(Yicai Global) March 6 -- China box office takings soared to a world record high of CNY10 billion (USD1.6 billion) last month after solid ticket sales through the Chinese New Year holiday.

Some 259 million viewers had seen over 8.2 million screenings as of 3.40 p.m. on Feb. 28, data from the State Administration of Press, Publication, Radio, Film and Television shows. The figure shattered the previous domestic record for a single month, CNY7.3 billion set in August, and the CNY8.8-billion global record set by North America in July 2011.

The whole week-long Chinese New Year holiday ran through February this year. The festive period is typically a chance for families, particularly those living apart, to celebrate and spend time together. However, data from a number of leisure, retail and tourism segments suggest many China residents this year opted to get out and about.

China's movie industry has offered a number of pleasant surprises to local consumers ever since Wolf Warrior 2, the July-released film that topped domestic ticket sales last year, Wang Wenhua, executive director at China Insights Consultancy, told Yicai Global, adding that increasingly diverse movie options are catering to additional age groups and boosting demographic coverage.

"Many middle-aged and senior citizens who seldom watched movies in the past have become cinemagoers today," said Guo Huan, a cinema manager in Shanghai who saw box office takings rise 40 percent annually during Chinese New Year.

Little Town Views

What Guo may not know is that movie theaters in second-, third- and even lower-tier cities outperformed their big-city counterparts as migrant workers returned to their hometown over the holiday.

"Every theater is making more than CNY1 million a day, it's as lucrative as mining used to be" said a cinema owner in Shanxi, China's largest coal-producing province.

Rapid infrastructure construction in third- and fourth-tier cities laid the groundwork for the soaring box office sales, and gave China more cinema screens than any other country.

"The last few years saw the proliferation of cinemas and a dramatic increase in the number of screens in China," said Wang Wenhua. "The country now has about 50,000 screens and they provide a solid foundation for ticket sales."

There are few entertainment services available in these cities, several sources told Yicai Global. This makes movie theaters particularly popular among local residents, and numbers typically rise substantially during holiday seasons.

"As consumers' lives improve and they have more money to spend, there is a rising demand for cultural products and services," said Chen Shaofeng, vice president of Peking University's Cultural Industry Research Institute. "Given the limited range of cultural and entertainment services available today, cinemas have become one of the few options available today, hence the spike during the Chinese New Year."

Effective Marketing

Powerful marketing campaigns were a decisive factor behind last month's unprecedented box office takings as studios and distributors invested heavily in promotion. Ticket selling websites, including Maoyan and 51taopiao, began pre-selling tickets a month before the holiday to maximize box office revenue.

"Movies can be combined with tourism, shopping and other merchandising efforts," Wu Zhixiang, founder of leading Chinese travel agency Ctrip.com, told Yicai Global. "For example, product placements can be inserted to the start of films and be subtly included as the story unfolds. Consumer goods and tourism products can also be marketed alongside the movie to increase receipts and merchandise sales."

Fair Ticket Prices

Ticket subsidies have been an important growth driver in China's movie market, but excessively low ticket prices could make the sector unstable. Local studios and distributors have been working to make discounts more sensible over the past few years.

"Offering the right subsidies can attract consumers with limited spending power and people who are otherwise not interested in watching movies at cinemas," a manager at a listed movie theater operator said. "It looks like distributors picked the right subsidy rates this year," he added.

Word of Mouth

The rise of social media and online movie ratings websites, such as China's Douban, have become an oracle of information influencing cinemagoers' choices and can substantially affect how films perform at the box office. Many people went to see smash hits Operation Red Sea and Detective Chinatown 2 after reading positive reviews online. 

"Movies released during Chinese New Year were all big-budget blockbusters," said Wang Wenhua. "The production techniques are better developed, and word of mouth recommendations kept their box office receipts ticking over."

"Filmmakers now pay more attention to storylines and catering to public taste," added Yu Dong, president of Bona Film Group, which produced Operation Red Sea. "Good stories generate word of mouth publicity and can strike a responsive chord with cinemagoers."

The growing impact of consumer reviews on box office revenues suggests viewers are becoming more frivolous and aren't prepared to spend money on all films that are marketed well, said Meng Jia, an analyst at Entgroup, which provides insights into China's entertainment sector.