Date of Completion

12-16-2016

Degree Type

Honors Thesis - Campus Access

Discipline

Finance (FNCE)

First Advisor

David Offenberg

Abstract

In 2015, the Chinese box office receipts grew 48.7%. This explosive year-over-year growth in conjunction with unprecedented rates of theatre expansion fostered expectations that the Chinese box office would surpass North America by 2017. However, these expectations were challenged when the Chinese box office experienced its lowest growth rate in years for the first half of 2016 and its first year-on-year quarterly decline from April to June of the same year. While some of the blame for this can be placed on underperforming films, the recent slump highlights a host of problems facing this market including government interventions, waning theatre growth as larger markets become saturated, high levels of online ticket sales often subject to heavy discounting, fraud allegations, and more. Additionally, inflated stock prices among entertainment firms threaten future stability in the market.

Substantial financing deals and other investments continue to flow in and out of China, a notable example being the Dalian Wanda Group’s purchase of Legendary Entertainment for $3.5 billion. However, the question remains as to whether or not these investments can materialize as a healthy return or if the “fuzzy math” has another story to tell. Is the Chinese Entertainment industry the wealth of opportunity its American investors are betting on, or is future growth more uncertain that it appears?

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