Movie merchandise the next big step for entertainment industry

Action figuresof two major characters in the film Monkey King 2 are on display during the 16th Beijing International Film Festival. [Photo by He Keyao/chinadaily.com.cn]

As China witnesses unprecedented growth in its film market, with box office sales likely to surpass its North American counterpart this year, industry giants are turning their eyes to the merchandising sector as its next economic tipping point.

"Film merchandising plays an essential part in the industrialization process and will absolutely become the future direction of the film industry in China, even though it is now still in its infancy," Ye Ning, CEO of Huayi Bros. Pictures, said Monday at the first China Film Merchandising Industry Summit during the 16th Beijing International Film Festival.

Fast growing box office numbers demonstrate the huge consumer potential in the Chinese film market. In 2015, total nationwide ticket sales reached a record high of 44 billion yuan($6.8 billion), a 48.7% increase compared with 2014. Box office totals just in the first quarter of this year are 15 billion yuan($2.32 billion), an impressive 50% growth, year-on-year.

However, the structure of the Chinese film industry is simple when film companies heavily rely on revenue earned from ticket sales. Up to 80% of the total income in the Chinese movie sector comes from the box office while the number in North America is only 30%, with the majority of revenues coming from film derivatives, or film merchandise. The sharp contrast presents an urgent need, but also a huge opportunity, for the development of the Chinese film merchandise industry.