All that glitters is not gold: Do movie quality and contents influence box-office revenues in China?

Economic policy reform that started in China in early 1980s also affected its movie industry. Like other sectors, movie industry is also not fully liberalized. The industry is required to ensure that movie contents are consistent with core socialist and cultural values and locally produced movies are also financially viable. However, cultural and politically motivated regulation can adversely affect box-office revenues. Using a recently available dataset, which covers the period of 2009–2018, we investigate the box-office performance of Chinese domestic movies. We start by examining the role of movie quality signals (such as star power, internet media evaluation and industry recognition) in our empirical analysis of the relationship between family-friendly content of movies and box-office revenues. We then match the movie contents with its financial performance records. Our novel approach reveals that the explicit sex and profanity in movies have a negative and statistically significant impact on box-office revenues, which confirms the role of cultural values in financial success of motion pictures in China. However, in the case of large-budget movies involving celebrity superstars, the violent and gore (graphic violence) content attracts viewers and hence the box-office revenue increases. Our work highlights the contradictory nature of China’s movie industry policy, which binds the industry to strict cultural and politically motivated regulation while insisting on financial success.