BEIJING - The recent agreement to allow screenings of an increased number of United States-made movies in Chinese theaters will simultaneously provide both opportunities and challenges to Chinese film makers and theaters, analysts said.

A poster for a Harry Potter film outside a cinema in Shanghai. China has agreed to allow 14 films in premium formats, such as 3D or IMAX, to enter the domestic market annually. [Photo/China Daily]

China has agreed to allow 14 films in premium formats, such as 3D or IMAX, to enter the domestic market annually. That is in addition to the existing annual quota of 20 films and would see the US movie companies sharing revenue with Chinese distributors and movie theaters.

US studios will see their share of the earnings increase to 25 percent from the previous payment level that ranges between 13 and 17.5 percent.

The agreement was announced on Feb 17, the last day of Vice-President Xi Jinping's five-day visit to the US, and received a warm welcome from US film makers and companies.

"This agreement represents a significant opportunity to provide Chinese audiences with increased access to our films," Robert Iger, chairman of Walt Disney Co, was quoted as saying by Reuters.

Some Chinese film companies say the change was expected and they believe that the move is likely to have a positive influence on the domestic industry.

"It will surely exert a negative impact on small-scale movie companies, but I do think that the rise in the number of imported films might result in more private film corporations qualifying to distribute foreign films in the Chinese market," said Wang Changtian, president of Enlight Media Co Ltd, a listed private media company.

At present, only China Film Co Ltd and Huaxia Film Distribution Co Ltd are allowed to distribute imported movies in the country.

Wang also said that the new policy will help end excessive competition in the sector, a factor that has resulted in a significant number of companies and the production of too many films.

"It offers a great opportunity for consolidation in the film sector," he said.

For Chinese movie theaters, while more imported movies will attract larger audience numbers, they will also face challenges, especially in terms of business operation.

"The reduction of Chinese theaters' share of revenue earned on imported films will be partly offset by the growing number of features," said Gao Jun, deputy general manager of the theater operator, New Film Association. "In general, the benefits will outweigh the disadvantages for cinemas," he added.

"As the increased quota is mainly for movies in enhanced formats such as 3D and IMAX, cinema investors and operators will have to keep up with the latest industry trends in terms of technology, much more than ever before," said Huang Wei, general manager of Bona International Cineplex Investment and Management Co Ltd, a subsidiary of Bona Film Group Ltd.

He added that more foreign blockbusters will mean that cinema operations and designs will have to be improved.

Zhang Xiaobei, a movie critic and scriptwriter, said that access to a greater number of imported films will serve as a stimulus to the creation of Chinese films, because poorly made domestic movies will be driven out of the market.

Meanwhile, film makers will have to place greater emphasis on the quality of the product instead of concentrating on factors unrelated to the market, according to the People's Daily website.

Chen Shaofeng, the deputy dean of the Institute for Cultural Industries at Peking University, said: "Chinese industry giants such as Huayi Brothers Media Corp and Bona Film Group should consider the overseas market before producing their films."

On Saturday, the US company DreamWorks Animation SKG Inc, the producer of the Kung Fu Panda series, signed an agreement to establish a joint venture, Oriental DreamWorks, with three Chinese partners.

The joint venture will focus on creating animated feature films in China. Industry experts said that establishing a joint venture is a way of avoiding the annual quota in the fast-growing Chinese market.