‘Cold War’ Off to Hot Start in China


Follow me on Twitter @robcain or Sina Weibo @robcain, or connect with me on LinkedIn.By Robert Cain for China Film Biz

November 13, 2012

The Hong Kong cops and robber thriller Cold War got off to a hot start last week with a $15.4 million 4-day debut, enough to make it the 3rd best Chinese language opener of 2012 and 12th best among all PRC debuts this year. For first-time writer-director Sunny Luk and his all-star cast, Cold War warmed up what had been a moribund Chinese box office, marking the strongest opening for any film on the mainland since Expendables 2 knocked off $25 million in its opening weekend two months ago.

 

Produced and distributed by Bill Kong’s EDKO Films and starring Aaron Kwok, Tony Leung, Andy Lau, Byron Mann and Aarif Lee, Cold War will likely rack up another strong week before serious competition shows up at Chinese theaters, with the 3D re-release of 2012 arriving on November 20th and Life of Pi drifting in on the 22nd. Mega-director Feng Xiaogang’s Back to 1942 will almost certainly freeze out Cold War when it debuts on November 29th.

Reaching $31 million in its third week, The Bourne Legacy is now Universal’s 2nd best performer in China this year after the surprise hit Battleship. With a few more weeks left in its run, Bourne should easily surpass the low end of the $35 million to $50 million range that I had predicted for it.

Wreck-it Ralph’s 6-day opening tally of $5 million continues Disney/Pixar’s long string of misfires in China. The only consolation for Wreck-It Ralph is that it didn’t open as poorly as Brave, which managed a tepid $4.6 million over its entire PRC run back in June. Disney/Pixar’s last truly successful animation release in the PRC was more than two years ago when Toy Story 3 tallied a then respectable $16 million box office total over its 4-week run in 2010.

 

Bait 3D wound up its extraordinary run by biting off another $500,000 to finish at $25.7 million, by far the best performance ever in China for an Australian film, and the biggest gross for any non-Hollywood import.

Aggregate weekly national box office was $39.3 million, down 23 percent relative to the same week last year. But the year-to-date tally of $2.13 billion is already 3 percent ahead of the full-year total for 2011, and with 7 weeks left in the year, China is well on its way to setting yet another annual box office record.

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.

It’s Action, Action, Action at the Chinese Box Office


Follow me on Twitter @robcain or Sina Weibo @robcain, or connect with me onLinkedIn

By Robert Cain for China Film Biz

September 18, 2012

The top 4 films at the Chinese box office two weeks ago–all Hollywood action films–held their positions again last week to combine for $34 million, or 85 percent, of the total $40 million weekly aggregate revenue at Chinese multiplexes. Action films have now led the Chinese box office for the past five consecutive weeks,

The Expendables 2 led the way with $15 million, extending its total in China to $40 million so far, compared to its final U.S. gross of $80 million. Expendables 2 will likely wind up earning over 20 percent of its total worldwide theatrical gross in China, which will make it one of the three highest indexing U.S. films in China’s history, after Titanic 3D, at 45 percent, and The Mechanic, at 22 percent.

Chinese films have again proven to be weak competitors against Hollywood imports. Since the SARFT blackout ended in late August, Hollywood imports have taken 95 cents out of every dollar spent on tickets by Chinese moviegoers.

Even the highly anticipated Chinese historical drama White Deer Plain failed to unseat the Hollywood leaders, taking in just $3.6 million in its first two days of release. That film, a controversial 3-hour adaptation of a novel by author Cheng Zhongshi, suffered from poor reviews and confusion over its release, which was delayed by Chinese authorities for “technical reasons.” It should see a bump next week as it expands into China’s second- and third-tier cities, but probably won’t be nearly the hit that its backers had hoped for.

In the week ahead the Daniel Radcliffe horror-thriller The Woman in Black will take aim at the chart-topping action blockbusters in its Chinese debut on September 20th. Radcliffe will need to bring along some of his Harry Potter magic if he hopes to dethrone Expendables 2 as the reigning box office champ .

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

Chinese Revenue for U.S. Films Has Doubled in Five Months

Aside


by Robert Cain for China Film Biz

May 4, 2012

After more than a decade of sizzling hot, 35 percent annualized growth, China’s theatrical film market is showing no sign of slowing down.

In fact, as incredible as it may seem, the pace of growth has actually picked up. So far this year China’s box office revenue is growing faster than the historical trend. While the average per-film revenue for all films has remained flat through April, many more films are being released this year relative to 2011, with the result that total box office is up by nearly 40 percent.

American film producers have been the biggest beneficiaries of China’s latest growth spurt, as Chinese audiences have increasingly turned away from homegrown product in favor of U.S. tent-pole movies.

Since we last looked at China’s contribution to the global box office of U.S.-made films five months ago, the numbers have positively exploded. In 2011, the average American film release in China earned $19.5 million in ticket sales, and the median U.S. film saw 5 percent of its total global theatrical revenue come from China. This year both those figures have doubled, with the average U.S. film earning $39.2 million in Chinese box office receipts, and the PRC now accounting for 11 percent of the median U.S. film’s global theatrical revenue.  (Note: international revenues are difficult to come by; for this article I am relying on public sources such as boxofficemojo.com and IMDB.com, which may in some cases provide information that is inaccurate).

Even if we take Titanic 3D, an outlier if there ever was one, out of the calculation, the average U.S. film has still grossed $30 million in China this year, 50 percent more than in 2011.

At this pace, by 2014 I expect Hollywood films will routinely earn more ticket revenue in China than they do in North America. This prediction would have been outlandish even six months ago, but now it’s looking inevitable that China will soon rival the United States in importance to Hollywood. The reality that Chinese tastes will swiftly become a major driver of the global movie business is one that Hollywood is not yet prepared to deal with, but it is the raison d’etre of my company, Pacific Bridge Pictures. At Pacific Bridge we’re dedicated to developing, financing and producing China/foreign film co-productions, and we’ve consulted to numerous studios and entertainment companies on cross-Pacific media initiatives.

While things are looking up for American films, for domestic Chinese films the trend has gone in the wrong direction. Revenues for the average Chinese-made release in China have fallen by 40 percent, from $5.6 million in 2011 to less than $4 million in 2012. Hong Kong-made films and China-Hong Kong co-productions are down by 18 percent on average, though Taiwanese films have been the exception to the rule, soaring this year to an average of $8.4 million per film, up from $1.9 million in 2011.

Wang Zhongjun, co-founder and CEO of the prominent film production and distribution conglomerate Huayi Brothers recently said, “2012 is a prosperous but difficult year for Chinese films. As Hollywood is getting a larger portion of the market, we are concerned about the competition. Huayi Brothers feels the pressure, but we are putting the responsibility on ourselves.”

Wang went on to express a commonly held view: “Through the years of cooperation, all the foreign companies came to us with their only interest being how much revenue the Chinese market could hold for them,” he complained. “When I asked how much revenue they can bring in for us from the overseas market, they just couldn’t answer.”

Foreign producers had better be prepared to answer that question if they expect to continue to prosper in China. What China’s film industry, and the Chinese government, want more than anything is to become major players on the global stage. It’s unlikely that the PRC’s leadership will tolerate foreign domination of such a strategically important sector as media for very long. The smart long-term players are crafting strategies for cooperation and mutual benefit with Chinese partners. More on that topic next week.

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 Box Office: Hollywood Films Regain Dominance


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By Albert Wang for China Film Biz

February 8, 2012

For the second week in a row, Mission: Impossible 4 Ghost Protocol reigned at the Chinese box office, grossing a reported $39.4 million and bringing the film’s cumulative 9 day gross in mainland China to just under $56 million.

Out of the $24.3 million that MI:4 grossed over the weekend in the foreign theatrical circuit, $19.8 million came from China. To put the numbers in context, MI:4 grossed a mere $7.4 million in its opening weekend in Japan in December of 2011. Until recently, Japan was the world’s 2nd largest movie market. It took MI:4 film little over a week in China to gross as much as it did in a full month in Japan.

In second place was Sherlock Holmes: A Game of Shadows, which continues its decent showing in China with a gross of $3.56 million over the week, bringing the film’s 22 day total to $27.7 million.  Meanwhile, both The Viral Factor and All’s Well, Ends Well 2012 held on to the number three and four spots, grossing $2.9 million and $2.4 million, respectively.

The lone newcomer into the top five was Jonnie To’s Life Without Principle, which earned a rather mild $2.3 million over three days to claim the number five spot.

With the exception of To’s Life Without Principle, there was relatively little movement in the box office top 10.  And so this week it is worth noting the complete dominance Hollywood films have had in the Chinese market, with M:I 4 and Sherlock Holmes together accounting for a cool 75% of the mainland Chinese box office this week.

This dominance by a pair of Hollywood films comes at a time when it seems that just about anyone and everyone with deep pockets in China is looking to develop a film fund.  This week saw the announcement of Bruno Wu’s $800 million Harvest Seven Stars Media Private Equity Fund, as well as the announcement of a Chinese government-backed film fund to be overseen by China Mainstream Media National Film Capital Hollywood Inc. (HSSMPEF and CMMNFCHI, respectively; good luck remembering those acronyms), the U.S. division of China National Film Capital Co. Ltd.  Even retired NBA star Yao Ming has been reported to be looking into developing a film fund in recent weeks.

The purported goal of most if not all of these film funds is to produce Chinese films with a more global appeal.  And yet as we see from the Chinese box office this week, Chinese films have yet to find a way to effectively compete with Hollywood films on their own turf.   This is due to a wide range of issues, from overly restrictive government regulations, to a lack of quality source material being developed in China for the big screen, to Chinese audience’s demonstrated preference for Hollywood’s film offerings.  However, I’d like to posit another problem a globally appealing Chinese cinema faces.

China, in spite of all the capital being thrown at film funds of late, lacks the necessary star power to promote its films globally.   M:I 4 had Tom Cruise, Holmes had Robert Downey, Jr.  Without those stars headlining their respective films, it’s difficult to imagine either film performing as well as it has on the foreign theatrical circuit.

And so in spite of all the promises the various film funds have made regarding a future global Chinese cinema in the making, a big question remains:  Who will be the Chinese Tom Cruise?  The Chinese Robert Downey, Jr.?  Or the Chinese Shia Lebouf?

Albert Wang is an aspiring producer of US-China film co-productions who joined the Pacific Bridge Pictures team in December, 2011. His previous blog on US-China films can be seen at hollymu.com.

China Passes Japan and is Now the World’s #2 Film Territory


By Robert Cain for China Film Biz

February 2, 2012

You heard it here first: China has surpassed Japan and is now the world’s biggest film territory outside the United States, as measured by total box office revenue.

For the past several months China has handily beaten Japan’s national box office take, and the gap is widening as China’s torrid pace of revenue growth continues.  Although China’s annual total of $2.05 billion for 2011 fell slightly behind Japan’s $2.29 billion, the last few months of 2011 and January of 2012 saw China surge ahead. 2012 will undoubtedly be the year in which China solidifies its position as the world’s number 2 market behind the United States.

.                    Source: Pacific Bridge Pictures research

.             Source: Pacific Bridge Pictures research

Now it is just a matter of time—about 6-7 years if current trends continue—before China overtakes the United States to permanently become the world’s biggest and perhaps most important movie territory.

For Japan, the lingering effects of the 8.9 magnitude earthquake and tsunami that devastated the country last March have certainly been a factor in its descent to #3. Hobbled by the damage to northeastern Japan’s infrastructure, and by a dampened national mood, box office dropped by 10 percent (nearly 18 percent in local Yen currency) from the record-breaking tally of $2.66 billion in 2010.

But even had there been no earthquake, Japan would have inevitably yielded the number two spot to China by 2013. Japan, like the U.S., has been a mature market for some time; even if we dismiss 2011 as an aberration, the annualized box office growth rate there has been in the low single digits for years. China, by contrast, has been growing by nearly 40 percent per year for a decade.

And aside from total box office, China outperforms Japan in other key measures. As a market for Hollywood films, China has the clear edge over Japan. Of the 26 Hollywood films that were released in both territories in 2011, 19 grossed more in China than they did in Japan, many by a very wide margin. Transformers 3 and Kung Fu Panda 2, for example, each grossed 3 times as much in China as they did in Japan. Had China allowed more American films into its theaters last year, it would have undoubtedly surpassed Japan in total box office in 2011.

.       Source: Pacific Bridge Pictures research

China also offers better upside for its domestic films than Japan does for its films. The top grossing Chinese films of the past year—The Flowers of War, Flying Swords of Dragon Gate, Let the Bullets Fly and Aftershock—have all earned more than $85 million in their domestic Chinese releases. During the same period, not one Japanese-made film cracked even $60 million in Japan.

The implications of China’s rapid ascension are enormous for the global entertainment business. As China’s theatrical business grows, so will its television and home video industries. In the coming years China’s global share of the entertainment pie will expand from the low single digits to 20 percent and higher, and China’s buyers will rapidly gain clout in deciding which films get made, and how and where they are produced. The flows of capital for production and marketing of movies will increasingly come from China. By simple attrition, U.S. tastes will become less dominant, and Chinese tastes will become more influential.

Hollywood’s major studios have been extraordinarily slow to respond to China’s emergence. It is no longer reasonable for them to expect that China will play by their rules, or that Hollywood will remain the world entertainment industry’s center of gravity for much longer. Any of us who hope to enjoy career longevity in the global film business had better start thinking and acting more with China firmly in mind.

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.

Chinese ‘Flowers’ Wilt in U.S. Theatrical Release


by Robert Cain for China Film Biz

January 25, 2012

If the message hadn’t fully gotten through yet, last weekend’s box office results confirmed it: China has no idea how to make movies that Americans—or the world—will pay to see.

The latest Chinese film to crash on the rocks of U.S. shores is The Flowers of War, the mainland Chinese blockbuster that opened on 30 North American screens this past Friday. The film seemed tailor-made to captivate global audiences, and with its $90 million price tag, it needed to. But despite its international star (Christian Bale), its world-renowned director (Zhang Yimou), a major U.S. producer (David Linde) who had massive prior success with Crouching Tiger Hidden Dragon, and a veteran distributor (Chris Ball), Flowers drooped on arrival with a paltry $48,448 and a per screen average of just $1,615.

Flowers continues a 5 year long string of international misfires from China. Chinese releases in the U.S. have rarely grossed more than $500,000. Even those that earn $50 million or $100 million in their home country typically fail to travel.

It’s not that Chinese films never work in the U.S. and internationally, but successes are extremely rare. The last real hit to emerge from the PRC was Jet Li’s Fearless, which sold $43 million worth of tickets in the U.S. back in 2006.  Hero (also starring Jet Li) grossed $53 million in 2004, and House of Flying Daggers took in $11 million that same year. The highest grossing Chinese language film of all time, Crouching Tiger, Hidden Dragon, was in fact not a Chinese film at all: its producers were from America and Hong Kong, its director a Taiwanese-American.

The failures are not for lack of trying. Most every Chinese producer, director, and financier desperately wants a meaningful slice of the international market. More than anyone, China’s Communist Party wants to export Chinese culture to global audiences in order to counteract the “creeping cultural influence of the West.” But they’re going about things all wrong.

For one thing, there are virtually zero writers in China who know the first thing about writing film stories that would appeal to international filmgoers. Cultural barriers are certainly an issue, but an even bigger issue is that Chinese studios and investors on the whole have no understanding of the development process. With little respect for writers and even less desire to invest in them, China is doomed to keep making films that are mostly mediocre at best, and terrible at worst.

Another major problem is that China’s film censors scrub out so much of the realism, titillation and thrills from their countrymen’s films that they leave them bland and tedious. Their need to micro-manage and sanitize the themes, characters and genre elements of films is anathema to good storytelling.

A third factor is the unquestioned primacy of Chinese directors, who shoot and edit their films with totalitarian disregard for the input of others. While Hollywood’s collaborative approach to filmmaking is far from perfect, its process of allowing cinematographers, editors, production designers, composers, and other craftsmen to meaningfully contribute and even challenge the director usually leads to better results than the Chinese approach of empowering the director to run roughshod over everyone else.

Chinese filmmakers know that their films don’t travel, and the smart ones know they need help. Hollywood has much to offer to them, if only they would listen.

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 www.pacificbridgepics.com.

China’s Box Office: Hong Kong Director Derek Yee Works Comedy Magic


By Robert D. Cain for China Film Biz

January 18, 2012

Hong Kong director Derek Yee spun gold last week with his new film The Great Magician, which knocked The Flowers of War out of the top spot and led the Chinese box office with $11.5 million.

For Yee, a writer-director- actor-producer who is perhaps best known for producing the hit Hong Kong crime dramas Overheard (2009) and Overheard 2 (2011), The Great Magician was something of a departure. It is the first comedy he has directed in over 20 years, and also one of the few films he has made on the Chinese mainland. SARFT censors required him to make numerous changes to the film before they would allow its production and release.

Second place was also claimed by a new market entrant, the fourth installment of the popular Pleasant Goat and Big Big Wolf children’s animation franchise, which took in $11.3 million. Based on a long-running Chinese children’s TV series, the Pleasant Wolf franchise is the only home-grown animated property that has managed to generate consistent, repeated success at the box office.

Taiwanese romance You Are the Apple of My Eye maintained its 3rd place rank with $5.6 million, for a $9.9 million cumulative gross.  Already this year’s Taiwanese films have exceeded the total gross for all of 2011’s Taiwanese releases in China. Quite a change from the days not so long ago in the PRC when mere possession of a cultural artifact from Taiwan could be construed as a political crime punishable by imprisonment.

Flowers of War and Flying Swords of Dragon Gate fell to 4th and 5th place, with respective weekly revenues of $4.5 million and $4.3 million. Flowers has now reached a $93 million total gross, but doesn’t have enough steam left to challenge Let the Bullets Fly as the all-time Chinese language box office champ. And unless it achieves the unlikely feat of grossing at least $100 million outside of China, it will fall well short of financial breakeven.

Flowers of War had a rough week in awards competitions: It lost out to the far superior Iranian film A Separation for the Golden Globes’ best foreign language film awards, and it failed to make the cut for the Academy Awards foreign language shortlist of nine films. For several years in a row the Chinese have tried to win over the Academy with big, crowd-pleasing melodramas. Perhaps they’ll learn their lesson next year and submit a movie that might actually have a prayer of winning. It must be particularly galling to the Chinese that a Taiwanese film, Warriors of the Rainbow: Seediq Bale, did make the shortlist.

American entry Sherlock Holmes: Game of Shadows, grossed a decent $2.9 million in its first day of release in Chinese theaters. If it performs as well in China as it has elsewhere, it should wind up with at least $15-18 million in total receipts there.

Independent distributor Bona Film Group had a rare indie trifecta with the number one, number two and number five films for the week.

Aggregate box office for the frame was 59 percent higher than the same period last year. With Enlight’s next installment of its hit All’s Well Ends Well franchise opening this weekend (last year’s sequel wound up with nearly $25 million) and with Mission Impossible: Ghost Protocol arriving on the 28th, January is shaping up as a very big movie month overall.

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 www.pacificbridgepics.com.


A Sweet and Sour Week at the Cinema


By Robert Cain for China Film Biz

January 4, 2012

It was a December to remember in China, with the national box office hitting a new record at just over $2 billion. What has been most noteworthy about the past year—and the past decade—is the Chinese cinema industry’s extraordinary rate of growth. The quadrupling of the country’s overall economy in the decade since 2001 has been astonishing enough, but that was barely a blip compared to the nearly thirty-fold growth of China’s theatrical box office during the same period. In the blink of an eye China has matured from a minor film territory into an international powerhouse, the country to watch.

One of the bright spots in December was the ongoing competition between Zhang Yimou’s The Flowers of War and Tsui Hark’s Flying Swords of Dragon Gate. Both films performed extremely well, becoming the two highest grossing Chinese language films of 2011, with nearly $77 million in revenue for Flowers and $69 million for Flying Swords so far.  Both are in contention to possibly break the all-time record gross in China for a Chinese-language film, which is currently held by the 2010 release Let the Bullets Fly with $105 million.

And yet, in some ways December was a disappointment. Without a single major Hollywood film released during the entire month, Chinese audiences had limited choices at the multiplex, and many stayed away. For the week ending January 1st, revenues declined by 4.5 percent compared with the same week in 2010, despite higher ticket prices and nearly 3,000 new movie screens in operation. Per-screen averages were down by about 40 percent from last year.

Six new films opened last week, but their combined revenue amounted to less than $6 million, with the Chinese action pic Speed Angels leading the way at $2.4 million. Speed Angels was the seventh film of the year released by the successful indie distributor Enlight, but it fell far short of the company’s 2011 hits Mural ($27 million gross), All’s Well Ends Well ($24 million), and White Vengeance ($23 million).

The lone American opener was the Daniel Craig-Rachel Weisz ghost thriller Dream House, which echoed its weak U.S. opening with a tepid $1.4 million take at the Chinese tills.

Flowers and Flying Swords should continue to lead the market for the next two weeks, as there won’t be any serous competition until January 15th, when Sherlock Holmes: A Game of Shadows, hits the theaters. Things will heat up after that, with the Jay Chou action vehicle The Viral Factor opening on the 19th, and All’s Well Ends Well 2012 opening on the 20th.

Late in the fall American movies’ share of the Chinese box office was above 50 percent, but because the last Hollywood blockbuster release of the year—The Adventures of Tintin—came all the way back in mid-November, U.S. box office share drifted down to 46 percent by the end of the year. Home grown Chinese films captured a 24 percent share and China/Hong Kong co-productions took 22 percent.

        Share of China Box Office receipts by Film’s Country of Origin, 2011

Look for more 2011 box office analysis in an upcoming post later this week.

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 Box Office: Zhang Yimou’s ‘Flowers’ Still Smell Sweet


By Robert Cain for China Film Biz

December 27, 2011

For the week ending December 25th, 2011, Flowers of War and Flying Swords of Dragon Gate once again held the first and second spots in what was a very good but not great weekend at the Chinese box office.

The $71 million cumulative box office total may look good at first glance—indeed, it was the second best week of 2011 after Transformers 3’s opening week in July, and Flowers set a new single-week record for a Chinese film. But the total box office was actually up only 4 percent on a Chinese RMB basis compared with the same week last year. And considering that there are 45 percent more movie screens operating across China now than at this time last year, the past week’s box office looks downright unimpressive by comparison.

The problem may have been the oversaturation of Flowers and Flying Swords. Those two pictures grabbed up more than 80 percent of China’s 9,000 screens, leaving little else in the theaters for moviegoers who might have wished to see a different film. The strongest new opener, China Film Group’s romance Dear Enemy, managed just $6.5 million in sales, and the second best, The Allure of Tears, brought in $3.8 million. The rest of the field, a mix of 3 holdovers and 3 new releases, every one of them Chinese, brought in a grand total of $600,000.

Flowers of War will pass Beginning of the Great Revival this week to become the highest grossing Chinese film of 2011. With a couple more strong weekends it could possibly challenge Kung Fu Panda 2’s  $92 million China gross for the number two spot among all films released this year. But even if it does reach that lofty height, Flowers will only recoup a third or so of its negative cost in China. In order to break into the black it will have to gross, at minimum, $120 million in the international marketplace. This has only happened once before for a Chinese film, when Crouching Tiger, Hidden Dragon became a breakout hit in the United States back in 2001. Flowers of War lacks the compelling narrative, the exotic appeal, and the universally resonant themes that Crouching Tiger offered, so the possibility that Flowers might replicate those numbers seems remote.

The most important box office news this week is that China’s cumulative gross for the year has definitely crossed $2 billion, making it only the third country in history, after the U.S. and Japan, to reach that mark. Even more remarkably, it was only last year that China crossed the $1 billion mark for the first time ever. The above analysis notwithstanding, a $71 million box office haul in one week would be extraordinary anywhere in the world outside North America; it’s indicative of China’s incredible growth that the number fails to impress only by comparison against last year’s numbers.

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.

SARFT Report Confirms It: China Box Office to Exceed $2 Billion in 2011


By Robert Cain for China Film Biz

December 16, 2011

SARFT Chairman Cai Fuchao picked an auspicious day, December 15, to announce the latest statistics for China’s cinema business. While two just-opened films featuring Christian Bale (Flowers of War) and Jet Li (Flying Swords of Dragon Gate) battled for moviegoers’ attention and drew huge crowds at the theaters, Cai dropped the news that box office revenue in China this year has already exceeded 12 billion RMB, or US $1.86 billion at 2011’s average exchange rate. Cai also noted that the country’s cinema screen count has crossed the 9,000 mark, a 45 percent increase over the 6,200 screens operating at year end 2010.

That 12 billion figure was for the week ending December 11, which means that there are still 3 more weeks in the year for China to extend its record breaking revenue surge. With last night’s screenings of Flowers of War and Flying Swords reportedly running at better than 90 percent of capacity and with ticket prices high$12.50 for Flowers and nearly $19 for the 3D Flying Swords—these two films alone will likely push China past $2 billion for the year.   

For those of us who closely track China’s film business, Cai’s announcement was like water in the desert, as SARFT only announces these figures a few times a year. Both the box office and screen count numbers were positive surprises for me. It now appears certain that box office growth will hit or exceed the 30 percent rate I had predicted. New screens have been opening at a rate of 8 per day, and the current screen count has surpassed my year-end estimate of 8,900.

Total revenue has expanded by a staggering 110 percent in just two years, and is up more than six-fold in the past 5 years. When compared with North America’s sluggish growth of less than 2 percent per year (actually, negative growth on an inflation adjusted basis), it’s mystifying that Hollywood’s major studios haven’t deployed teams of their best people to tackle the opportunities there.  Most are largely sitting on the sidelines, tossing a picture or two a year into Chinese theaters, and mainly just watching the China juggernaut pass them by.

For 2011, China’s box office growth has once again nearly quadrupled the country’s overall GDP growth rate, at least the 8th year in a row that it has done so. And contrary to those who think the industry is due for a downturn, I believe China’s film business is still in its infancy.  It will most likely pass Japan in 2012 to become the world’s biggest territory outside North America; give it 7 or 8 more years and China will pass North America. The reasons for this continuing surge have to do with income growth, improving availability and quality of films, and especially rising screen count. Cinemas will continue to be built because there is a huge shortage of them: China has dozens of cities with populations larger than Boston or Washington that still lack a single multiplex.

There exists a fairly predictable straight-line correlation between the number of cinema screens in a country and total box office revenue. If you build it, they will come, so long as you aren’t over-built. Even with its spectacular 10-year long cinema expansion, China is still the world’s most under-screened major market. Given the country’s projected GDP and per capita income growth, it can build another 50,000 screens and still not be anywhere near over-built. With upside like that, fortunes are just waiting to be made.

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.