Movies Industrial Chain Behind the Box Office

Movies Industrial Chain Behind the Box Office

LUO Nan 1155081715

The phenomena in movie industry of “幽灵场”, which means screening movies without audience in midnight and “Faking Box Office Figures” are not strange for audience in China since 2015, when the movie “Monster Hunt” tried to break the global box-office record of “Fast & Furious 7” with these two cheating methods. Then, some other movies were exposed the scandal of cheating in box office, and more people became aware of cheating when they see the movie on the ticket is not the one they choose, or a movie being showed again and again in the midnight when few people will go to movies in that time. After “Monster Hunt”, “Ip Man”, “I Am Not Madame Bovary”, and many other famous movies were accused of cheating in box office, which already has become a special phenomenon in China. With the phenomenon appearing, the problem of industrial monopoly, especially the industrial chain monopoly, stands out.

The movie industrial chain is composed of four components, including production, distribution, screening, and post-market, where producers, publishers, and cinemas play essential roles in former three procedures, respectively. One unique situation in China is that the producer, publisher, and cinema can be one company. For example, Wanda can invest or produce a movie, and publish it to its own cinema, which means it can finish the whole procedure and control consumption chain by itself. This model can reduce a lot of cost, creating convenience and new profits at same time. Not only Wanda, many other big companies also join in the action of developing business to cover all parts of the movie industrial chain. For example, the China Film Group Corporation (known as 中影) was firstly established as a producing company, then it won the qualification to release movies and became the only company that could import foreign countries. Finally, 中影 developed its own theaters, holding four brands a 中影星美、中影南方新干、中影数字and 海南蓝海 and also buying shares of 北京新影联, 江苏东方, and etc. The total box office has reached 6.8 billion in 2013, taking over 31.2% of the country’s total box office. To step into other parts of the industrial chain, small companies usually cooperate with other companies in other parts they want to enter, and the method can be unstable to some extent. However, for big companies with strong financial background, they can either establish a new department or a sub-company to take care of new business, or buy other companies and take over their business. The advantage of the second approach is that an existing company always has a good foundation in the market. One great example is that Wanda bought AMC and Legendary Pictures, two big company in Hollywood, which has aroused a hot discussion in movie industry.

       However, the industrial condition in America is different. Regulated by antimonopoly laws, the producing and distribution company of movies can be the same; however, they cannot own cinemas. Hollywood film moguls have rights of cinemas, which means if the producer and distributor want to cheat in box office, they must collude with a cinema, and get back some money through proper channels as the certain proportion of box office revenue. Thus, even buying fictitious box office may also exist in America, the producer and distributor won’t cost much on it. However, in China, buying fictitious tickets is just like giving money to the companies themselves because the cinema belongs to them. Besides, the cinema can arrange the best time and rooms, and make more screenings for their own movies, which means squeezing the existence space of other films, especially those lacking of   strength of background.

In the view of vertical integration, big companies get more profits and become stronger, while building a high entry barriers for new comers. Meanwhile, small companies are facing a difficult situation to survive in the fierce competition. Besides, in monopoly industry, it is very easy to do some illegal activities, such as money laundering, which is hard to be supervised and regulated. To solve the problem, the judgement of Paramount Pictures’s case in antimonopoly law is a good lesson for all, which judges the vertical monopoly as illegal. Unfortunately, a piece of news shows the situation is going harder - Wanda have bought Mtime.com, a famous website for audience to discuss and evaluate movies which is similar with IMDb. Mtime.com is an important part of post-market, the fourth components of movie industrial chain. Thus, it is worth worrying that a producing company which takes over distribution and cinema may even controls people’s attitudes towards movies. How can we do if the score produced by the public may be fake?

Reference：

1.  中影VS万达，谁是“院线第一股” from http://lancet.baijia.baidu.com/article/34835

2．国内电影产业应防止形成垄断格局

   from http://mt.sohu.com/20160519/n450308654.shtml