China pushes cinemas beyond the screen

China’s cinemas are being encouraged to add AI agents, karaoke rooms, coffee bars, retail corners and cultural events as regulators seek to turn theatres into broader entertainment venues rather than spaces dependent only on film screenings.

The policy direction was set out in a notice issued by the National Film Administration and the State Administration for Market Regulation, outlining 10 measures across business diversification, brand management and service upgrades. The move comes as theatre operators face pressure to stabilise footfall outside peak holiday seasons, even after a strong box-office rebound in 2025.

The notice supports the introduction of AI agents, electronic games and karaoke as part of cinema-based leisure services. It also encourages theatres to add light meals, bakeries, desserts, coffee-book bars, self-service vending zones and smart meal-pickup cabinets. The aim is to create “film plus leisure” venues that can attract customers before and after screenings and generate higher non-ticket revenue.

The policy also urges cinemas to develop licensed film merchandise, IP-linked products, designer goods, cultural and creative retail stores, and pop-up experiences connected to film releases. Operators are being encouraged to work with local craftspeople and intangible cultural heritage practitioners to create cinema-themed products with regional characteristics.

The shift reflects a wider attempt to reshape cultural consumption in China, where shopping malls, live performances, exhibitions, themed restaurants and online entertainment compete for the same urban leisure spending. For cinema chains, the challenge is not only to fill seats for blockbuster releases but also to make their real estate useful throughout the day.

China’s film market recovered strongly in 2025, with nationwide box-office revenue reaching RMB51.83 billion, up nearly 22 per cent from the previous year. Urban cinema admissions rose to about 1.24 billion, helped by strong domestic titles and holiday demand. The Lunar New Year season alone generated about RMB9.5 billion in ticket sales, setting a record for the eight-day holiday period.

The rebound, however, has not removed structural pressure on theatre operators. Attendance remains concentrated around major releases and holiday windows, while many cinemas continue to depend on thin margins from ticket sales. Food, beverage, advertising, memberships and venue rentals have become increasingly important for operators seeking steadier cash flow.

The inclusion of AI agents in the policy points to a more experimental phase for cinema services. AI tools could be used for ticketing assistance, personalised film recommendations, interactive lobby experiences, virtual characters and customer engagement linked to specific film franchises. Such services may also help cinemas build stronger membership systems by analysing viewing preferences and tailoring promotions.

Regulators have also encouraged cinemas to improve customer profiling for core film fans, young viewers and family audiences. This would support more targeted promotions and help match films with suitable audience groups. The policy places emphasis on membership operations, local community engagement and interactive events with a clear film-culture identity.

The measures also open the door for cinemas to host art education events, cultural talks, reading sessions and science-popularisation activities. Character-experience halls, brand flagship spaces, cultural markets, art exhibitions and IP pop-up shops are among the formats identified for possible expansion.

Technology upgrades form another part of the plan. Cinemas are being encouraged to adopt advanced digital LED projection systems, improve sound and image quality, strengthen equipment maintenance and support virtual-reality film screenings through new venues or additional halls. The policy also calls for better film promotion and distribution services at the theatre level.

For major cinema chains, the guidelines could provide a policy framework for deeper partnerships with film studios, technology firms, food brands and local cultural businesses. Companies with strong data capabilities may be better placed to integrate ticketing, retail, memberships and event marketing. Smaller theatres, particularly those in community locations, may use the guidance to add lower-cost services such as coffee, talks, reading clubs or family events.

The strategy carries risks. Expanding beyond film may raise investment costs at a time when not all theatres have recovered fully from earlier losses. AI installations, themed spaces and licensed merchandise require careful execution, while karaoke and gaming could create noise, crowd-control and brand-positioning challenges if not separated well from screening areas.

There are also regulatory considerations. The notice says local film and market-regulation departments should provide business guidance, support qualified cinemas in obtaining required permits and improve administrative procedures. That suggests operators will still need to comply with food safety, entertainment, retail, fire-safety and consumer-protection rules before adding new services.