Research Of Chinese Film Industry Based On Modern Industrial Organization Theory

Film industry which has strong positive externalities to the whole economy is one ofthe core industries of cultural industries, occupying an increasingly important role in thenational economy. Chinese film industry has made great achievements because of a seriesof reforms since from2002. In2010, the domestic movie box office of China reached10.172billion Yuan (RMB), exceeding10billion mark for the first time, with5.734billion Yuan coming from domestic films. The results made a historic breakthrough(domestic movie box office in2003is only990million Yuan), but relative to the totalGDP of China in2010of nearly40trillion Yuan (RMB) when China became the secondlargest economy in the world, the domestic movie box office only accounted for0.026percent of GDP. This proportion is lower than that of the United States, also lower thanJapan, Korea, the United Kingdom, France, Russia, Brazil and India. This shows that theachievements of Chinese film industry which has a strong potential for development isnot enough. Therefore, the empirical research of Chinese film industry based on modernindustrial organization theory has a very important significance on the development of thefilm industry itself, also in promoting economic development. We should identify theunfavorable factors which may hinder the development of Chinese film industry andexplore the road suited to it.This paper only studies the traditional industrial chain of Chinese film industry aboutproduction, distribution and release. Firstly, this paper studies the status andcharacteristics of Chinese film industry from the perspective of modern industrialorganization theory, analyzing production, distribution and release by SCP paradigmframework. The structure part analyses the industry concentration, product differentiation,industry barriers to entrants. The conduct part analyses the behavior of producers,distributors and cinemas. The performance part points out that in Chinese film industry,the fares are too high, and there is widespread loss in the film production industry, but theproduct diversification is significant, also the technological progress, and the whole scaleof the industry has been expanded. Secondly, this paper compares the results of analysisto the theory of industrial organization and puts forward five normative goals. Theexpansion of domestic movie box office represents the expansion of market scale; thispaper analyzes the influencing factors on domestic movie box office using film industrypanel data from ten countries between2003and2010. Empirical results show that the elasticities of domestic movie box office on nominal GDP, the number of admissions,screens and releases was0.771,0.526,0.229,-0.137. Finally, this paper puts forward somepolicy recommendations to Chinese film industry through the previous research. Weshould expand the proportion of the film industry in the national economy; Establishingthe film classification system and allow foreign investors setting up distributioncompanies and cinemas; For attracting more persons watching the films by lower fares,we should try a restricted maximum price; We should distribute the films orderly andcombat piracy strictly; Expanding the number of screens in small and medium-sized cities,increasing the number of second-round screens, subsiding the commercial real estaterental to the theaters; Finally, controlling the number of films released and diverting thefilms that can’t be released actively.