Due to the insufficient supply of high-quality films, it is expected that the box office of the films in 2024 will form a low base, leading to an increase in market attention to the film market in 2025.
Financial news app Zhitong Finance learned that Founder Securities issued a research report stating that due to the insufficient supply of high-quality films, the box office of films in 2024 is expected to form a low base, increasing market attention to the film market in 2025, expecting a turning point in film supply in 2025 and driving the box office to return to growth with strong expectations. According to calculations, if the number of moviegoers in 2025 decreases by 10% compared to 2023, and the average ticket price remains the same as 2023, the box office in 2025 is expected to return to nearly 50 billion yuan, with a year-on-year increase of about 20% compared to 2024. In terms of recommendations, in the short term, it is advisable to focus on assets with strong expectations catalyzed by the crucial release dates of films; in the medium term, focus on assets benefiting from rich content reserves + overall ticket sales rebound due to the re-opening of channels.
The main points of Zheng Securities are as follows:
In terms of domestic films, the number of films approved for production has reached a turning point, with film companies' prepayments increasing month-on-month.
On one hand, taking the number of films approved for production as a leading indicator (it generally takes about 2-2.5 years for a film from approval to release), the number of domestically produced feature film projects approved in 2023 has increased by 43% compared to the lowest point in 2022, indicating a potential rise in the number of released films in 2025. At the same time, the number of film projects approved from January to September 2024 is basically the same as from January to September 2023, showing an increase of around 35% compared to 2022, providing support for film supply in 2026-2027.
On the other hand, from a financial perspective, by selecting inventory (films in production and completed) prepayments (investment in commissioned film production), and contract liabilities (demands for entrusted and joint film production business), we found that Wanda, Bona, Enlight, and China Film's prepayments are all showing an increasing trend month-on-month, demonstrating good external expenditure on commissioned film production. Meanwhile, Wanda, Bona, and China Film's overall contract liabilities are stable, with an increase in Wanda's inventory of films in production + completed films month-on-month. In addition, the box office performance of blockbuster films will determine the overall box office ceiling. Currently, "Feng Shen 2" has been scheduled for release during the 2025 Chinese New Year, and upcoming blockbuster films such as "Jiaolong Action 2" and "Nezha 2" are also expected to be released in 2025.
Looking at imported films, several key Hollywood films in 2025 are expected to drive an increase in the box office revenue of imported films.
Due to the impact of the Hollywood screenwriters and actors strike in 2023, there was a shortage of high-quality Hollywood films this year, leading to a significant decline in the North American box office. The box office for imported films in China also experienced a decrease. With the fading effects of the strike, several major IP series films from Hollywood are expected to be released in 2025, restoring the supply of imported blockbusters and potentially boosting the imported box office.
In summary, if high-quality films drive an increase in moviegoers, the box office in 2025 is expected to return to growth.
In 2024, the domestic film box office was mainly affected by a decrease in moviegoers, with the average ticket price basically remaining stable year-on-year. Therefore, whether the supply of high-quality films can attract audiences back to the cinemas will be key to the box office growth in 2025. Additionally, as an important carrier of cultural strength and a key driver of boosting domestic consumption demand, films may further stimulate the medium-term recovery of the film market if supply and demand side policies resonate next year (such as relaxed content censorship or movie viewing subsidies). According to estimates, if the number of moviegoers in 2025 decreases by 10% compared to 2023, and the average ticket price remains the same as in 2023, the box office in 2025 is expected to return to nearly 50 billion yuan, with a year-on-year growth of about 20% compared to 2024.
Investment Advice: In the short term, it is recommended to focus on targets catalyzed by strong movie release expectations, such as Bona Film Group, China Film Co., Ltd., Maoyan Ent, Beijing Enlight Media, etc. In the medium term, pay attention to targets benefiting from rich content reserves and the overall annual box office recovery, such as Wanda Film Holding, Hengdian Entertainment, Shanghai Film, Bona Film Group, Beijing Enlight Media, Maoyan Ent, Ali Pictures, Guangzhou Jinyi Media Corporation, and Omnijoi Media Corporation.
Risk Warning: The number of high-quality domestic films is lower than expected; a decline in audience willingness and demand for movie viewing; stricter regulation on domestic film-related approvals.
