‘Iron Man 3’ – ‘So Young’ Duel Smashes Chinese Box Office Records. Are Hollywood’s Fortunes Turning?

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By Robert Cain for China Film Biz

May 8, 2013

It’s happening so often in China these days that it’s difficult not to sound clichéd, but it was another record-breaking week at the national box office in the 7-day period ending May 5th.

So many records toppled that to list them all would fill up an entire column. To avoid making this article an overly long list, I’ll mention just a few.

First, at $148 million, last week’s cumulative PRC gross easily beat the all-time weekly record of $136 million that was set during Valentine’s Day week less than three months ago.

Although Iron Man 3’s $64 million 5-day gross fell about $10 million short of the all-time single week record that was set by last year’s Titanic 3D at $74.7 million—it did set new records for biggest midnight screenings total with $2.1 million, and biggest opening day with $19 million.

So Young, the Vicky Zhao directed romance, notched the biggest second-place weekly gross ever, with $53 million.

And The Croods became the highest-grossing original (that is, non-sequel and non-pre-existing franchise) animated film in China’s box office history, with a $36 million total as of Sunday.Box office week ending 5-5-13

So all of this is good for China and good for Hollywood, right?

Good for China’s producers and distributors, yes. For Hollywood, it’s hard to get too enthused. This past week was a positive blip in what continues to be a confounding and rather distressing trend for American studio films in China.

There’s no debating that Iron Man 3 is a solid success. Its PRC gross will roughly double the $60 million gross of the year’s second-best Hollywood release so far, Skyfall, and it will become the first Hollywood film in 12 months to reach $100 million.

But it still may not beat So Young, a melodrama from a first-time Chinese director with a production budget that was probably less than 3 percent what Iron Man cost. And So Young won’t even be among China’s top 5 grossers this year.

When you consider that Iron Man 3 is the biggest and best that Hollywood has to offer, that it enjoys the backing of a strong local partner in DMG and an unprecedented level of government support, yet it still struggles to beat a low-budget B-level Chinese language movie, you know something’s not working. Iron Man didn’t break the downward trend for Hollywood in China, rather, it’s the exception that proves the rule.

Chinese audiences like Hollywood movies, but they love Chinese ones. And that’s a major problem for Hollywood.

China’s box office is now up 41 percent year-to-date (36 percent in RMB terms) while North America is down by 11 percent. Chinese movies are getting better, and with $50+ million grosses now routine, they’re becoming much more profitable. Capital is attracted to ventures that offer profits, and Chinese movies, though tricky investments in some ways, are looking increasingly attractive.

Because Hollywood action movies like Iron Man remain extraordinarily expensive to produce, they need growth from overseas to compensate for their shrinking domestic market. China was supposed to be the solution to Hollywood’s math problem, but China isn’t cooperating. In the global market for film financing, U.S.-based projects are going to find it increasingly difficult to compete, unless they radically change their strategies.

Two strategic approaches that offer promising future prospects for foreign producers are:

1. Provide animated films and family fare. These genres have repeatedly gotten special dispensations from SARFT, enjoying prime distribution slots even during holidays and blackout periods.

2. Make local Chinese language films for low to moderate budgets. This is not easy, but at least it’s permitted, and as we’ve seen, a well-made Chinese film can generate windfall profits.

A third strategy, U.S.-China co-productions, remains extremely challenging, and it may still be a few years, if ever, before such productions become common. As Jiang Wei, general manager of Edko (Beijing) Films Limited, puts it:

“The Chinese film industry needs to grow for greater cooperation to be achieved. There is no real in-depth cooperation, in which staff from both countries work together, like what the English and Australian filmmakers have been doing in Hollywood. When China’s film industry grows as an equal partner and the box office becomes big enough, the Hollywood community will have to think of real stories involving Chinese culture and people who are real characters. Only then will real co-productions be possible.”

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 Swoons With ‘Iron Man’ Fever

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By Robert Cain for China Film Biz

May 1, 2013

I didn’t dare say it until now as I’ve been holding my breath for my friends who handled the Chinese production and release of Iron Man 3, but “WOW!” Their picture has just set new PRC revenue and attendance records for midnight screenings with over $2 million, and initial reports indicate it has easily surpassed Transformers 3’s full opening day record of $15 million, with a nearly $20 million haul in its first-day plus midnight receipts.

And after so many disappointing PRC releases of Hollywood films in the first quarter, IM3 now appears likely to become the first U.S. film in 12 months, since Titanic 3D last April, to crack $100 million at Chinese multiplexes.

I’ve gone on record several times here with the opinion that So Young might beat Iron Man 3 in total China box office revenue. But now it’s a real horse race, and I may wind up eating my words.

Barely a year ago it was conventional wisdom that super hero films don’t play in China, because audiences didn’t grow up with the characters and weren’t familiar with their stories. And until recently this was true; the last Iron Man movie grossed only a fraction of what Avatar, Inception, and several Chinese language hits did back in 2010.

But Disney and Marvel have worked hard to edify the Chinese audience with films like Captain America, Thor, and especially The Avengers, and together with the invaluable efforts of their Chinese partner DMG they made Iron Man 3’s release into a major cultural event. Despite increasing their initial midnight screen count from 1,500 to over 2,300, there was scarcely a ticket to be had in most theaters, and commentary about the film has lit up China’s social media networks.China B.O. Perf of U.S. Films

The China-U.S. collaboration on Iron Man 3 faced numerous challenges and risks, and its success was far from a sure thing, but today’s box office results have vindicated the Disney/Marvel/DMG strategy. Congratulations to all involved for boldly and successfully pioneering new ground in the China-Hollywood relationship.

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.

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

Follow me on Twitter @robcain or Sina Weibo @robcain, or connect with me on LinkedIn. For info on China Pooch email info@chinapooch.comIron Man with Xueqi

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.

DMG’s Chris Fenton Discusses the Bilateral U.S.-China Film Relationship

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By Robert Cain for China Film Biz

November 16, 2012

I recently came across a series of videos published online by the organizers of September’s Stanford Business School China 2.0 conference. The keynote speaker was a friend of mine, DMG Entertainment’s Motion Picture Group President Chris Fenton, who consented to my request to publish a link to his speech, a segment of which you’ll find here.

In the video Chris provides a brief overview of DMG and the activities of its 900 employees in China and the U.S: its businesses include a major advertising agency, media buying, production of local language films in the $2-6 million budget range, co-production and import of U.S. films, and most recently, building and operating theaters. He goes on to show the Chinese version of the trailer for Looper, a film that DMG co-financed and co-produced. And most important for Chris, he shares his thoughts on the importance of improved relations between China and the U.S.

As Chris put it to me, “It is crucial for the US to understand the Chinese point of view to successfully open their market to our exports, particularly with regards to the film industry because it’s so visible. The Chinese view the inference that there’s industry-wide corruption in China and the negative rhetoric of U.S. political leaders as impediments to smoother relations between us.”

Chris’ basic message, one I wholeheartedly agree with, is that if American producers and production companies want to continue to participate in China’s booming entertainment market, they need to meet their Chinese counterparts halfway, to understand and address their needs, and to behave in ways that are a little less foreign and a little more ‘Chinese.’ Of course the same can be said for Chinese companies that wish to participate in the global entertainment business. DMG is one of the few Chinese companies that has shown itself to be fluent in the U.S. and international business culture.

Also appearing at the Stanford conference are my friend Janet Yang, who spoke about her movie career in China, former U.S. ambassador Jon Huntsman, who discussed business lessons from Google’s China experience, and China Film Co-Production Company President Zhang Xun, who talked (in Mandarin only) about keys to U.S.-China co-production. All well worth watching.

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.

We’ll Be Right Back After This SARFT Holiday Break

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By Robert D. Cain for China Film Biz

October 8, 2012

More than a week after it was reported in the Hollywood trades and beyond that Looper opened with a record-smashing debut in China, there is still no official word from SARFT as to what actually happened at the PRC’s multiplexes. In a country where the designated president-to-be can disappear for 10 days without feeling the slightest obligation to explain or even acknowledge his absence, I suppose it’s too much to hope that timely box office reports might be delivered during a holiday week.

In the absence of official word, I’ll go out on a limb and offer my best guess as to what did occur in China over the past week and a half. Bear in mind that the figures below are only as accurate as my back-channel sources. Official numbers should be out in the next day or two, at which point I’ll provide an update.

First, Looper did open well in China, but it came nowhere close to the US $25 million figure that was initially reported by the Hollywood trades and picked up by more than 100 news outlets around the world. While the film did set several notable precedents, it didn’t break any box office records, and it now appears that my initial estimate of $4.3 million for Looper’s opening weekend was just about right.

The National Day holiday week of October 1st through 7th saw roughly $60 million in aggregate ticket sales, making it only the 8th best week of the year so far. Given the high expectations exhibitors had coming in to the week, they were likely disappointed by this result.

China’s year-to-date box office tally probably reached, or at least came very close to, the $2 billion mark last weekend. By the third week of October it will surpass last year’s record total of $2.06 billion. Had it not been for the bucket of ice SARFT dumped on the country’s sizzling box office growth by imposing its 2-month summer blackout of Hollywood blockbusters, the year-to-date total would now be more than $2.2 billion and China would have a shot at cracking $3 billion by year’s end. As it stands now I’m projecting a year-end total in the $2.7 billion to $2.8 billion range.

While China’s film bureaucrats continue to revise their priorities and tactics, two North American companies and one partially American one have exhibited great savvy in maneuvering through the ever shifting political sands of the PRC.

The two aforementioned North American companies are IMAX and Twentieth Century Fox. Both companies have made substantial investments in China and have been smart about how they conduct their business there. IMAX picked a winning film and a winning strategy when it decided to back the Huayi Bros action-fantasy film Taichi 0 with a large format theatrical release. IMAX was unquestionably a major factor behind Taichi  0’s winning box office performance. And Fox made the right move when it submitted Europa Corp’s Taken 2 as a French, rather than an American film, enabling that picture to slip through the holiday blackout and open on Sunday. Its estimated $2.3 million opening day bodes well for Taken 2’s China run.

The ‘partially American’ company I’m referring to, DMG, is a Beijing-based Chinese company that has strong American representation among its senior ranks. DMG pulled off several coups with Looper last week, getting a film that was clearly American (with Chinese flavor) released during a blackout week when Hollywood studio films were strictly prohibited. DMG also managed to obtain for Looper the first U.S.-China day-and-date release since Madagascar 3 opened in June. And DMG’s connections enabled it to achieve a strong screen count during an extremely competitive frame, and should enable it to keep the film running longer in China than most other American films. Although Looper’s China gross won’t come close to matching its U.S. total, it will likely wind up as one of the best indexing U.S. films in China this year.

Also of note: Lionsgate’s The Expendables 2 ended its spectacular run on Sunday, winding up at an estimated $53.6 million, which would put it ahead of The Amazing Spider-Man and just behind The Dark Knight Rises for China’s 9th best performance in 2012. Not bad for a film that grossed $84 million in North America.

And now back to our regularly scheduled program.

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