The summer season had ended, yet Duke was still on vacation. However, he didn't leave North America; instead, he often went to Lucasfilm in San Francisco to discuss plans and scripts for the new Star Wars film with a group of screenwriters.
As he had said before, what Duke demanded wasn't innovation or creativity, but the most reliable plan possible. For a franchise as immensely successful as Star Wars, the risks brought by so-called innovation far outweighed the benefits of being conservative.
Aside from that, Duke also accompanied Scarlett Johansson to Tennessee, where she was preparing to invest in the Junhao Theaters chain — which was one of the reasons Duke had been paying close attention to ticket prices.
At present, Junhao Theaters couldn't compare to AMG or Emperor Entertainment, but it represented the benchmark for high-end theaters in North America.
Perhaps older North American audiences still remembered what Junhao theaters used to be like — sticky cinema floors, cramped and narrow seats, and pathetically small projection screens.
But all of that had completely vanished in the Junhao theaters Duke saw. In their place were all kinds of advanced screens, brand-new audiovisual projection quality, luxurious seats that could be booked online, and even theaters offering dining services.
Since two years ago, Junhao Theaters had renovated over 50 cinemas and more than 600 screens and related equipment under its name. Simply replacing fixed-back seats with adjustable ones had significantly increased the box office revenue of the renovated theaters.
Meanwhile, according to Junhao's plans, the company also intended to renovate over 2,000 more screens and their related facilities within the next two years.
This was one of the reasons Junhao had been seeking external financing.
After touring the company with Scarlett, Duke did not oppose her investment plan. In the coming decades, theaters would still remain the foundation of the film industry. For an established theater chain like Junhao, as long as it was managed properly, this investment was quite worthwhile.
Junhao Theaters not only renovated its existing cinemas but was also opening new ones. Duke and Scarlett visited some of the newly opened locations as well. These theaters offered Junhao's latest "Premium Junhao Viewing Experience."
This brand-new premium service included the latest ultra-large IMAX screens, upgraded theater lighting systems, enhanced Dolby Atmos 3D surround sound, real-time online seat selection, and priority purchasing rights for cinemas located in the most prosperous districts.
Of course, all these upgraded services also meant higher ticket prices.
In these luxurious premium theaters, Junhao also began to introduce a limited-edition black anodized hardened movie ticket. After purchasing this ticket, the audience could watch any film in the same cinema, without restrictions on time or number of viewings, for that day.
At the same time, Junhao planned to update its membership points system, further strengthening the services tied to earning and redeeming points after ticket purchases. The new membership system would first roll out in numerous theaters in Knoxville, Tennessee, and then expand to all Junhao cinemas across the United States.
In addition, as a major source of profit, Junhao also made big moves in concession sales. All its theaters now featured in-cinema bars, genuine leather reclining seats, and full dining services provided directly by attendants during screenings...
Because of all this, Junhao Theaters had gradually become known as a "diamond-level" premium cinema brand in the North American market.
Originally, Duke planned to accompany Scarlett for further theater tours and take part in the investment negotiations, but new messages from Warner Bros. forced him to return to Los Angeles ahead of schedule.
Fortunately, Tina Fey had come along as well. With such an experienced professional assisting Scarlett in negotiations, Duke could rest easy.
The reason Duke hurried back to Los Angeles was that his film had been caught up in a controversy across the Pacific.
Apparently, The Dark Knight Rises could not stay out of trouble. Just a few days ago, a "box office theft" scandal had erupted in the Chinese market. The film, which had grossed nearly 1.6 billion RMB, was passively dragged into the issue — with part of its box office figures being diverted to other films.
"Duke, you know the Chinese market better than any of us," said Doug Walter, frowning deeply in Warner Bros.' meeting room. "Do you think there's a better solution?"
"No…" Duke shook his head. "That's not our turf."
After thinking for a moment, he turned to Jamie Johnson and said, "When you leave for there tomorrow, bring my letter of protest. Also, inform the MPAA about this incident and have them exert diplomatic pressure to ensure this doesn't happen to our films again."
Having once worked in the industry across the Pacific, Duke knew well that box office theft was anything but rare.
"Stealing" Hollywood films' box office earnings and reallocating them to domestic films had long been a commonly used tactic.
Jamie Johnson, who was flying there to address the issue and represent Warner and Duke in filing a formal protest, sighed. "That market is indeed huge, but it's also extremely chaotic."
"Don't forget," Duke said, patting him lightly on the shoulder, "they've only just started."
This was happening on the other side of the Pacific, and there wasn't much they could actually do — unless the local authorities introduced clear, targeted legal measures. Otherwise, similar incidents would continue to occur.
In fact, Duke knew even better than the Warner executives that the situation was far more chaotic and serious than they imagined.
At present, the Chinese film market appeared to be thriving, breaking its all-time box office records year after year. Yet beneath this prosperous surface lay turbulent undercurrents. Anyone familiar with the industry had heard of terms like "box office theft" and "buying box office."
Having once been part of that industry, Duke had learned quite a lot about it — and some things were truly shocking.
To discuss the details of box office theft and "box office buying," one must first understand China's film distribution and revenue-sharing system. The major players in the market were divided into three groups — producers, distributors, and theater chains.
This was easy to understand: producers made the films; distributors handled copies, release schedules, and negotiated contracts with theater chains; while theaters were responsible for screenings.
So how was the box office revenue divided among these three parties?
If someone bought a 100-yuan movie ticket, the breakdown was roughly as follows: 5% went to the Film Development Fund, 3.3% to taxes.
After deducting these, the remaining 73.36 yuan would be split between the film side and the theater side at a 43:57 ratio — meaning, from a 100-yuan ticket, the producers and distributors would receive 31.54 yuan, while the theater chain would take 41.82 yuan.
Of course, this was only a general basic structure; not every film would strictly follow it.
From this, it could be seen that a film's box office revenue—after deducting the portion that must be turned over to the state—was split between the producers and the theaters. Although there was an agreed-upon revenue-sharing ratio, profit always came first. Sometimes, in order to gain more, theaters resorted to box office theft.
That was one of the reasons box office theft occurred.
For example, if a film earned 1 billion yuan, the producers and distributors would be entitled to around 400 million yuan. If a theater used various methods to report only 800 million yuan in actual box office revenue, the hidden portion would be kept entirely by the theater, with no need to share it with the producers.
This meant that the film's producers lost their rightful earnings. To put it simply, box office theft could be described as this — theaters used improper means to steal the share of revenue that should have gone to the film side.
To achieve this goal, theaters could employ a variety of tactics.
For instance, handwritten tickets, entry without tickets, and using invalid tickets for entry were among the most basic methods theaters used to hide box office revenue.
Of course, it couldn't be ruled out that a theater's ticketing system might encounter a bug preventing proper ticket printing, thus temporarily requiring handwritten tickets. But the likelihood of such a situation was extremely small. If a theater was found issuing a large number of handwritten tickets or allowing unticketed entries, it could be almost certainly concluded that box office theft was taking place.
When encountering handwritten tickets, one could request that the theater issue machine-printed tickets. But did that necessarily mean box office theft would then be avoided? Of course not.
Handwritten tickets were only the most basic form of box office manipulation. Nowadays, distributors often employed monitoring measures, making such primitive tactics easily detected. More sophisticated methods soon became popular — such as the "structured ticket."
What was a structured ticket?
For example, a distributor would usually set a minimum ticket price for a film — say, Film A had an agreed minimum price of 30 yuan. In practice, tickets wouldn't usually be sold at the minimum price but rather based on market demand.
Suppose a theater set the ticket price at 80 yuan. If a viewer bought a movie ticket for 80 yuan, then all 80 yuan would be subject to revenue sharing with the producers, leaving no hidden profit for the theater.
So the theater came up with a trick: the bundled combo.
The theater would sell a combo package for 80 yuan — "movie ticket + popcorn + drink." Of those 80 yuan, only 30 yuan would be counted as box office revenue — since 30 yuan was the minimum ticket price — while the remaining 50 yuan would be categorized as revenue from popcorn and drinks.
What benefit did this bring to the theater? The income from popcorn and drinks didn't need to be shared with the producers; it all went directly into the theater's pocket.
For the sake of profit, business ingenuity knew no bounds. An even more advanced form of box office theft than bundled combos had recently become popular — theaters adopting dual accounting systems: one for reporting, one for internal bookkeeping.
The theater's reporting system was connected to the national box office monitoring network, and both the theater and the film producers accessed box office data through this system. However, the other system — a privately maintained bookkeeping system — was set up by the theater itself. It could also issue machine-printed tickets, but the revenue from those tickets was kept entirely by the theater.
As everyone knew, theaters weren't the only ones guilty of box office theft. Many times, the producers themselves joined in. Capital naturally pursued profit, and coupled with the imperfect regulatory measures in China, all kinds of profit-driven manipulations kept emerging endlessly.
One of the most typical examples was box office misallocation.
...
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