SHANGHAI IMAX China Holding Inc saw a steep fall in profits in 2016 amid a slump in China's box-office sales, the film company said on Friday, underlining the challenge filmmakers and cinema operators face in the world's second-largest economy.
The subsidiary of large-format movie and cinema screen giant IMAX Corp saw net profit for the year fall 13 percent to $37.6 million versus 2015. Revenues were up 7.2 percent to $118.5 million.
The profit drop underscores a painful slowdown that gripped China's box office in 2016, after years of rapid growth which have lured in Hollywood movie producers looking for a boost as the North American market cools.
China's cinema ticket sales in 2016 increased 3.2 percent against the year before to 45.3 billion yuan ($6.6 billion), according to data from box-office tracker EntGroup. That compared to nearly 50 percent growth in 2015.
IMAX China, which operates and installs cinema systems, saw its own box-office takings at a network of 424 cinemas fall to $295.7 million from $312.4 million in 2015. IMAX China has tie-ups with other operators such as Wanda Cinema Line.
The firm's chairman, Richard Gelfond, said in a statement that the drop in profits and ticket sales reflected "a downturn in the PRC film industry as a whole" last year, but that he expected things to improve in 2017 with a better slate of films.
"This decline was primarily a result of weaker content in 2016 and not the result of any systemic issues in the China market," he added.
Despite the slowdown, China is increasingly important for U.S. producers from Walt Disney Co to Time Warner Inc's Warner Bros. A quota system for foreign films allowed into China is expected to be increased this year.
(Reporting by Adam Jourdan; Editing by Stephen Coates)