Cinema in China: The ups and downs of a rollercoaster ride

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Summary

Since the film market was liberalized some 20 years ago, Chinese cinema has built something remarkable, growing to become the second-largest box office market and the largest market by number of cinema screens. The year 2020 changed the path of growth, and box office has been variable since. What is driving the market, what else is going on in the market to leave it down in 2024 by 23% on the previous year, how did Hollywood lose its way, and what does 2025 have in store for China?

Factors underpinning the market decline in 2024

Underlining the market volatility, in 2025 the movie Ne Zha 2 has become the first film in history to gross more than $1bn in a single market (in this case China) and now stands at $1.4bn (CNY10.2bn), 17th in the all-time worldwide box office rankings (with further box office to come) and ahead of global hits such as Deadpool & Wolverine and The Super Mario Bros. Movie. This means that one film has already earned nearly a quarter of the whole market’s result last year, an encouraging sign for the year as a whole. It also became the first movie to attract 200 million views, according to CCTV.

Returning to 2024, the main factor behind this steep annual decline is the poor summer period in 2024, which saw a 44% drop over the previous summer. China’s cinema market seems to be struggling to adapt to evolving tastes; the dominance of comedies is a clear indication of that. Comedy seems to have been the mainstay of the market last year, and the big budget films have underperformed.

Figure 1: Box office performance in China Source: Omdia

It is also true though that US films have less appeal for Chinese audiences than before COVID-19. Tastes have changed across the board, it would seem, and the political hostility between the two countries may also be playing a part as censors have been demanding more changes since 2020. It is worth noting that China Film Bureau handed over the role of censor to the party structure in 2018, and though US producers would make changes to accommodate the Chinese market in the mid-2010s, this attitude had hardened by 2022, when Top Gun: Maverick was refused entry into the market after the film’s producers declined to do so.

Hollywood’s market share was 21% in 2024, but it used to take 35–40%. Keeping US films out, as happened during the pandemic, to favor Chinese films may work in times of strong local product, but breaking the habit of watching major US blockbusters has partially backfired: when the local films do not perform, the depth of product isn’t there to complete the natural market level. The revenue earned by local films dropped 27.3% in 2024. There were 100 fewer local releases into the market in 2024 than in 2023, which was a contributory factor in the poor year for cinemas and domestic movies. Total domestic releases dropped back to just over 500 in 2024, 85% of the total number of first-run films released but down from 612 in both 2023 and 2019. One key difference between now and a decade ago is that Chinese films are now regularly topping the box office, partly explaining the decline of Hollywood’s market share in the country. In 2023, all of the top 10 movies were Chinese, and in 2024, 8 of the top 10 were Chinese, the two outliers being Godzilla x Kong: The New Empire (US) and The Boy and the Heron (Japan).

As foreign films are kept out, the ability of local filmmakers to learn from them is lessened. This may not matter now, because many Chinese films have high production values. China has successfully built up a production sector in the past decade by learning from others, whether through collaboration on projects, acquisition of companies and talent, or coproduction with outside producers. Hollywood is no longer making movies for the Chinese market, which was a politically tricky endeavor, and Chinese investment in US movies has dried up a once fertile cross-pollination. In October 2024, Legendary Pictures bought out the 50% share that Wanda Group had had in it since 2016. E-commerce giant Alibaba (which in 2016 acquired a stake in Spielberg’s Amblin Entertainment) has ceased direct investment in Hollywood movies (such as with Mission Impossible – Rogue Nation). For its part, Tencent acquired IM Global in 2016 and directly invested in movies (e.g., Men In Black: International) but was encouraged to sell its stake in IM in 2022 and also pulled its investment in Top Gun: Maverick, reportedly for political reasons.

The rise of Her Story – driving Chinese cinemagoing

It is not all going badly: in December 2022, Her Story was released, the first film in China to be collectively made by women filmmakers. In summer 2023, women made up 61% of the audience for the top five movies in China. These films were of differing genres—crime thriller, epic fantasy, and  romantic mystery among them. In 2024, 58% of Chinese cinemagoers were women (up from 51% in 2019), even though there are more men than women in China, and the two leading films, Yolo and Successor, were both aimed at women. Chinese producers seem to be tapping into what women want to watch at the cinema in a way that US studios, and indeed others, are not. Women are more social than men, building social groups more effectively, and the core of cinema is the social importance of going out; these two factors are being missed by many current films. This is a positive trend within the market, but it can also be a double-edged sword in that the prevalence of women cinemagoers means there is a fall-off in interest from men, and that is unsustainable over a longer period than a year or two. The market needs better balance than that.

Film producers need to reconnect with younger audiences

In the same demographic vein, one of the more worrying trends for cinema in China is the desertion of its venues by younger audiences. In 2018, cinemagoers under 25 made up nearly 40% of the audience: in 2024 the equivalent figure was 21% (according to a recent report from China Film Association). More specifically, from 2018 to 2024, the proportion of ticket buyers aged 20–24 in China dropped from 30% to 17%. At the other end of the age scale, over-35s were only 20% of the market in 2018 but were one-third of visitors in 2024. One reason may be that, as stated already, there are fewer Hollywood action movies, which are often aimed at young men, coming into the market. Another reason is that the unemployment rate among young people is at 20%, which leaves this key audience with less disposable income for cinemagoing. This statistic is symptomatic of the wider slowdown of the Chinese economy, which is also an underlying factor behind cinema’s poor year. It has proved more recession resistant than many other sectors, but it isn’t immune to these pressures. In these straitened times, the movies need to get people out of their homes and spending money.

It may also be that as a new medium, cinema has not become an ingrained habit among younger people, and their attention has moved elsewhere, especially as they perceive that cinema content is not aimed at them. For these younger viewers, new formats may be more attractive, notably the rapidly rising microdramas. These are short-form content, 1–15 minutes in length (usually at the shorter end), and are consumed on a mobile phone for a subscription fee or in-app tokens to unlock new episodes. They are in line with the shorter attention spans of users of TikTok and other apps and the move away from longer formats such as feature films and are very popular with young audiences, often going viral once they drop. A recent report puts the market for these short-form programs at $6.8bn in 2024, up from $5bn in 2023, even after tightened rules on permitted content by the authorities. Production cycles are also short, so new series and episodes can be launched regularly.

Cinema screen numbers are still growing

The screen base, though increasing by 4,600 screens in 2024 to just over 90,000, is approaching the government’s 100,000 target and therefore saturation. The screens now being built are often in smaller towns and cities around China, and they are smaller and with lower ticket prices than those in the major cities. It is also unclear whether some screens are still inactive after the pandemic. This underlines that the days of high growth for China’s box office are probably past, and a more modest pace can be expected.

The longer-term prognosis depends on the ability of the market to adapt to these changing conditions, which in turn depends on how much of a market it is allowed to be. Chinese feature production levels dropped significantly in 2024, which will have an impact on releases for the coming two years. Much therefore depends on whether producers can make films for younger audiences again and cinemas can get people, especially those financially struggling younger audiences, back to perceiving value in a standard cinema ticket (not just premium, which is performing better) and can recreate the cinemagoing habit.

The Chinese film industry has built something remarkable from scratch in 15 years, but domestic production levels and success at the box office are not enough to fuel the entire market. It will require other successful movies, whether that is Japanese anime, Indian titles, or Hollywood blockbusters, to achieve the full market potential that it deserves after the effort required to get here, and the market structures need to accommodate this reality. The movie world at these rarefied levels is interconnected: Hollywood needs China and overseas markets to come back for its movies, and Chinese cinema needs Hollywood movies in order to grow further and achieve its potential.

Appendix

Further reading

China Cinema Market Update – 2024 (September 2024)

Author

David Hancock, Chief Analyst, Media & Entertainment

[email protected]