Chinese box office revenues will almost double over the next three years, according to analyst Screen Digest and Nielsen NRG, from last year's $336m to $720m by 2010.
The rapid box office growth that has been driven by the opening up of the Chinese market and the fast development of modern multiplexes looks set to continue.
The report predicts an increase in modern, or silver screen cinemas from 2,940 in 2005 to 5,000 by 2010.
But there brakes on progress, the report warns.
Liberalisation has attracted much foreign investment, but it has been at an erratic pace.
While 41% of last year's box office was taken by Hollywood blockbusters, would-be overseas partners have found the market exasperating.
Most notably, Warner Bros International Cinemas pulled out of China last year, when the government barred foreign companies from holding majority ownership of exhibition companies.
Piracy has also been a consistent problem that, despite various initiatives and some prosecutions, accounted for some 95% at the end of 2005.
As the wide availability of Casino Royale before the premiere this week demonstrates, it remains a devastatingly widespread problem.
The report looks at the demographics behind the piracy figures. It suggests that the cinema is simply beyond the reach of the average worker.
Indeed, growth in box office revenue has largely come from what the report suggests is a 'cinema class' - around 19% of the population for whom paying for a cinema ticket is a realistic option.
'High ticket prices mean the thrill of experiencing one of the new multiplexes isn't enough to get the average worker to spend a significant proportion of their monthly salary at the box office,' says Screen Digest analyst David Hancock, who led the report
'To reach anything like a mass market, China is going to need more cinemas across the country, not just in the major urban centres, and significantly lower ticket prices.'
That change may happen, supported by the introduction of lower-cost digital cinema.
The rapid rise in local production - China is now the third-largest film producer in the world, after India and the USA - may also be a motivation for the government to support film exhibition in rural areas.
The most original part of the report - Cinema in China: opportunities and obstacles - may be its research into local tastes that offer promising results to non-Chinese film-makers.
The Nielsen NRG/ACNielsen China consumer survey was carried out with targeted respondents who were regular cinema-goers (i.e had been at least once in the last six months) aged 16-34.
Research was conducted online in major cities of Shanghai, Beijing and Guangzhou.
The authors studies conclude that there is little resistance to foreign film - indeed 42% of respondents had no preference for either Western or Chinese film
So even given the obstacles, simple population numbers mean that relatively small changes can lead to huge leaps forward in box-office growth.
The report claims that if the average number of cinema visits per person in China was increased from 0.14 times a year where it currently stands, to one a year, China would be the third largest market for cinema in the world, after USA and Japan.