The emerging middle class in China like their movies as much, if not more, than their counterparts in the US.
And sometime in the next few years China will overtake the US, the home of the movie industry, for box office takings at cinemas.
According to Credit Suisse estimates, China’s box office grew at 40% a year for the past five years.
It’s expected to grow at 20% for each of the next five years, overtaking the US for the No.1 spot globally sometime in 2018.
This rise of movie consumption hasn’t escaped the attention of billionaire James Packer, who also sees tourism from China — another indicator of the rise of the middle class — driving revenue for his Australian casinos.
Packer’s key reason for forming a movie production company, RatPac Entertainment, with director/producer Brett Ratner, is the potential in China.
“The thing that was at the centre of our thinking all along is the rise of China,” says Packer. “I think 10 years from now a bunch of studios will say, ‘Why didn’t we do more in China?’.”
The following chart shows the forecast growth in box office takings in China, hitting $US17.2 billion in 2020.
The US box office takings are between $10 billion and $11 billion.
In China, the number of cinemas is growing to meet demand with about 5,813 now almost doubling to 9,600 in 2017.
The movie consumption is begin driven by an increase in disposable income in China, fueling the population’s appetite for the good life and all things Western, including food and entertainment.
“We believe that the steady rise in individual disposable income is driving up the population’s demand for a better lifestyle,” says Credit Suisse in a note to clients.
“From an entertainment perspective, we are observing that the younger generation (aged below 30) is going to movie cinemas more often.”
According to an audience study by Entgroup, 87% of the movie-going audience is aged between 19 and 40 and more than 70% of the audience is aged below 30.
Credit Suisse says Hollywood is also making a strong push into China, hoping to grab a piece of the new box office market despite China’s government trying to control the import and release of foreign films.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.