 15 local movie theaters had been penalized for just such falsification of the numbers. All of the 15 theaters were located in 2d- and 3d-tier cities, where much of China’s theater construction boom and box office growth is presently taking place. In the theaters of China’s major cities, however, the software required to be used by the new rules is mostly already in place and there have been no recent reports of box office manipulation there.

The notice regarding the circular can be found on the SAPPRFT website here (Chinese), while the full text (PDF download) of the circular can be found here (Chinese).

http://www.sarft.gov.cn/articles/2014/01/24/20140124101054200117.html

http://www.chinafilm.org.cn/uploads/soft/140117/2_1140448191.pdf