Streaming and tech firms are key to the development of the film industry in China, which is home to far more internet users than cinema-goers, Chinese tech giant Tencent and online ticketing platform Maoyan said in a joint year-end report. One statistic puts this in stark perspective: While 66 million movie tickets were sold for last year’s top 10 highest-grossing films in China, those same films have been viewed 503 million times online.

“Internet films” commissioned by online platforms have also ballooned as a genre, while hit IPs such as internet novels and games are increasingly being mined for their theatrical potential in a country where finding a good story remains one of the industry’s biggest challenges. Meanwhile, online ticketing has boomed and streaming channels with their large numbers of paying users and lakes of data offer new commercial possibilities.

“Cross-industry cooperation with internet companies has generated a new industry ecosystem,” Maoyan said in a statement about its joint report with Tencent, which was released last month. The two companies formed a strategic alliance last July.

As of June, China was home to 759 million people watching online content, including short-form videos, the report said. This has become a critical audience to win over in order to boost the influence of theatrically released films. 

Online ticketing in China is also king, thanks in particular to the popularity of selecting seats in advance. The percentage of movie tickets sold online has grown steadily in recent years, climbing from 76.1% in 2016 to 81.6% in 2017 and 84.3% last year. More people buy tickets online in the wealthier and more technologically advanced eastern parts of the country, but China’s middle and western regions are now experiencing the fastest growth in online ticket sales, especially in fourth- and fifth-tier cities.

And thanks to social media and user-review platforms, Chinese audiences are assessing the quality of films faster than ever – and increasingly “voting with their feet” to make their views felt at the box office, the report noted.

Back in 2016, a film’s box-office performance was much less tied to viewer reviews of its quality. Movies rated above a 9 out of 10 on the Maoyan platform took only 27% of the total annual box office, while films that scored below 8 took 19%. But last year, films rated over 9 took 46% of the box office while those below 8 accounted for 11%. And in 2019, films rated higher than 9 grabbed a whopping 67% of the box office, while those under 8 took just 7%, showing how bad word-of-mouth online can now quickly make or break a title.

Bullet comments – real-time commentary from other viewers that scrolls over streamed videos – have become a distinctive part of Chinese online film-watching culture. They’ve grown in popularity in the past two years, with the total annual tally of comments more than doubling since 2017. The highest-grossing film in Chinese history, 2017’s “Wolf Warrior 2,” has just 248,000 bullet comments on Tencent Video, but 2018’s romantic drama “Cry Me a Sad River” has 501,000.

Movies have also increasingly become a topic of discussion on social media, the report said. In 2019, the number of articles about the top 10 biggest films of the year posted to Tencent’s ubiquitous WeChat platform grew by 78% from the year before, while the number of reviews grew by 71% and views for such content grew by 36%. Sci-fi blockbuster “The Wandering Earth,” animation “Nezha,” “Avengers: Endgame” and the government-backed, propagandistic “My People, My Country”  were the most written-about films of the year.

The report also provided data on China’s online streaming behavior, using Tencent Video as an example to illustrate trends. The majority of users, a stable base of about 70% for the past four years, choose to watch Tencent Video content via a phone app rather than via PCs or OTT TV. However, OTT users spent the most time consuming content, accounting for 43% of overall streaming time in 2019.

In terms of content selection, Chinese viewers are primarily streaming new Chinese films. This year, 68.1% of films screened online were new Chinese fare and 10.1% were new foreign films, while 15.2% were older Chinese films and just 6.6% were older foreign ones.

Internet films – movies commissioned by Chinese streaming platforms such as Tencent Video and iQiyi – are declining in number but rising in quality and lucrativeness. This year saw 637 internet films put up online, less than half of last year’s 1,524. But this year’s crop drove more traffic and revenue to platforms this year than in previous years.

The content is drawing more viewers in part because budgets have risen. In 2017, only 6% of internet films had budgets over $428,000 (RMB3 million), but by last year, it became fairly standard for budgets to exceed $713,000 (RMB5 million), with at least seven productions exceeding budgets of $1.4 million (RMB10 million), the report said.

Internet films are also starting to break out into the theatrical market. Last year, 146 Chinese internet films received the dragon seal of censorship approval to screen theatrically, an increase of 370% from the year before.