Chinese Regulators Escalate Crackdown on Box Office Fraud

Illustration by: Lars Leetaru

Industry experts believe that as much as 10 percent of Hollywood's gross box office in China last year may have been lost to illegal skimming by cinemas.

Chinese regulators have punished another seven cinemas for box office fraud, banning them from screening new movies after they were found to have been cheating on box office figures, industry organizations said.

The cinemas were found to have used a “dual software system” to sell film tickets without registering the real box office gains to a uniform system, according to a statement issued by the China Film Producers' Association and the China Film Distribution and Exhibition Association, carried by the Xinhua news agency.

Another cinema was found to have reported falsified box office figures, and three others were punished for screening unlicensed movies.

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The crackdown on box office fraud is good news for Hollywood, as it means the data coming out of China should become more reliable, and that studios' share of China revenues will be more accountable.

In February, 15 local movie theaters were punished for falsifying box office receipts under new rules clamping down on cinemas manipulating revenue data, viewership figures and other forms of fraud related to ticket sales.

In January, the State General Administration of Press, Publication, Radio, Film and Television (SGAPPRFT) issued a circular with a new standard on the technicalities of managing cinema ticket sales.

The rules are aimed at stopping tax avoidance and the cheating of filmmakers and distributors by falsifying the numbers of moviegoers and reporting artificially reduced ticket sales.

Official box office data for last year shows sales of $3.6 billion, with domestic movies taking $2.12 billion of that, a rise of 54.3 percent for homegrown films. However, industry experts believe that real box office sales are at least 10 percent more, Xinhua reported.