China's Entertainment Industry To Grow By 17% Annually Through 2015#
According to a new Ernst & Young report on China’s media and entertainment industry, the country will surpass the US to become the world's largest box office by 2020, following years of breakneck growth and cinema expansion. Benefiting from consumption-led growth among the Chinese middle class, the report notes that Chinese spending on entertainment and leisure activities rose 56 percent from 2010 to 2011 and the country's entertainment industry should maintain 17 percent average annual growth through 2015. Among the segments expected to show the strongest growth is mobile, with the current 431 million people currently online in China projected to swell to 632 million by 2016.
According to the Motion Picture Association of America, the Chinese box office rose 35 percent to US$2 billion last year. Though the North American box office took in more than five times that of China, the pace of new theater construction and rising disposable income means China is catching up quickly. Still, this doesn't mean the market is an easy one for international players. Among the obstacles highlighted in the new report are "changing consumer preferences in a diverse marketplace, an evolving and highly competitive digital landscape, price sensitivity, intellectual property rights infringement and government control and regulatory restrictions."
“The challenges for media and entertainment companies to penetrate China are still considerable; however, the vast potential of the market makes it impossible to ignore,” said John Nendick, Ernst & Young’s Global Media and Entertainment leader. “Companies will need to understand that investing in China is a long-term proposition, and those who can make that commitment will be in a much better position to succeed.”
Peter Chan, Nendick’s colleague in charge of Greater China, said companies would also need an understanding of the “cultural nuances across geography, age and income level” to sustain brand loyalty from Chinese customers.