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The Chinese Film Industry Is Set To Surpass North America’s

 March 01, 2011 09:37 AM

by Tony D'Altorio, Investment U Research

Forget the Oscars… Movie lovers and investors alike should take note of the Chinese film industry instead.

Back in January, China's cinematic market produced the largest grossing domestic film ever – Let the Bullets Fly – a western, that raked in over $100 million in ticket sales.

Despite the rise of piracy over the last few years, the cinematic culture in China is finally looking up.

For years, it has suffered from poor films, poor movie theaters and a thereby natural lack of consumer interest. But film companies now expect good things ahead, thanks in part to China's rapidly growing middle class.

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And heavy investments into new cinemas certainly don't hurt either…

The Silver Screen Finds Gold in China

It's not Hollywood yet, but China's overall box-office receipts grew 40% in 2009. They rose the same last year as well, rising to $1.5 billion.

China now has over 6,200 movie screens, after adding 1,500 in a single year. That number keeps on growing, with about 3 screens added per day, a faster pace than anywhere else.

Within five years, the country should have 20,000 screens, more than triple its current total. And unlike in the U.S., most of the new screens are digital and 3-D capable.

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Box-office revenues should surpass Japan and India, the second and third largest markets, by the end of 2012. And they could grow to $7 billion by 2015.

That can't yet compare to North America's 2010 total of $11 billion. But if it continues to grow 40% annually, China's cinematic market will surpass all of that by the end of the decade.

Tony Adamson, marketing head of DLP – the digital cinema technology arm of Texas Instruments (NYSE: TXN) puts its sheer size into perspective. He says, "China could have as many as 100,000 screens and it would not be over-screened."

That projection looks good to Chinese movie studios and theater chains. And North American-based cinema equipment and technology firms like it too.

Investing in China's Film Industry Boom

China's movie-going boom opens up several noteworthy investment opportunities…

  • For one, investors can buy into equipment makers that sell their wares there.

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