Chinese box-office revenues will almost double over the next three years, from $336m to $720m by 2010, according to analyst Screen Digest and Nielsen NRG.
The rapid box-office growth has been driven by the opening up of the Chinese market, and the swift 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 are a series of potential brakes that could slow the country's progress towards becoming the world's biggest domestic market, the report warns.
Liberalisation has attracted much foreign investment, but it has done so 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% of all films watched in the country at the end of 2005. The wide availability of Casino Royale in pirated editions before its premiere this week, demonstrates that it remains a devastatingly widespread problem.
The report looks at the demographics behind the piracy figures and suggests that the cost of going to 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, Cinema In China: Opportunities And Obstacles.
"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 spread 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 US - may also be a motivation for the government to support film exhibition in rural areas.
Foreign films welcome
The most original part of the report may be its research into local tastes that offer promising results to non-Chinese film-makers. The authors conclude there is little resistance to foreign film - indeed 42% of respondents had no preference for either Chinese or Western film.
So even given the obstacles, simple population numbers mean relatively small changes can result in huge box-office growth. The report claims that if the average number of cinema visits per person in China increased from 0.14 times a year - where it now stands - to one a year, the country would become the third-largest market for cinema in the world, after the US and Japan.
The Nielsen NRG/AC Nielsen China consumer survey was carried out with targeted respondents aged 16-34, who had been to the cinema at least once in the last six months. The research was conducted online in Shanghai, Beijing and Guangzhou.