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In 2013, China achieved a record-breaking high for its film industry's box-office revenues, which officially register at 21.769 billion yuan ($3.59 billion). But according to Wang Changtian, CEO of Enlight, that was at least 5 billion yuan short of the real number. Other experts put the gap at 2.4 billion, explaining the reported box-office figure at 10 percent less than the real one. That gap is someone's windfall, illegally pocketed by cinema owners and operators, professionally known as film exhibitors. And the regulating agency is getting tough on this kind of theft.

Wang Changtian has reasons to be angry. Over the Lunar New Year season that has recently wound down, he received on his microblog numerous audience reports, complete with photos, of tickets to Dad, Where Are We Going?, a runaway hit his company distributes. The tickets had no movie title printed on them or the prices printed were lower than what was actually paid by the moviegoers - all signs that the movie's revenues were not correctly registered.

The earliest manifestation of the shady practice of "box-office stealing" loomed a few years ago when individual moviegoers posted suspicious tickets online. Tickets of this type usually had movie title "A" computer-printed on it, but the printed title was scratched out by hand and title "B" written in. Fingers were pointed at the producer or distributor of title A, but more likely it was the movie theater that was behind it. The reason could be simple: Film A gives the exhibitor a larger share of the revenue than film B.

However, this is just the tip of the iceberg. Industry insiders reveal it was much worse before computer systems were installed in the nation's cinemas, and of course, before social media websites turned everyone into a potential reporter of such business deceit. As a matter of fact, some cinema investors were not even aware that they had to split their revenue with other parties. "This phenomenon started from the age of planned economy," says Mao Yu, deputy director of the Film Bureau, a branch of the regulating agency.

But it may have turned from guerrilla tactics to larger-scale con games. For group purchases, violators would not even issue tickets, essentially not reporting a single cent of revenue from a whole screening. Since a representative of the group usually deals with the cinema, unless he or she specifically demands a printed ticket for each member of the group, all of them would be in the dark about income reporting from the cinema to the distributor.

Another trick lies in membership dues, which are often collected up front. When a paid member reimburses for a ticket, it may have only the screening room on it, and the exhibitors can choose to credit it to any movie they like, or not to any movie, in which case they pocket 100 percent of the revenue.

Some cinemas would go as far as investing in a separate point-of-sale computer system so that each ticket buyer gets the right ticket, but none of the data shows up on the centralized system. Instead, another set of credible purchase data would be put in the correct system, but with lower attendance.

Both distributors and exhibitors that I spoke to agree that cheating is much less rampant than before, say a dozen years ago, and now is mostly limited to third and fourth-tier cities. China Film Group, the nation's largest film production and distribution company, heads a consortium with several major private companies that hires 1,000 people to monitor cinemas nationwide, and Huaxia, another State-owned company, has a smaller army of 800.

However, there are situations even these sharp-eyed monitors can do little about. For example, if a cinema sells a ticket for 80 yuan, which is normal for primetime, but gives away a free popcorn, it may attribute as much as 60 yuan of the ticket price to the popcorn, leaving only 20 as the ticket price. But it can argue that 20 yuan is the minimum price for this particular film agreed upon by both sides and therefore it does not violate any rule.

A similar scheme was employed when Transformers 3 was bundled with Yang Shanzhou, a very small film with little box-office potential, making the latter into a strange film with eye-popping revenue (79 million yuan) but disproportionately fewer people who actually bothered to see it. There were sporadic online complaints about the practice even though consumers did not pay more for the package deal.

The State Administration of Press, Publication, Radio, Film and Television, the regulating agency, announced measures in late January to curb under-reporting and cheating on box-office revenues. A special fund is set up to subsidize the upgrading of computer software at point of sale. The current system was installed in 2005 and "cannot keep up with the new situation", in the words of Jiang Tao, director of the fund. "The new system will fix loopholes and shorten the reporting window to only 10 minutes after a sale is made instead of waiting till next noon, which is the current reporting lapse in time, which leaves room for manipulation. The national platform will be ready by May and the cinema side will complete their upgrading by October."

Apart from putting a stamp of authorization on all sales systems, SAPPRFT insists that all film tickets carry correct prices and movie admission. But conspicuously absent are concrete penalties for violations. The software upgrade will certainly be a great help, admit distributors and exhibitors, but it may not be enough.

"The cost of violation is still too low. If you're caught under-reporting 10 tickets, all you need to do is make up for the shortfall," says Huang Ziyan, vice-president of Le Vision Pictures in charge of sales.

Cao Yong, a manager with the Huaxing UME cinema chain, suggests that violators should have their business license revoked. "Cinemas invest tens of millions of yuan and, with punishment of this severity, it would not make sense for them to steal 80,000 or 100,000 yuan from the box office."

Other ideas have been floated such as the use of an infra-red camera that automatically scans a movie theater for attendance. The technology has been available for eight or nine years and it claims to have 95 percent accuracy. But it has never been put into use.

Filmmakers are reluctant to stand firm when they become victims because they do not want to offend the exhibition branch of the business chain - the branch that deals directly with end users. Some say they are no longer sad at the irregularity, but have come to the stage of despair.

This time it's for real, and "we'll cleanse the industry of this illegal and irregular behavior", says Zhang Hongsen, director of SAPPRFT's Film Bureau.

By Raymond Zhou ( China Daily)