(Yicai) June 20 -- Several leading figures from China’s film production industry are sounding the alarm over rising production costs at a time when audience numbers are dwindling, and are calling for the industry to cut expenses and boost efficiency to avoid a deeper downturn.

“If we don’t change things, the entire industry could head towards decline,” Wang Changtian, chairman of Enlight Media, said at the recent opening forum of the 27th Shanghai International Film Festival. Many industry leaders echoed this sentiment, saying that it is essential to bring production costs down.

Movie ticket sales in China have been tumbling for the past five years, plunging 40 percent in 2024 from 2019 to 1.7 billion, according to data from Lighthouse Professional Edition.

“The film projects that I have seen recently still cost around the same to make as those during the peak of the market, but now both ticket sales and audience turnout are falling,” said Li Jie, president of Damai Entertainment Holdings.

This is putting more pressure on production budgets, he said. There has also been a noticeable drop in external funding in recent years. Without strong box office numbers to support returns, investors are less willing to put money in.

However, due to high standards for content, cutting costs is not easy. Directors now take over three years to complete a film, compared to just 18 months in the past, said Chen Zhixi, chairman and president of Wanda Film Holding.

The profit distribution in the film industry should be readjusted to shift the benefits towards the production side, said Wang. Producers and investors only receive about CNY33 (USD5) out of every CNY100 in ticket sales once distribution costs are deducted.

Cinemas are under even greater pressure than before, the operator of a Shanghai-based movie theater said. Rent and staff expenses remain high and many cinemas have not fully recovered the losses incurred during the lengthy shut downs during the Covid-19 pandemic in 2020 and 2022.

The focus should be on improving the quality of films rather than prioritizing quantity, Wang said. The role of movies within the industrial chain should be redefined and the proportion of revenue from ticket sales should be reduced. Instead, there should be a greater emphasis on the film’s intellectual property and more revenue generated from merchandise and spin-offs, he added.

Editor: Kim Taylor