The company is to be suspended from releasing films for a month, according to a statement from regulator, the State Administration of Press, Publication, Radio, Film and Television.
A special panel tasked by SAPPRFT probed the release of “Ip Man 3” which was reported to have earned a gross of over $70 million in its first three days of release. But other cinemagoers and other distributors rapidly cried foul and pointed to manipulation.
According to state news agency Xinhua, Max Screen has now admitted to having bought up $8.61 million (RMB56 million) of tickets to its own film and to have helped create the appearance of 7,600 more screenings, so called ‘ghost screenings,’ that really took place.
SAPPRFT has also given warnings to three online ticketing agencies and to some 73 cinemas, which had participated in the manipulation. Their names will be published on a website.
Box office reporting in China has often been clouded with suspicion, something made possible by the rapid pace of cinema building, incompatible ticketing and reporting systems and simply the vast scale of the business.
However, it is not always clear when it is being manipulated up, in order to inflate a film’s appearance of success and create buzz, or down in order to reduce or avoid revenue sharing and tax payments.
In the case of “Ip Man 3” there was a clear incentive to inflate the figures. The chairman of Max Screen is Shi Jianxing, who is also chairman of Hong Kong-listed firm ShiFang, which in turn has a contract that gives it 55% participation in the theatrical revenues, not net profits, of “Ip Man 3” in mainland China.
“Dozens of cinemas received punishment, ranging from warnings to removal of funding support and business suspension, for box office fraud in 2015” Xinhua said. “Earlier this year, authorities launched a campaign targeting box office misconduct, unlicensed copying and recording of films as well as poor screening quality.”