By Grace Li
HONG KONG (Reuters) - In "American Dreams in China", Cheng Dongqing is giving a lecture in an abandoned factory in Beijing. Snow falls through the damaged roof and a power cut sends students reaching for their flashlights.
The movie, about how young Chinese in the 1990s tried every means to learn English so they could study overseas, is part of a boom in domestic productions that is outpacing foreign films at the box office in China - the world's second-largest market after the United States and Canada.
Revenues remain far smaller than in North America, but China looks set for another record year as screens are added rapidly, cinemas expand into more cities and themes switch from martial arts to depictions of ordinary people.
"The past half year has seen the Chinese audience identify with and feel proud of their own lives," Peter Chan, the director of "American Dreams in China", said in a recent newspaper interview. "They want to watch their own lives in the cinema, watch realistic themes."
Based on real stories from Yu Minhong, founder of New York-listed New Oriental Education & Technology Group Inc, and his partners, "American Dreams in China" raked in more than 100 million yuan ($16 million) in its first three days.
The fifth-highest-grossing film in China this year, it has helped total box office sales reach nearly 11 billion yuan ($1.8 billion) in the first six months, according to the government agency that tracks all forms of media.
"This is a big boost to the market and it set the tone for the year-round revenue to exceed 20 billion yuan," said Kady Yang, senior analyst at entertainment consulting firm EntGroup.
If China hits that full-year mark, equal to $3.3 billion, it would eclipse the official tally of $2.8 billion in 2012.
That lags North American revenues of $10.8 billion last year, but PricewaterhouseCoopers, a consultancy, sees China narrowing the gap quickly. It predicts the box office in the world's most populous nation will grow at a year-on-year rate of 15.6 percent over the next five years and hit $5.5 billion by 2017.
In January to June, domestic films outperformed imported ones by 65 percent at the Chinese box office. That was a huge reversal from the same period last year, when proceeds from imported films almost doubled those of domestic productions.
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 nearly 1.4 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.
($1 = 6.1234 Chinese yuan)
(Editing by Anne Marie Roantree, John O'Callaghan and Ron Popeski)