New guideline threatens movie ticket discounts

(Ecns.cn) –Newly proposed rules on movie ticket pricing in China have aroused widespread suspicion of administrative monopoly by a regulatory authority, resulting in an investigation by the National Development and Reform Commission (NDRC), according to the Beijing News.

On February 26, an insider from the film industry exposed in a microblog that the State Administration of Radio, Film and Television (SARFT) had issued a regulatory guideline proposing that movie tickets for theater members and group buyers should not be sold for less than 70 percent of the listed price.

Later, the SARFT confirmed the cap but explained that it was only a draft guideline, and that the administration was still soliciting opinions from law enforcement agencies. The news immediately sparked debate among netizens, with the overwhelming majority opposing the move.

Abuse of power

The draft guideline stipulates that movie tickets must be kept within local officially-sanctioned price ranges, but a movie in the IMAX or 3D format is allowed a hike of no more than 50 percent, while discounts for cinema membership or group tickets should be no more than 30 percent.

It also notes that the maximum discount will not be applied during half-price periods at cinemas, and that moviegoers can still enjoy half-price films every Tuesday and on weekday mornings.

However, the NDRC's Anti-Monopoly Bureau suspects the guideline of administrative monopoly, as it may be a move to curb competition, which the Anti-Monopoly Law of the People's Republic of China prohibits.

Many legal professionals have shown support for the NDRC's ongoing investigation into the case, arguing that such practices take place frequently in China, but that little punishment is available for violations of this type.

Although the guideline might be a reasonable solution to the problems in China's film market, managing movie ticket prices is a responsibility for the commodity pricing bureau, noted You Yunting, an intellectual property rights lawyer in Shanghai who thinks the cap violates both the Price Law and the Anti-Monopoly Law.

Wang Xiaoye, a consultant from the Anti-Monopoly Commission of the State Council, said the SARFT's Film Bureau is suspected of abusing its administrative powers to restrict competition. The film market has been open and movie theaters have been competing with one another fairly, but this guideline is likely to stifle the industry and infringe upon legitimate rights and interests of consumers, he added.

Moreover, an increasing number of Chinese people are buying movie tickets via group purchasing to save money, but if the proposed draft is finally passed, many of these consumers will likely spend less time in theaters.

An oar in every man's boat

According to a survey of 1,258 respondents conducted by Xinhuanet.com on February 27, an overwhelming 98.6 percent disapproved of the guideline and believed that a 30 percent discount would still leave movie ticket prices too high, reported China Youth Daily.

One netizen said that for people whose monthly incomes are between 2,000 and 3,000 yuan (US$317 and US$476), after-discount prices would be around 50 to 60 yuan (US$7.9 to US$9.5), about 2 percent of their incomes, which is much higher than the ratio in the U.S. of 0.2 percent.

Another Web user stated that the SARFT's pricing regulations have gone in the wrong direction. He said a large number of people buy movie tickets at a discount of more than 50 percent through cinema memberships or group purchasing, but this move will undermine their interests.

A netizen on the Sina website blamed the SARFT for having an "oar in every man's boat," as movie ticket prices are none of its business in the first place and should be monitored by the Bureau of Commodity Price.

Many Web users simply don't see the point of SARFT's proposal as high prices will only hurt theaters, and such pricing regulations will ultimately hinder the development of China's film industry.

A survey from Sina Weibo shows that more than half of 11,276 microbloggers think film tickets should be priced less than 30 yuan (US$4.8). Only one-third believe 30 to 60 yuan (US$4.8 to US$9.5) is acceptable.

Bad news for group buyers

In China, listed prices of movies hover around 60 to 80 yuan (US$9.5 to US$12.7), and prices of movies in IMAX and 3D formats are even higher.

Yet despite rising costs, China's relentless stream of moviegoers has not let up in the slightest. One important reason is the stimulus of group buying. In recent years, movie tickets have been among the most popular deals on group buying sites, with 60 to 70 percent discounts cutting prices to approximately 30 yuan (US$4.8).

According to a source at group buying site 55Tuan, group buying sites reach large numbers of users, particularly those who don't typically go to movie theaters. In 2011, group buying deals accounted for nine percent of all movie tickets sold.

However, if the SARFT proposal is passed, it will have a major impact on the large number of group buying sites, and ultimately on the movie industry as a whole, experts say.