The Chinese entertainment industry is on the cusp of a fresh growth phase. In the last decade, it has witnessed exponential growth and is expected to maintain a steady trajectory in the next as well. This industry is driven by people’s tastes and preferences, as well as government support. The industry continues to be affected by global market changes and regulatory policies. However, its growth trajectory remains intact, as it continues to attract both domestic and foreign players. This industry includes film production, television production, music production, and online streaming platforms such as Weibo-based video platforms like Youku Tudou, mobile video-streaming giants like Youku Tiantian (where most of the video content produced in China are consumed) and iQiyi (China’s largest OTT platform), as well as social media platforms like WeChat that foster online communities for fans to connect with their favorite celebrities and content creators. As the industry evolves at a fast pace, we’ve compiled a list of predictions for the Chinese entertainment industry in 2023.
"In the symphony of resilience, China's entertainment industry orchestrates a triumphant rebound, captivating hearts and captivating the world with its resurgent creativity and unwavering spirit in 2023."
Outlook for the Chinese entertainment industry in 2023
China's entertainment industry is predicted to reach $526.9 billion in annual revenue by 2026, with a 5.7% compound annual growth rate (CAGR). This represents a significant year-on-year increase from the estimated $402.0 billion in revenue in 2017, and is expected to continue its upward trajectory as the industry increasingly invests in virtual reality, internet advertising, video gaming, and esports. In terms of market size, China's internet advertising industry is projected to reach $120 billion by 2026, with a CAGR of 4.2%. Similarly, the video game industry is expected to be worth $52 billion by the same year, with a CAGR of 10%. However, growth rates are forecasted to vary across each industry as the aforementioned categories have divergent growth patterns. The global video gaming industry is projected to grow at an annual rate of 13.6%, while internet advertising would experience a CAGR of 13.3%. By contrast, China’s games-related revenue is estimated to surge at a rate of 27.0%, followed by internet advertising at 19.4%. The final segment on virtual reality is also projected to be lucrative for China as global revenues are pegged at an annual rate of 21.1%. As for internet advertising, it would clock a CAGR of 16.3%. And the last segment on esports would witness a growth rate of 26.6% over the next six years.
Exploring New Business Opportunities in the Entertainment Industry
The entertainment industry is in a state of constant change as the competition between streaming video on demand (SVOD) services and social media services for attention, time, and revenues intensifies. Social media services are increasingly leaning into user-generated video content (UGC) to provide personalized TV experiences. In recent years, video games have evolved rapidly, staying close to younger demographics and providing new avenues for monetization. Over the past few years, companies in the media and entertainment industry have explored new business opportunities to stay competitive and maximize profits. Exploring new business models and exploring new revenue streams, companies can continue to stay ahead of the changing landscape in the industry. It is crucial for companies to explore new business opportunities as the industry continues to evolve at a rapid pace.
Impact of Technological Advancements on the Entertainment Industry
The growth of streaming services has allowed for films to be more widely distributed and enjoyed, leading to an overall increase in viewership. The industry is experiencing rapid growth due to the increasing demand for quality entertainment and the government's support for investments in film production and modern film studios. Despite global competition from other entertainment giants, the Chinese film industry is expected to remain at the forefront due to its unique blend of artistry, history, and culture. The Chinese government has invested heavily in the entertainment industry over the past several decades and has provided extensive tax breaks for film production. This support has helped make the industry one of the fastest-growing in the world. Such efforts have led to an influx of top-quality content as well as increased viewership among locals as well as global audiences. In addition to investing in modern film studios and equipment, the government offers extensive subsidies for film production as well as financial support for popular actors, actresses, and directors.
The growth of streaming services has also contributed significantly to the rise of quality entertainment in China as viewers have access to a wide range of movies from different genres and companies. Overall, there are plenty of reasons to expect continued growth in the country's entertainment industry in the coming years.
Increasing Demand for Content Localization
The growth of the Chinese entertainment industry is expected to be driven by increased consumer spending as the industry increasingly attracts top-end customers. Local content providers are seeing greater demand for localized content in the Chinese market as the demand for international content continues to fall. To address this market challenge, companies are introducing digital collections as a way to monetize intellectual property rights, creating new opportunities for local companies to grow their business. The growth of the entertainment industry is also being fueled by cinema developers looking for ways to recoup the cost of infrastructure booms through premium ticket prices for large-format and 3-D movies. As the industry continues to evolve and adapt, there is significant potential for it to reach new heights in the future. The growth of the Chinese entertainment industry is expected to be driven by increased consumer spending as the industry increasingly attracts top-end customers. Local content providers are seeing greater demand for localized content in the Chinese market as the demand for international content continues to fall. To address this market challenge, companies are introducing digital collections as a way to monetize intellectual property rights, creating new opportunities for local companies to grow their business.
Cinema developers are also seeking ways to recoup the cost of infrastructure booms through premium ticket prices for large-format and 3-D movies. There is great opportunity for growth in China's entertainment industry as it looks to cater to a growing appetite for engaging with cultural stories from around the world.
Rise of Chinese Entertainment Companies in the Global Market
The Chinese entertainment industry is one of the largest and most dynamic in the world. The industry is dominated by domestic movies, which accounted for 84.5% of total revenue in 2021. However, the Chinese video game market is expected to outpace those of its U.S., Japanese, and South Korean counterparts due to the rapid growth of app-based games. The domestic movie market remains strong as moviegoers increasingly turn to cinema hits as a way to escape from daily stress and as a cultural activity in their free time. Plus, increased movie attendance is also fueled by the growing popularity of cinema hit franchises, such as Marvel and DC superhero movies and popular animated film franchises such as Pixar and Disney.
Impact of the Internet on the Entertainment Industry
Chinese consumers are predicted to increase their spending on entertainment by 8% annually over the next decade, and online entertainment is expected to account for a large portion of consumer spending. The box office has already seen record-breaking figures, with ticket sales reaching the 10 billion yuan mark in China in 2021. Internet advertising revenue growth is also projected to be faster and account for a larger market share as more content creators and short video platforms emerge. The rapidly developing Chinese entertainment industry is vital for the country's economic growth and innovation, as it plays an important role in driving consumption and consumption-based industries such as movie theaters, restaurants, and shopping malls. It is vital for companies involved in this industry to adapt to changing consumer demands and develop new business models to thrive in the changing environment.
Emergence of New Talent in the Entertainment Industry
The entertainment industry in China has seen remarkable growth in recent years. In particular, the booming commercial film industry is expected to continue its growth trajectory by 2023. The industry has shown impressive resilience to the rapid growth of online video content and the advent of the metaverse. This growth will be supported by a number of factors, including new platforms, new technologies, and market demand for premium content. At present, domestic companies are making efforts to capitalise on these opportunities by assessing a range of considerations, such as business models and development strategies. But, given the prevalence of high-value impacts in this sector, companies will have to be careful as they navigate through various challenges and opportunities that arise from technological upheaval. Besides, the entertainment industry in China is poised for continued growth in the near future as it looks to continue innovation and foster creativity.
Rebounding Entertainment Industry
China will lead the global market for virtual reality, internet advertising, video gaming, and esports, which are some of the fastest-growing segments in the industry. In 2021, the domestic box office collection of China's film industry was at an 11-year low, as theatrical revenue declined year-on-year. This can be attributed to a lack of new releases as well as increased competition from other content platforms such as Netflix and Amazon Prime Video.
The film sector has also been struggling with a lack of new releases in cinemas, as people have shifted their attention towards watching movies on digital platforms. The country's entertainment industry has been a key driver for growth over the last few years. However, it will take time for it to recover from its current slump due to increasing e-commerce spending.
China's Comeback Story
According to the EOS Group, China's film and television industry is expected to rebound in 2023, fueled by the growing demand for film and television content. The industry will be a major driver of the market growth as it continues to invest heavily in content production. The music industry is estimated to be one of the fastest-growing industries globally, with revenue from digital platforms growing exponentially. In 2017, China had the largest share of the global market in terms of revenue generated by digital music, accounting for 25 percent of the total market. The Chinese online gaming industry is also expected to benefit from the rise in demand for entertainment as consumers become more open to new technologies and trends. The rebound in China's entertainment industry will have a positive impact on the global economy as it promotes creativity and innovation among content creators and audiences alike.
2023 Predictions
One of the main growth drivers for the industry is virtual reality (VR) and internet advertising, as the former is expected to grow faster and increase its market revenue share. Internet advertising, on the other hand, is anticipated to witness pre-pandemic levels of growth in 2023. Companies looking to take advantage of metaverse and emerging technology need to consider business models and development strategies. For instance, companies should be aware of the opportunities provided by internet advertising as well as be prepared for changes in consumer preferences due to new technologies. Plus, companies should be able to adapt their strategies as rapidly changing technologies such as AI and VR continue to evolve in the market. Pre-pandemic levels of growth are anticipated in 2023.
Regulations governing online streaming services in China
China’s entertainment industry is on the rise as it continues to diversify and grow. In the past few years, film industries have seen a significant rise in revenue. China now holds the title as the second largest film market in the world, grossing approximately $11 billion in box office revenue alone last year. As its film industry continues to flourish, so has online streaming services.
Foreign studios are limited to distributing their films for theatrical release through a Chinese company, with a limited number of revenue-sharing releases distributed through a state-run giant studio. The government also regulates online streaming platforms and sets strict censorship guidelines for them. On top of all this, foreign companies are subjected to double taxation if they earn revenue from Chinese customers. To release film or television content for broadcast or online streaming, a license through an approved Chinese company and approvals are necessary.
The role of online streaming services in the Chinese entertainment industry
The Chinese entertainment industry is booming with new opportunities. The country has a vibrant film and television industry as well as an active gaming industry. With consumers’ growing appetite for entertainment, online streaming services have emerged as viable revenue generators for the industry.
As of July 2018, Tencent Music Entertainment (TME) and Netease Cloud Music had the highest MAUs out of the online music streaming services in China. These players not only provide music content on their platforms but also manage artists and content creators. Enterprises are expected to produce their own content in order to enhance the uniqueness of their owned platforms in the short-video market. This is evident from Bilibili's acquisition of the team behind virtual singer Luo Tianyi and its launch of 230,000 virtual anchors since 2019.
The growth of online streaming services has drawn attention from governments as well. The government of China has taken several steps to promote its domestic firms, including Alibaba’s investment in Tencent Music and Netease Cloud Music. This is expected to further propel the growth of the industry in the country.
Factors that will drive the growth of China's entertainment industry in 2023
In 2017, cinema revenue in China topped US$13.9 billion as the country witnessed an increase in movie-going habits and spending on entertainment. The market for online video content is also growing rapidly as consumers look for high-quality content on digital platforms such as WeChat, while in-app purchases (IAP) generated revenue of US$5.17 billion in 2022. Plus, the market for mobile games is expected to be immense as more and more people are accessing their devices via a mobile network connection rather than a cable or satellite connection.
Changes taking place in China's entertainment industry
The changes taking place in the Chinese film industry are significant and promising. In the last few years, the government of China has provided tax breaks and investments in modern film studios and equipment to encourage the growth of the film industry in the country. This is likely to help it emerge as a global leader in film production. Also, with an increase in the middle class, there is increased demand for entertainment, including films. Thus, more people are going to the cinema and spending money on tickets. This has led to an increase in cinema attendance as well as box office receipts. The rise of digital media platforms such as online video-on-demand services is also contributing to the growth of cinema industry in China. More people are opting for movie-going at home instead of going to a cinema hall. That’s why content providers have come up with new ideas and formats to attract audiences at home as well as abroad. These developments have resulted in a market that’s increasingly dynamic and innovative, offering movie-goers a wide range of entertainment choices.
Growth of the Chinese movie industry
China's film industry underwent a significant recovery in 2023 with the addition of 6,725 new screens across the country. Total cinema revenue reached $13.9 billion that year, marking a 10-year high. This growth was driven by an uptick in demand for film screenings and content as well as increasing numbers of moviegoers. China had only 5,000 screens in 2007, but it now has around 30,000 screens as of late 2018 and now hit to 65,500 in 2022. Given such growth, it is natural to assume that the Chinese film industry is poised for even greater heights in the years to follow. Under the current economic climate, China’s film industry is undoubtedly set to undergo a sustained revival.
Growth of the Chinese television industry
The growth of the Chinese television industry is expected to be steady in the forecast period. The box office of the film industry is projected to reach US$13.9bn by 2026, with a CAGR of 8.62%. During this timeframe, 6,725 new screens were added nationwide, and this growth is expected to continue throughout the forecasted period. With regard to online advertising, China’s market is estimated to reach about US$185.3bn with a CAGR of 13.1% by 2026. Digitalisation has become a social development trend, providing new opportunities for Internet advertising. As more and more people are getting accustomed to using internet-based media such as mobile devices and social media platforms, the industry will see increasing demand for digital advertising.
Increase in the number of movie theaters in China
The number of movie theaters in China is expected to continue to grow throughout the forecasted period as the country becomes increasingly aware of the benefits of cinema. In 2021, 6,725 new screens were added nationwide in China, according to industry estimates. This will increase the total number of movie theaters in the country to close to 50,000. Chinese box office revenue is projected to reach $13.9 billion by 2026, and China is expected to account for 26% of global box office revenue by 2026. Ticket sales at Chinese cinemas topped $1 billion during the Lunar New Year holiday in 2023. Increased spending on entertainment and the growing popularity of cinema shows in the country are factors that are likely to contribute towards this growth. Also, with urbanization inevitable, people are likely to opt for movie theaters as a preferred mode of entertainment as they offer more space and convenience than home theaters.
Expansion of the music industry in China
The two biggest online players in China’s music industry are Tencent Music Entertainment (TME) and Netease Cloud Music. According to a report, the total revenue of China's entertainment and media industry is expected to reach approximately $526.9 billion by 2026. The growth rate of China's entertainment and media industry is expected to return to pre-COVID levels in 2023. As the market continues to diversify, music industry revenue is expected to rise significantly.
Mainland China’s video game exports will continue to grow significantly, surpassing counterparts from the U.S., Japan, and South Korea. The video game sector has been one of the bright spots for Chinese entertainment and media companies as it provides lucrative returns with high profitability.
Future prospects for the Chinese entertainment industry
The growth of the Chinese entertainment industry and the media industry as a whole has seen a significant revival in recent years. The film industry in China is especially thriving. In the six months ending on September 30th 2022, Alibaba Pictures experienced a significant increase in revenue, reaching RMB1.83 billion ($256.11 million). Technological advancements like virtual reality and internet advertising, segments such as virtual reality gaming and online advertising are also seeing high growth rates.
Rising income levels and increased leisure time
China's entertainment industry is expected to continue its growth in the coming years as rising income levels and increased leisure time contribute to higher consumption of entertainment. The industry is driven by the growth of lower-tier cities, which have a large middle class population that is looking for ways to spend their money. With online platforms providing access to a wide range of entertainment, there has been an increase in the popularity and distribution of films both inside and outside of China.
Emerging technology and digital platforms driving growth
China's entertainment industry is set to reach a massive $526.9 billion by 2026 with a compound annual growth rate of 5.7% over the next five years, according to a new report from EY. Online entertainment has taken off across China, with potential for growth from lower-tier cities where internet access and mobile phone penetration are often lower. The development of digital collections based on notable IP, such as film and television series, has become a profitable and popular method to monetise intellectual property rights in the industry. As a result, many companies are investing in movie and TV show streaming services to engage their audiences. Virtual reality (VR), internet advertising, video gaming, and esports are also expected to lead in average revenue growth in China over the next few years as consumers spend more money on entertainment activities. From an industry-wide perspective, there is considerable growth potential as the Chinese market continues to develop rapidly and new technologies like AI and robotics revolutionize the industry.
Increasing government investment in the entertainment industry
The entertainment industry in China has seen rapid growth in the past few decades. The Chinese government has implemented measures such as providing tax breaks for film production and investing in modern film studios and equipment to promote and support the development of the industry. One result of this investment is that people are attending the cinema in increasing numbers. There are also more movie theaters, which allows people to spend money on tickets. This growth has been fueled by the country’s growing middle class, which have higher disposable income than previous generations. Anyway, the entertainment industry is thriving thanks to continued government support and increased consumer demand.
Conclusion:
The entertainment industry in China is witnessing growth across multiple fronts. The industry has seen the emergence of new technologies and platforms that are paving the way for a new generation of entrepreneurs to thrive. This growth is backed by increasing consumer spending power as well as improved infrastructure such as greater access to broadband, which have enabled more people to consume content online.
Besides, the government’s efforts to boost the industry through regulations such as legalizing streaming services and supporting film funding initiatives have also helped bolster growth. There are still some challenges that the industry faces, including a lack of talent and infrastructure. To achieve its full potential, the industry will need to further develop its talent pool and promote digitalization. All in all, the Chinese entertainment industry is on course for growth in 2023.
Frequently Asked Questions:
What factors contributed to the rebound of China's entertainment industry in 2023?
The rebound of China's entertainment industry can be attributed to several factors, including the easing of pandemic restrictions, increased government support, technological advancements, and a growing middle class with higher disposable income.
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