Distributor Dayinmu suspended for one month, RMB 32 million subtracted from box office total

China Film Assn VP calls for greater rights (and derivative income) for embattled screenwriters

Market forces challenging official drive to ban certain subjects, themes from popular entertainment

In an unprecedented move, Chinese regulators have taken legal action against a distributor for involvement in the manipulation of ticket sales.

According to reports of a statement issued by the China Film Bureau, Ip Man 3’s distributor, Dayinmu Film (also known as Beijing Max Screen) admitted to purchasing RMB 56 million ($8.65 million) worth of tickets, while conspiring with theaters to falsify more than 7,600 “ghost” screenings worth another RMB 32 million ($4.95 million). As punishment, the Film Bureau will suspend Dayinmu’s distribution license for one month and will subtract the RMB 32 million in false receipts from Ip Man 3’s box office total. Three online ticket sellers and 73 theaters involved received formal warnings, according to the notice. Ip Man 3 had a reported gross of $72 million in its opening weekend.

Shady ticketing and screening practices are nothing new in China, where just the past year has seen questionable tactics used by distributors to inflate the reported box office receipts of films such as the patriotic, government-backed The Hundred Regiments Offensive and the blockbuster Monster Hunt, but no punishment. (In the first case, none was possible given that the state was involved, and in the second, it was deemed sufficient that distributor Edko apologized and promised to deal with the matter internally.) Penalties have instead fallen on theater operators, with Xinhua reporting that dozens were punished last year.

But in the case of Ip Man 3, it looks like those involved went too far: The manipulation seen during the film’s opening weekend — when the film’s performance was being watched closely — appeared blatant and was called out publicly by Chinese netizens, forcing the hand of authorities who have been intensifying their vows to crack down on box office fraud. However, Chinese media report that the punishment for Dayinmu may not have much practical effect, as its next release isn’t slated until April 29.

IP and Copyright in the News

Chinese media have declared 2015 the breakout year for IP-related mergers and acquisitions in China, with 42 deals worth a combined RMB 21 billion ($3.24 billion). Still, the matter of turning IP into more than just a buzzword and movie adaptations remains a challenge in China, where opportunities for additional marketing tie-ins are rarely exploited to their full potential.

But at last week’s annual legislative meetings in Beijing, the vice-president of the China Film Association called for greater rights for China’s embattled screenwriters. Wang Xindong noted that while Hollywood writers can enjoy derivative income when their material is adapted for other platforms, “such earnings are very rare among the writers in our country.” Wang also lamented the fact that the current draft of the Film Industry Promotion Law under consideration does not include terms to protect original screenplays. “The legislation has missed the key point, and it must be rectified,” Wang said.

Even as screenwriters struggle, the major players in the Chinese video streaming market have been fighting each other over their intellectual property and related rights. This week, search and online video giant Baidu took to social media to accuse streaming video rival Youku Tudou of defamation for claiming that Baidu had streamed one of Youku’s programs without permission; Baidu also accused Youku of stealing protected elements of Baidu’s video app design and said that it had lodged a complaint with Apple’s iTunes store.

Recently, we noted another industry dispute that found Baidu in the hot seat when it was sued by Le Eco (formerly LeTV) for unfair competition when Baidu allegedly removed advertising and credits to Le Eco as the source of content offered on Baidu’s mobile video app. That case is still pending.

Talking Back to Censorship

That trend we noted last week of increasing resistance to Xi Jinping’s crackdown on free speech and increasing media control continued to grow, with even mainstream state-run publications presenting points of view that are seemingly at odds with Xi’s edicts.



Even the people behind some of China’s recently censored web series are finding support in the industry, as market forces appear to overpower the official drive to ban certain subjects and themes from popular entertainment. The directors and producers of the censored hits Go Princess Go and Addicted are now in high demand, having proven that they are in tune with the millennial audience (Read in Chinese here.)

Chinese media also discussed how popular South Korean dramas are changing their production practices to accommodate China’s censors. Whereas Korean soap operas are typically shot on a rolling basis as the season progresses, Chinese demands to pre-screen an entire season before approving it for broadcast in the country have forced producers to shoot on a compressed schedule to get a full season to the censors in time.

And while official restrictions on TV and web programs have been tightening, movie censors appear to be “a little more open-minded now,” according to Easternlight Film’s Ying Ye, who has successfully managed to bring “light horror” films to China despite the sensitivities around the genre. Some of the secrets to success? “The whole story is set in China, the lead actress is Chinese. And it’s not a ghost story or a slasher. Not too much blood, nothing supernatural,” said Ying.

Money Problems

Speech and content aren’t the only things facing a crackdown in China, as capital flight spurred by the slowing economy has sparked increasingly heavy-handed reactions from authorities to keep money in the country. Our content partners at the China Law Blog have regularly covered the resulting headaches for business in general in some detail, and this week lawyer Matthew Dresden discusses the impact on the film industry in particular. “Long story short,” he writes, “we can expect to see more U.S.-China film deals fall through for lack of funding, and it won’t necessarily be the fault of the Chinese company.”

Government Announces More Funding Plans for Strong Performers

In the past week, official sources announced two separate plans to provide cash rewards to homegrown movies with artistic, social, and cultural merit that have performed well at home and abroad. In the first, films that have grossed more than RMB 20 million ($3.1 million) domestically can apply for an award of up to RMB 6 million ($930,000), while the second funding scheme will offer up to 1% of overseas box office receipts for movies that earned at least RMB 1 million ($150,000) outside of China (read more in Chinese here)

A couple of weeks ago we noted another funding plan to help export Chinese movies. These are all part of a master plan to improve the quality of Chinese filmmaking in accordance with President Xi Jinping’s vision of arts and culture, and to see those films reach global audiences.