Category Archives: General News

‘So Young’ is So Rich in China

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So Young director Vicky Zhao is ‘crying’ all the way to the bank.

By Robert Cain for China Film Biz

April 28, 2013

Month after month, China’s movie industry has been making major leaps that spell trouble for Hollywood’s creaking business model.  China has repeatedly proved that massive profits can come from tiny investments, while Hollywood’s studios keep making enormous financial bets in the face of rapidly dwindling returns. Where China’s distributors are piling up cash with the new equivalent of a “My Big Fat Greek Wedding” nearly every month, Hollywood has increasingly churned out cash burning duds like Jack the Giant Slayer.

The latest Chinese jackpot winner is So Young, a low-budget youth romance that put its financiers well into the black in just its first two days of theatrical release. After its huge $22+ million three-day weekend debut, and with the major three-day Labor/May day holiday about to start, So Young is now assured of posting one of the biggest 7-day debuts in Chinese box office history.

Based on the wistfully titled Chinese young adult novel “To Our Eventually Lost Youth”  (致我们终将逝去的青春), So Young is the latest in a string of Mandarin language films to employ a formula first made successful by the blockbuster hit Love is Not Blind back in 2011: adapt a successful novel (or in some cases a TV show or even an old American movie) to a contemporary Chinese context; cast popular, young, inexpensive actors; keep the budget low; choose an optimal release date, preferably a major box office holiday; leverage social media like Sina Weibo and WeChat to promote mainly to young female moviegoers; and let the box office magic happen.

The novel centers on a young woman whose romantic flame, played by Mark Chao (Caught in the Web, Black & White Episode), leaves her without saying a word to her, to study at a university in America. Then she falls in love with another young man, played by Mando-pop star Han Geng of Super Junior fame, who also leaves her to study in America. This leads her to a fit of rage in which she climbs to the top of a hill, faces the Pacific and shouts “The United States is an evil capitalist country. I hate you! Return my men back to me!”

I’m not sure this climactic scene was included in the movie, but really, what filmmaker could resist the pathos, the dramatic power, of those lines?

Kidding aside, So Young has been getting some of the best reviews I’ve seen lately for a Chinese film, with a 9.1 rating on movie fan site Douban. And distributor Enlight’s marketing team has generated tremendous buzz. First-time director and popular Chinese actress Vicky Zhao has pulled out all the publicity stops, recruiting many of her celebrity friends to tweet about the movie.

Zhao also reportedly made the Machiavellian move of visiting China’s government distribution authorities and tearfully convincing them to delay Iron Man 3‘s release by five days to give her film a big market advantage during the Labor Day holiday. Her ploy worked, and although I doubt So Young needed the help, it looks likely that it will beat the Marvel/Disney blockbuster in total admissions and revenue.

Whatever happens, there will be plenty of RMB to go around this week for both movies. Last year’s Labor/May Day holiday saw a total national gross of about $36 million. If current trends continue, this year’s holiday could double that amount.

Other films are enjoying excellent results, with Finding Mr. Right winding down its extraordinary run at a cume of roughly $84 million. G.I. Joe: Retaliation will surpass $50 million, and The Croods has benefited from excellent word-of-mouth and will beat my earlier forecast by at least $5 million to finish at no less than $25 million, a decent total for a non-sequel animated feature.

The disparities in box office expectations are becoming more and more stark. $100+ million is becoming an increasingly reasonable target for local Chinese movies, and an increasingly distant dream for Hollywood movies releasing in the PRC. If they want to keep up with the times, Hollywood’s studios ought to start putting filmmakers like Vicky Zhao on speed dial.

To my friends and readers in China, 祝大家劳动节愉快（I wish you a happy Labor Day).

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

Lovers vs. Fighters in China, ‘So Young’ vs. ‘Iron Man 3’; and the Winner Is…

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By Robert Cain for China Film Biz

April 26, 2013

The PRC movie showdown between So Young and Iron Man 3 is now at hand. And what a showdown it is! The two movies combined couldn’t possibly generate as much drama, tension, and emotional angst as has the behind-the-scenes battle over IM3’s release date.

Although So Young has only just opened, and Iron Man 3 has yet to unspool in China, So Young has already won the battle, thanks to a relentless campaign by that film’s Chinese distributor Enlight to derail the Disney/Marvel/DMG machine. The story of the two films’ jockeying for position offers interesting (and somewhat damning) insight into how SARFT favors domestic movies over foreign ones.

Back in March it was announced that the romantic melodrama So Young and the Hollywood action tent-pole Iron Man 3 would open head-to-head on April 26th. This is an excellent date, just ahead of the three-day Labor Day/May Day holiday, when business is expected to be brisk.

As a local film, So Young’s debut on April 26th was locked. As a perceived foreign film, albeit one with a domestic Chinese investor and partner in DMG, Iron Man 3 was on shaky ground, subject to the indignities that several Hollywood movies have recently faced in China (see this article for a taste of how Hollywood movies have fared lately at the hands of SARFT).

After much lobbying by the producers of both films, and a confusing string of announcements by various parties about where Iron Man 3 would land, it now appears that the Robert Downey Jr.-starring action extravaganza has been granted a release at 12:01am on May 1st.

For So Young, this is great news. The low-budget romantic melodrama gets the holiday to itself, and five full days to rake in its spoils before the big budget Hollywood movie enters the scene. Indeed, early reports are saying that So Young has opened to an excellent $8 million Friday debut, and that it has a good shot at earning at least $100 million.

For Iron Man 3, the May 1st date has to be disappointing, but it’s much better than the May 3rd date that had been widely reported a few days ago. Never mind the rather silly assertion from “Deadline” that May 3rd was the date Disney and Marvel were “eyeing all along.” Why would anyone be happy to open just after a major box office holiday? That was pure face-saving spin, presumably from Disney’s PR folks. Credit DMG with fighting a nearly unwinnable fight and preserving at least one day of the holiday to bolster its debut.

Whether Iron Man 3 can overtake So Young and become the first Hollywood film in over a year to reach $100 million is an open question, but missing the first two days of the three-day holiday will certainly hurt its prospects.

According to ‘Firedeep’, my unfailingly reliable “deep throat” in China, Iron Man 3 was buffeted by a series of unexpected delays, which began with some late reshoots of its Chinese scenes. According to Firedeep, the locked print of the film wasn’t sent to the Film Bureau for technical censorship until the night of April 12th, which made the April 26th debut a rather iffy, although still perfectly possible, proposition.

Meanwhile, the translation and dubbing of the film ran into late hour delays when Marvel decided to replace the original translator.

But the biggest obstacle for Iron Man 3 emerged when So Young’s distributor, Enlight Films, decided to play the ‘local film protection’ card, putting up major resistance to its competitor’s holiday release date by appealing to China’s Film Bureau. It’s rumored that So Young’s celebrity director, Vicky Zhao, showed up at the Bureau and literally cried her way to sympathy and ultimate victory. The film authorities dithered and vacillated before finally announcing their ‘final’ decision about IM3 on Friday, causing great confusion amongst moviegoers and provoking howls of protest from Marvel’s Chinese fanboys.

As one sharp-tongued Chinese observer put it on a PRC film website, “Back and forth. This whole thing is a fucking mess. Fuck Enlight Pictures and fuck SARFT like every time.”

And as if to underscore the point, SARFT continued to torture Django Unchained by repeatedly approving and then un-approving that film’s re-release. On Thursday one announcement pegged Django’s theatrical revival for May 9th, and a day later it was supposedly pushed to May 12th.  It’s death by a thousand cuts. Meanwhile many frustrated Tarantino fans have undoubtedly downloaded the uncensored BD-rip from pirate sites, leaving one to wonder whether any among them will still be waiting to buy theater tickets if and when the movie finally goes back up on the big screen.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

China’s Censors Ride Into the Old West and Castrate ‘Django’

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By Robert Cain for China Film Biz

April 11, 2013

For a brief moment there it looked like China’s film authorities had taken an important and welcome step forward in loosening their censorship policies by allowing the theatrical release of Django Unchained. When news came out last month that the blood-spattered Tarantino film had been approved for an April 11th theatrical debut, many Chinese moviegoers and observers like me were encouraged that the censors’ strict barriers to violence and sexually suggestive material might be coming down at least a little.

No one expected Django Unchained would be shown in China completely intact; it was a marvel that it would be released at all.

But in a rather bizarre and disappointing move on Thursday, SARFT canceled the film’s release on its very first day. In some theaters the film had actually started playing when the projectors were turned off less than sixty seconds later. What legions of Django’s film adversaries failed to do, China’s censors managed to pull off in only a minute: they killed him.

SARFT explained only that the release was canceled for “technical reasons.” They are unlikely to provide any further insight, leaving China’s moviegoers to speculate about what really happened.

Much of the talk in China’s online film forums has centered on the film’s violence and nudity. The Chinese government censors movies before they can be released, and scenes that contain nudity, politically sensitive issues, or graphic violence, must be edited out before a film can receive a go-ahead from the authorities.

The Chinese publication IBTimes noted in this article that even after the censors’ cuts, a couple of scenes remained in the distribution prints that must have been inadvertently overlooked. One of those scenes is a long shot in which Jamie Foxx’s penis can be briefly but clearly seen. In the other Kerry Washington’s nipple can be glimpsed. As an online observer with the handle “Bob Violence” noted “With all the fuss over the violence, maybe someone forgot about the nudity.”

One internet wag in Shanghai with the handle “Alexbenetta” quipped “The government are agitated about the failure of castration of Django in the movie so they decided to do it themselves.”

Another observer, my Beijing-based friend “Firedeep,” speculated that “the sudden last-minute blocking of Django Unchained has a lot to do with the unwillingness of SARFT to see a [ratings] system getting further actively discussed, which is always a sensitive and inconvenient subject for them. Drug War, a drug enforcement themed film which was released last Tuesday has already stirred up some notable talk amongst the public regarding SARFT censorship and demands for the launch of a ratings system. With the coming of the Beijing International Film Festival next week, topics about films will predictably go even hotter. So it is reasonably argued that SARFT blocked Django Unchained to avoid any further heating up of these movie-ratings discussions.”

To which another observer “Polylove” replied “Whatever their intention was, now it backfired. Talk about Django Unchained‘s censorship raised more attention from people.”

Hu Xijin, editor-in-chief of the Global Times, a newspaper run by the People’s Daily, wrote on his microblog: “The harm created by the act (of suddenly suspending the screening of the film) will be much greater than what may be brought by some ‘dangerous scenes’ to the nation’s politics.” Hu said some authorities have frequently made questionable decisions at the expense of the government’s credibility.

As Firedeep noted, Django did manage to set two records in China:

1) Lowest grossing imported revenue sharing film: box office RMB 25,683 yuan (US $4,144)  with 716 admissions via 87 shows [midnight debut).

2) Shortest screening time (closed in less than 11 hours after midnight opening).

There’s been no word as to whether the “technical reasons” would be addressed or whether Django’s release would be reinstated. The unfortunate and rather ironic reality is that disappointed would-be theater ticket buyers in China will instead wind up watching the uncensored version of Django via internet piracy sites or pirated DVDs.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

‘Upside Down’ Flips the Script at China’s Theaters

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By Robert Cain for China Film Biz

March 12, 2013

Although China’s distributors release roughly as many ‘buyout’ films—that is, foreign films acquired under flat fee purchase arrangements—as they do revenue sharing ‘quota’ films, it’s unusual for a buyout film to lead the box office. This is because quota films are mostly big-budget studio tent-pole pictures with major stars, while buyouts are most often independent ‘B’ level movies with less ambitious commercial aspirations. The numbers are pretty stark: last year the 31 foreign buyout films took only a 5.4 percent share of China’s total box office revenue, while the 34 foreign quota films earned 45.6 percent.

So it came as quite a surprise last week when a buyout, Millenium Films’ romantic fantasy Upside Down, became the first film in nearly a month to outgross box office behemoth Journey to the West: Conquering the Demons. The $60 million Kirsten Dunst-Jim Sturgess starrer, about a sort of interstellar Romeo and Juliet who are separated not only by family but also by the physics of the cosmos, was shot way back in 2010 and had earned only $8 million worldwide when it debuted last Thursday in the PRC.

In its first four days in China Upside Down nearly doubled its worldwide gross, and it also out-earned Journey by a slight margin. Despite its wide availability on pirated BD, DVD and online, it is now primed to become one of China’s highest earning buyout films ever. Top Grossing Foreign Buyouts

WIth the advantage of a full week of screenings versus Upside Down‘s four days, Journey to the West won the weekly box office crown for its fifth week in a row, a feat last achieved by Avatar back in 2010. Aggregate weekly box office was $42 million, a 38 percent improvement over the same week in 2012. Year-to-date, China’s box office revenue is running 46 percent ahead compared to the first 10 weeks of last year.

Although they continue to underperform, American films are at least beginning to gain market share, capturing 44 percent last week thanks mainly to Journey‘s slowing momentum. The Hobbit: An Unexpected Journey stretched its cume to $45 million, and will end its China run next week at around $50 million. Box office week ending March 10, 2013

On March 14th A Good Day to Die Hard will open wide with hopes that it can turn the tide and become the first studio film to over-index in China this year. Resident Evil: Resurrection is set to open on March 17th, presumably in a heavily edited version. Oz the Great and Powerful has been pushed back to April, so the next studio release will be Jack the Giant Slayer on March 25th.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

Will ‘Iron Man 3’ Get China Co-Pro Status, and Does it Really Matter? Most of the Co-Pro Benefits Have Come Already

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By Robert Cain for China Film Biz

March 7, 2013

Two thoughts on all the media speculation about whether Iron Man 3 will get official co-production approval from SARFT for its China release this spring:

  1. It won’t, in my opinion.
  2. I doubt that Disney, Marvel and DMG—the film’s backers—really care.

A while back Disney, Marvel and DMG had to decide whether to comply with the strict SARFT co-production rules, or to sacrifice some of the benefits of official co-pro status and instead optimize Iron Man 3’s potential for the global market. Not surprisingly (as was revealed by a flood of press coverage that included some untimely revelations at last summer’s Comic-Con), they decided on the latter approach, making a film broadly aimed at the global audience.

Although they shot scenes in China last December with local actors—most notably the venerable Wang Xueqi and even a rumored appearance by movie diva Fan Bingbing—the partners’ overall creative and business approach precluded full adherence to the co-production rulebook. Namely, their strategy made it impractical to hire enough Chinese citizens to comply with the rule requiring that one-third of “major actors” be Chinese nationals, and they didn’t incorporate the requisite level of Chinese cultural content to qualify the film as an official co-pro under the Chinese guidelines.

But by working closely with the Chinese government, the co-producing partners have already secured many of the benefits they would have received with official co-pro status. These include:

  1. Iron Man 3 will almost certainly enjoy a rare day-and-date release, perhaps even a pre-U.S. release date. Current chatter on China’s movie blogs and chat sites has speculated that the film will release in China in April, before its May 3rd U.S. debut.
  2. The Chinese government has allowed the parties to promote the film since April of last year, whereas most U.S. imports only get a 2-3 week marketing window prior to release.
  3. IM3 has enjoyed a high degree of media access in China, at a level usually reserved only for high-profile local films. This has included various web and digital promotional activations; uncensored “leaks” of photos and news items to the national press; and an unprecedented promotional segment on the most watched TV program of the year, CCTV’s annual Chinese New Year Gala.

CCTV Gala-Downey and WangThey managed to work in a smart show of goodwill toward China on the Gala program by presenting the “Iron Man Hero Award” to a young Chinese boy who committed a heroic act worthy of Iron Man’s approval, as pictured below.Iron Man AwardThough no one at Marvel, Disney or DMG are talking publicly about their plans for IM3 in China, I’ve confirmed through other sources that they’re planning a major worldwide premiere for the film in Beijing, something that has rarely if ever happened before for a major U.S. studio.

The one major thing that these three companies presumably won’t get is the full 43 percent rental fee that comes with co-production status. But with all the other promotional consideration and support they’re receiving, by my estimation they’ve positioned the film to very likely become one of the top 3 U.S. films in China this year. Given the way things have been going for U.S. action films in China lately, that’s a very big advantage indeed.

In any case, for Disney and Marvel theatrical revenue is only a small part of a bigger picture that includes their interests in the Shanghai theme park and their consumer products business in China, both of which I expect will benefit nicely from the exposure and interest they’ve generated in the Iron Man franchise.This is exactly the sort of hustle and outside-the-box thinking that are required to ride the China wave. If Disney keeps up this level of focus and commitment to the market, this could be the year they win bragging rights as the top-grossing U.S. studio in China.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

“Cloud Atlas” Crosses $20 million in China; Stephen Chow’s “Journey” Will Go Big

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By Robert Cain for China Film Biz

February 9, 2013

Happy New Year, dear reader! May the Year of the Snake bring you much prosperity and happiness.

Theaters went dark for much of the day on Saturday as China’s population turned its attention to New Year’s fireworks and lion dances.

The multiplexes reopened on Sunday with high expectations—and a massive screen count—for the release of Stephen Chow’s new action comedy, Journey to the West: Conquering the Demons. Based on the Ming dynasty literary classic commonly known as “Monkey” in the west, the film is a silly, slapstick parody with director Chow’s usual collection of rapid-fire gags.

Chow’s prior films Kung Fu Hustle and Shaolin Soccer were major hits both in Greater China and abroad, due largely to Chow’s zany energy as a leading man. This time, however, Chow will be absent from the on-screen action, leaving a hole that will be difficult to fill. Whether this picture works in pleasing audiences—reviews so far have been mixed—it is sure to open big, as it has reportedly racked up very strong presales.  Early word is that it cracked the $10 million mark on its opening day. Don’t be surprised if it goes well over $100 million in the next few weeks.

To accommodate the opening of Journey and four additional films on Sunday, Cloud Atlas and Skyfall will have to relinquish most of their screens, which will effectively slow the remainder of their China runs down to a trickle. Skyfall, as I previously noted, will wind up with $60 million or a bit more. Cloud Atlas, which crossed the $21 million mark on Saturday, could still possibly surpass its U.S. total of $27 million. While $27 million is only a middling tally for a foreign film in China these days, this would nevertheless represent some 25 percent of the movie’s worldwide gross, which would set a new record for a foreign film release in the PRC. The previous record-holder, The Mechanic, earned roughly 22 percent of its worldwide revenue in China in 2012.

Expect these percentages to keep climbing as China accounts for an ever-increasing share of the global box office. Chinese moviegoers’ tastes, which are proving to be very different than those of American audiences, will exert a steadily increasing influence over what movies get made and whom they target.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

Studio Report Card 2012: A Roller Coaster Year for U.S. Distributors in China

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By Robert Cain for China Film Biz

December 28, 2012

2012 has been an up and down year for Hollywood’s studios in China, offering a rising bounty of distribution revenues amid a series of sometimes gratifying, sometimes unsettling, but almost always surprising gives and takeaways from the unpredictable Chinese government’s film regime.

Early on, the Year of the Dragon looked to be a propitious one for Hollywood, perhaps the beginning of a long-term reign of market dominance for American films. But by summer the bloom was off the rose and Hollywood’s leaders were confronted with the question so many ‘foreign barbarians’ have faced throughout history: how to deal with the Middle Kingdom and win.

On the positive side, 2012 was the year in which China finally capitulated to years of MPAA and WTO pressure and meaningfully loosened restrictions on the import and distribution of foreign films. On the other hand, it was also the year in which China began making liberal use of blackouts—“domestic film protection periods,” in PRC parlance—to manage the grosses and maintain at least a 50 percent market share for domestically made films. By year’s end the studios had more to worry about in China than they ever did before.

None of this would matter so much were it not for the fact that China has clearly emerged as the world’s most important growth opportunity for Hollywood. For more than a decade the mainland’s aggregate box office has grown at a pace three to four times faster than its overall economy, and in 2012 it surpassed Japan to become the second largest film territory after North America.

The analysis presented below provides what I hope is a valuable snapshot, and a few useful insights, about where American distributors now stand at year’s end.

To conduct this analysis I reviewed the box office results of the more than 40 American films that released in China between January and December, 2012. These included both revenue-sharing ‘quota’ films and ‘flat fee’ imports. I classified each film as belonging to a single U.S. distributor, although in some cases multiple companies were involved. In deciding which film belonged to whom I assessed, as best as I could, which company was receiving the distribution receipts from China.

While the PRC’s rapidly rising revenue tide has lifted all of Hollywood’s boats, the benefits have not been equally apportioned. Twentieth Century Fox, for instance, grossed more than twice as much in the mainland as second place finisher Warner Bros. Universal lagged behind the other 5 majors, both in aggregate box office and in average gross per film. Although Lionsgate finished just behind Universal, the mini-major has come on strong in recent months to establish itself as a solid player at China’s multiplexes.Aggregate bo by studio 2012

Some might point to the outlier success of Titanic 3D ($154.8 million in China) as the key driver of Fox’s dominant showing, but the truth is that with its deep bench of strong performers like Life of Pi, Ice Age 3 and Prometheus, Fox would have beaten the others in total box office gross and average gross per picture even without Titanic.Average China bo by company 2012

While the PRC’s film regulators make efforts to appear even-handed in their dealings with all the studios, it is possible for a U.S. studio to win favor in the form of more rev-share distribution slots and better release dates. Fox, with its investment in local Chinese language films and its acquisition of a stake in Beijing based distributor Bona Film Group, appears to have earned special treatment as the only foreign company to have been granted six rev-share releases by SARFT in 2012. Disney and Warner Bros snagged five slots each, while Sony, Paramount and Universal each got only four. To its credit, Lionsgate won 3 slots with seemingly censor-defying pics as The Hunger Games and Twilight.

Another useful measure to examine is China indexing, that is, the share of total worldwide box office earned by each company’s films in China. This figure tells us how ‘China friendly’ each company’s slate has been; the higher the number, the greater the China appeal. The average index for all studio films in 2012 was 8.8 percent.China indexing 2012

Fox, again, came out on top by this measure, with its out-sized index of 15.8 percent. Universal ironically took second place because its international dud Battleship over-performed in China. Disney’s big China hit The Avengers was counter-balanced by the company’s under-performing animated films Wreck-it Ralph and Brave.

In many ways, 2012 has been a watershed year for Hollywood in China. Whether the studios are on an upward trajectory there or a downward one is impossible to say. But each studio’s fate in the Middle Kingdom is at least partly in its own hands, and 2013 may well be the year when those fates are ultimately decided.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

China’s Wild and Wooly December

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By Robert Cain for China Film Biz

December 25, 2012

Back in the fall, most everyone who follows China’s film industry predicted a record-breaking December. Three films by three iconoclastic Chinese directors—Feng Xiaogang, Wong Kar-wai and Jackie Chan—would sweep audiences into the multiplexes, with each picture grossing around US $100 million or more. Confidence was high that 2011’s December box office record of $218 million would be shattered and that a $350 million record-setting month was in store.

Now, as December draws to a close, the prognosticators can congratulate themselves at least on the latter point: China’s box office is running a scorching 70 percent ahead of last December, and the $350 million record should be in the bag before New Year’s Eve. But the path that China took to get there was one that no one could have foreseen.

Box office week ending 12-23-12

The first step in December’s long march to glory was the surprising performance of Taiwanese-American director Ang Lee’s film, Life of Pi.  Pi enraptured Chinese audiences with its lush 3D images and its weighty philosophical themes, becoming only the third non-Chinese film to achieve a higher gross in the PRC than in North America (the other two films are the American re-release, Titanic 3D, and the Australian shark attack thriller Bait). Pi would have likely reached $100 million in China if SARFT hadn’t clipped its run at 30 days on Sunday, so it finished with an $89 million final gross.

The next surprise was that Wong Kar-wai’s star-studded action pic The Grandmasters was pushed from its December 18th slot to January 8th, 2013.  At first this appeared a blow for Grandmasters, as it will completely miss out on the December box office bonanza, but the pushed date may actually be a blessing. Grandmasters would probably have gotten buried in the fierce pre-New Year’s competition, and January tends to be a strong month in China, as was proven by the early 2012 successes of  Flowers of War, Flying Swords of Dragon Gate and Mission Impossible 4, which launched last January and became the year’s first $100 million grosser.

Another shocker was the dismal under-performance of Feng Xiaogang’s war drama Back to 1942. The film’s grim and depressing themes, underwhelming marketing, and poor critical reception (my favorite quotes called it a “daisy-licking drama,” “a sledgehammer epic” and “an emotional strip-mine”) combined to diminish turnout. 1942’s $60 million gross would be heroic for most Chinese pictures, but with its reported $40+ million cost and $100 million expectation, 1942 caused the stock of distributor Huayi Bros to tank by 20 percent in the first few days after its release. Huayi’s stock regained some of its losses after it released CZ12 a few weeks later, but the stock of director Feng Xiaogang may not recover so quickly.Huayi Bros stock price

The biggest surprise of all was the emergence of sleeper hit Lost in Thailand, the low-budget comedy that has smashed dozens of Chinese box office records on its way to becoming the highest-grossing domestic Chinese film of all time. Only two weeks into its run, Lost in Thailand is now certain to surpass Titanic 3D and become the highest grosser of 2012. The little comedy that could has propelled the stock of its distributor, Beijing Enlight Media, to a 40 percent gain this month.Enlight Stock Price

The only detail that Chinese box office watchers predicted correctly was the success of Jackie Chan’s CZ12. The action-comedy opened to a $35 million first-week gross and, with little serious new competition this week, has a good chance of crossing the $100 million threshold by early January.

All told, December’s box office result will beat April’s prior monthly record by more than 35 percent. With the PRC’s box office record books being re-written on a weekly basis these days, film distributors can look forward to a very happy new year in 2013.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

CZ12’s Massive Opening Marks a Massive Shift in China’s Film Business

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By Robert Cain for China FIlm Biz

December 21, 2012

On Thursday Jackie Chan’s and Huayi Bros’ action-comedy film CZ12 (formerly known as Chinese Zodiac) confirmed a reality that should strike fear in the hearts of Hollywood’s studio executives: China doesn’t need Hollywood films to break box office records.

One-man band Chan, who wrote, directed, produced and DP’d the $50 million CZ12, has exceeded all expectations by delivering a film that set a new December single day record in China with 43 million RMB (US $6.8 million) on Thursday, adding fuel to an already blazing hot month at PRC multiplexes. Last week China set an all-time single-week revenue record, and this week is on track to break that record.

CZ12 follows on the heels of smash Chinese hit Lost in Thailand, which will pass $100 million in its first two weeks and should easily eclipse $160 million by the end of its run (my Chinese colleague Firedeep was the first to go on record with a prediction that the film’s gross will exceed $200 million). That will make it the second highest grossing film in China’s history after Avatar. With its lower ticket prices, Lost in Thailand will actually beat Avatar’s record for total admissions.

Although I haven’t yet seen it, CZ12 gets my vote as the film most likely to break out from China and become an international hit. Release dates are lined up in Russia, South Korea, Malaysia, Vietnam, and all over Greater China, and a U.S. release now seems likely.

Just as Detroit mocked the clunky little imported Toyota cars from Japan in the 1950s and RCA, Magnavox and Zenith (remember them?) ignored Sony’s little transistor radios in the 1960s, Hollywood has so far done little to protect its position vis a vis China as the world’s leading provider of movies.

To be sure, China has a long way to go, but if Hollywood had any common sense it would be sending legions of smart, China-savvy execs and producers to the PRC to figure out how to make movies there and profit over the long run. Instead Hollywood has yielded that advantage to the Hong Kongers and South Koreans, who are now much better positioned to ride the China wave and profit there than Hollywood may ever be.

There is still time for the major U.S. studios to counteract the competitive threat from China, but the success of films like Lost in Thailand and CZ12 ought to be viewed as the first shots across the bow of Hollywood’s global hegemony.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.

Big Trouble in Movie China

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By Robert Cain for China Film Biz

November 26, 2012

Crisis in China’s movie business was narrowly averted on Friday when the country’s film authorities announced that they will award performance-based box office bonuses to domestic film distributors and to theaters, ending a weeks-long dispute that had each side threatening to boycott the other over revenue splits. Thanks to the feds’ intervention, the eagerly awaited release of Feng Xiaogang’s Back to 1942 will proceed as planned on Thursday, and Chinese moviegoers will enjoy a normal December movie season,

Tensions were high in mid-November when five of China’s biggest film distributors banded together to demand an increase in their shares of box office revenues from 43 percent to 45 percent. The five companies—China Film Group, Huayi Brothers Media Group, Bona Film Group, Stellar Mega Films, and Enlight Pictures—told theaters that if they didn’t get their way they would immediately start withholding the releases of their blockbuster movies, including Back to 1942 and Jackie Chan’s China Zodiac, both of which are expected to be major holiday season hits.

In a notice issued to theater chains, the five film distributors said that China’s domestically-made blockbusters have contributed significantly to the nation’s film market. Yet, they complained, as they continue to produce films using state-of-the-art technology, production costs will continue to rise. “Therefore,” the distributors asserted, “In order to boost the creation and production of domestic movies, improve their quality and gradually smooth over the economic relationships between the stages of producing, distributing and screening, we five companies have reached the consensus that the profit share proportion for distributors should not be lower than 45 percent.”

Theater operators responded by holding an emergency meeting of their industry organization, the China Film Circulation and Projection Association, on November 17th in Guangzhou. They published a combative response (copied below) to the distributors’ demands and offered some choice words to reporters, with veteran Wanda Cinema salesman Liang Liang telling a reporter, “I have only three words [for the distributors]: Go to hell!”

In their declaration, the theater operators deemed the distributors’ demands unacceptable, for the following reasons:

  1. The five film distribution companies failed to follow the rules; without any attempt at consultation, they simply went ahead and gave the theaters an ultiimatum.
  2. The five film companies failed to consider that the industry’s current revenue split has been formed over an extensive period of trial and error and therefore any change in pattern would require adequate preparation.
  3. The five film distribution companies only took into consideration their own interests, without considering the challenges faced by theater operators. Most theaters are unprofitable due to the exorbitant rents they must pay their landlords.
  4. The distributors failed to use the correct method to address their grievance. They could have easily taken their request for a raise in revenue shares to China’s Movie Special Funds and apply for the increase in rates there.
  5. The distributors exchanged friendship for profit. China’s movie industry has always supported these five major players in film distribution. However, their actions showed how they have seemingly left behind their integrity when the temptation of personal gain showed its face.

Note that most of these objections are moral and ethical ones, not legal arguments. It’s an interesting example of how business operates in a country like China, where contractual obligations are usually less important than relational ones.

Civil war was ultimately prevented when the National Film Development Funds Management Committee (NFDFMC) stepped in and offered a solution in the form of bonus compensation to both sides, as follows:

For distributors of domestically made 3D and IMAX films 

If a film grosses RMB 50mm to 100mm , a RMB 1mm bonus

If a film grosses RMB 100mm to 300mm, a RMB 2mm bonus

If a film grosses RMB 300mm to 500mm, a RMB 5mm bonus

If a film’s box office gross surpasses 500mm, a RMB 10mm bonus

For theater operators

If at least 50 percent of a theater chain’s total annual box office gross is earned from domestic films, 100 percent of fees paid during the year by the theater chain to the NFDFMC (a straight 5 percent of every RMB of ticket sales) will be reimbursed to the theater chain.

If the percentage of box office earned from domestic films is between 45 percent and 50 percent, the NFDFMC will reimburse 80 percent of the fees a theater has paid to it.

If the percentage is below 45 percent, but the domestic film revenue is still more than last year’s, the NFDFMC will reimbursed 50 percent of the fees.

Both sides were apparently satisfied with this solution, and the show will go on. China’s theaters will continue to run films from the five distributors, and Back to 1942 will unspool on the 29th.

Having witnessed an endless string of financial shenanigans in China’s movie business, I can’t help feeling that this whole dispute was staged as a ploy to justify an end result that undeniably favors domestic films over imported ones. After all, China’s film regulators have for years twisted and strained to get around the WTO rules, and have often simply reneged on their legal obligations, in order to keep foreign films’ revenues below a 50 percent aggregate share of the box office.

With the attractive NFDFMC bonuses to tempt them, it’s hard to imagine that any theater chain in China will ever again submit an annual report with a domestic film box office share of less than 50 percent. The new rules give them powerful incentive to under-report the grosses of the foreign films they exhibit (if they aren’t already doing so) in order to maintain the desired balance and win their juicy year-end spoils.

As if this shift against the interests of foreign distributors wasn’t injury enough, I’m also hearing rumors that SARFT is planning to find ways to roll back the 25 percent share it pays foreign films to a somewhat lower rate. If you’ve heard anything about this please write me at the email address below.

Robert Cain is a producer and entertainment industry consultant who has been doing business in China since 1987. He can be reached at rob@pacificbridgepics.com and at www.pacificbridgepics.com.