Today

The Chinese DVD market will surpass the $500m barrier by 2010, a Screen Digest report has predicted.

The report shows that Hollywood studios and other distributors sold nearly $115m worth of DVDs to Chinese consumers in 2006.

This equates to nearly 70 million DVDs.

The growth in DVD sales is expected to come at the expense of China’s VCD market, which has halved in value to around $50m since 2002 and is expected to continue to decline over the next few years.

Screen Digest said the biggest hurdle to China’s DVD market is piracy.

Estimates put Chinese video piracy rates at 95 per cent, a major challenge for any company trying to make a profit from film.

Screen Digest research suggests that as many as 2 billion pirated discs were sold last year.

Pirated copies of the latest James Bond film, Casino Royale, were available over a month before the film's scheduled release date.

David Scott, Screen Digest: "With China's vast population, a stable economic environment and government commitment to economic liberalisation, the country has the potential to become the world's largest video market."

Screen Digest also cites government restrictions on the legitimate DVD market as a barrier to future growth.

"While the government is understandably keen to protect the cultural identity of China, market liberalization will in turn push China's video industry to a more prominent position in the world," Screen Digest's Asia-Pacific analyst, David Scott, said.

"This would give China the opportunity to make full use of the foreign distribution channels set up by multinationals to introduce its products abroad and gradually gain a larger share of the international entertainment business."

China, which has a population of more than 1.3 billion, is one of the world's fastest growing economies.

Mr Scott added: "With China's vast population, a stable economic environment and government commitment to economic liberalisation, the country has the potential to become the world's largest video market.

"But the government will need to also address the issues of piracy and disputes over DVD royalty payments that dissuade foreign investment.

"A key obstacle to substantial DVD growth, but one that is going to be much harder to overcome, is that of making DVD hardware more accessible to rural Chinese."