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.
chinafilmbiz 中国电影业务 
After working myself into the ground and mainly alone I am only now finding some interesting invitations to meet and talk about co operation n China. Maybe meeting with some Poly International people next week for a casual chat after meeting them at the recent Beijing film market.
Even have a game company interested in slowly forming a possible deal to make an online game which is very flattering but now the pressure is on to improve the script with more action but have an opportunity to shoot some scenes in a new hotel in Hainan, I’m thinking 007 style now but the budget is slim and I have to do my own stunts but looking forward to that.
This China opportunity is a long time coming but I feel the wait could be worth it as I go forward in my quest to make my first film in China, it’s not been easy but a light at the end of the tunnel.
Robert, I believe you’ve discovered in your article why the cooperation with China shall be very short lived. No one here in the U.S. believes there’s a market for Chinese films other than in China. Soon, the Chinese government will see this, put an end to it, yet not understand why. Your findings are indicative of the long standing truth that America has and always will be the trailblazer in global entertainment, hence the thirst for American content rising in China. But what is the one essential thing creativity needs to flourish? FREEDOM. Until the Chinese government realizes this simple truth, they will never compete with the modern world regarding arts and entertainment.
I’ve been trying to get this across to people here in China for five years Louie. What it does though is give foreign players a greater chance to co pro with chinese companies to make films that can start to bridge the gap through fusion but you have to be here to do it.
I see some people online claiming to have projects on the go to be shot in China and looking for advice, they are just fishing as they have no idea or personal contact in the country.
China has some exotic locations if the story requires, but that can be done in Hong Kong or other close asian countries with a little effort and planning, if the story is not suitable for china it won’t get a play in the chinese cimema.
If the story is tailor made for China, probably, it won’t get a play or much interest outside china in cinema.
The chinese cinema going audience is demanding more bang for their buck, hence the big foreign films taking more and more market share.
Local film makers are shit scared of losing more and more, hence a shift in films being produced by younger producers and directors gaining market share also.
There is an internal changing of the guard in china regarding this currently that equals the competition against foreign productions by the old guard.
I’ll be meeting some cinema managers soon in Beijing and initiating some ideas like private test screenings if that can be allowed in the near future plus other things that we take for granted outside china.
I’ll also be requesting to do a cinema survey in these cinemas to ask patrons what they want, like and look for in the future from both foreign and chinese films, then pass that on to the “powers that be” here.
Hopefully that can be used as a guage for what can be allowed in the future and noticed by the new SARFT and China Film Group heads when the current crew is relieved of duty later this year.
Change is slow in china unless there is a buck in it, then things happen faster than lightning.
Piracy in China contributes to shaping Chinese audience’s taste for American blockbusters, and all sort of American content. This will have a deep and lasting impact, and will not make it easy for the Chinese film industry to match Foreign standards.
Interesting to note that China made up the lion’s share of a re-release, i.e. Titanic 3D; smart money would be to identify other blockbusters that would benefit from this apparent delayed market effect.
This is the time for American/Chinese joint ventures to start focusing on films that promote Chinese culture to a global audience. And this is the goal that my new screenplay will try to accomplish. My protagonist is a Chinese heroine who will utilize several elements of traditional culture, and the film will avoid violence, sexual issues, and profanity. And it will also turn stereotypes on their heads. If interested, please send an email to wmlover2003@yahoo.com. Thank you for your time. KLM