Hollywood filmmakers, who previously believed that China was on its way to become the world's largest film market, have been adapting to a new reality of slowing revenue growth produced by headwinds including a decline in discounted tickets, rising scrutiny of "ghost screenings" and an increasingly mature audience, according to The Wall Street Journal. China's box office grew a tepid 2.2% in 2016, according to EntGroup Inc. figures. In the five years prior, this industry grew 34% on average. (For more, see also: How Exactly Do Movies Make Money?)

Top-Grossing Films

During 2016, several U.S. films managed to gross at least $100 million in China, according to data provided by Box Office Mojo. "The Mermaid," which was distributed by Sony Corp (SNE) and grossed roughly $527 million in the Asian nation, was China's biggest U.S. box-office hit. "Zootopia," released by Walt Disney Company (DIS), brought in $236 million in China. Universal Pictures' "Warcraft" also grossed more than $200 million, earning $221 million in China. Walt Disney's "Captain America: Civil War" grossed more than $190 million, and "Kung Fu Panda 3," whose producer DreamWorks Animation is ultimately owned by Comcast Corporation (CMCSA), grossed $154 million. 

Inevitable Slowdown

While the slowdown might come across as a bad sign to some, one analyst told The Journal that the slump was inevitable. China's box office benefited from highly robust growth, expanding 49% in 2015. "It was bound to happen," Rob Cain, who works as a producer and serves as a consultant to Hollywood studios, told The Journal. He added that if China's box office had sustained its current growth rate, it would have "consumed every single bit of currency on earth." (For more, see also: Big Picture: China Set for M&A Wave.)

Rising Headwinds

The industry did generate some robust growth figures, but these impressive figures came about as movie distributors would buy tickets in significant quantities to make movies look more successful and industry participants would leverage discounted ticket prices to entice movie watchers, according to the news source. The impact of these developments have been reduced, and China's box office has faced a third headwind in the form of a maturing audience with shifting tastes. 

"As markets mature, there tends to be a more discerning audience," Sanford Panitch, president of Sony Corp's Columbia Pictures, told The Journal. "It's not 'Wow, it's a Hollywood film.' There's a bit more choice and more local choice." 

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