Niche markets

Hollywood blockbusters remain hugely popular in China, but the success of local content is being driven by a bigger and broader audience as cinemas expand into second- and third-tier cities, where movie-goers tend to watch domestic films.

"For viewers who grew up watching TV and videos from the Internet, they are more familiar with and more receptive to movies with local culture and human interest elements," said Yin Hong, director of the Center for Film and Television Studies at Tsinghua University.

China now has more than 15,000 movie screens, with about 10 having been added each day since early last year, EntGroup says. That compares with 39,718 screens in the United States in 2012, according to the National Association of Theater Owners.

As viewership grows in a country of 1.3 billion people, filmmakers can now aim at more targeted audiences.

"Tiny Times" was deemed by critics to be good only for fans of its pop idol actors and its director, a best-selling author.

But it fared well with more than 400 million yuan at the box office. The film's audience had an average age of about 20 and was more than 80 percent female, according to an analysis of data from Weibo, China's popular Twitter-like service.

"When the total market size is big enough, it is possible to develop some niche markets," said Zhang Benhou from Beijing-based HuiCong Research.

Despite the success of smaller films, blockbusters rule at the box office. Revenues from the four highest-grossing films accounted for 44 percent of overall proceeds from about 100 homegrown movies screened in the first half of this year.

"More diversity and creativity is needed in our film industry," said Yin.

Some relaxation of censorship rules could help. Last month, the government said Chinese filmmakers would no longer have to submit screenplays to officials for review and approval before they can shoot a movie.