‘Terminator Genisys’ Release in China Will be a Litmus Test For Hollywood

‘Terminator Genisys’ Release in China Will be a Litmus Test For Hollywood

by Robert Cain for China Film Biz

If ‘Terminator Genisys’ fails in China it will mark a major shift in audience tastes.

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“Furious 7” Blows the Doors Off China’s Box Office Records

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Furious 7 poster

By Robert Cain for China Film Biz

April 13, 2015

Expectations were high among China’s movie biz pundits for Sunday’s opening of Furious 7, but no one came close to predicting the stunning drive-by looting the Universal release would commit at the country’s movie theaters. Prior Chinese box office records weren’t just beaten, they were throttled, smoked and thoroughly lapped by the skydriving thrillfest.

Furious 7’s opening day haul of 391 million RMB, or $63.1 million, doubled the previous opening day record of 194 million RMB set by Transformers 4 back in June of 2014 (Universal and the Hollywood trades are reporting somewhat higher numbers, but I haven’t yet seen these figures confirmed by official Chinese sources).

Furious 7’s midnight screenings likewise trounced the prior Transformers 4 midnight record of 20 million RMB ($3.3 million) with a new benchmark of 50 million RMB ($8.1 million).

The film’s opening day revenue also nearly equaled the Chinese receipts from the entire 4-week run of the franchise’s previous installment, Fast and Furious 6, which revved up 413 million RMB in 2013, good enough to place 11th in China for the year.

Perhaps most impressively, the film sold more than 10 million admissions in a single day, an attendance total that has been matched only a few times by modern day releases in North America, even though China has 40 percent fewer screens and less than half the seating capacity. What this means is that Furious 7 strained the PRC’s theaters to the limit by selling out a huge percentage of its 93,000 opening day screenings. And it completely squashed the competition, seizing a 92 percent share of the day’s box office revenue.

Top 10 single day grosses

Furious 7 should easily race to a $200 million cume by around April 20th. What happens after that, and whether it can break Transformer 4’s all-time Chinese box office record of nearly 2 billion RMB and $320 million, will depend on its ability to hold up against a slew of competing releases in the next few weeks. These include:

  • The April 17th release of the Fan Bingbing and Han Geng romance Ever Since We Love. Fan is China’s biggest female star, so this film could present a major speed bump for Furious.
  • The April 24th releases of the Dreamworks Animation toon Home and the Arnold Schwarzenegger action crime drama Sabotage. Home’s strong global tally so far bodes well for a strong PRC opening, and Arnold’s last few films have performed much better in China than they have stateside, so Sabotage should easily beat its tepid North American results.
  • The April 30th release of Helios starring Nick Cheung and Shawn Yue. Cheung and Yue’s previous outing The Man From Macau 2 grossed $154 million in February, so if their fans show up for them again they’ll put a major dent in Furious 7‘s record-breaking prospects.

Furious 7‘s surprisingly powerful start raises the bar on expectations for Marvel’s May 12th China release of Avengers: Age of Ultron. One of these movies or the other is likely to be the 2015 China box office champ. Up until last week the consensus for Avengers  was for a $175 million to $200 million cume; now that figure looks relatively unimpressive.

A major question Furious 7‘s box office bonanza brings up is whether the Chinese film authorities at SARFT will deploy their market management tactics to actively crimp the returns of upcoming Hollywood releases, in order to save face for locally made Chinese films. Avengers has what appears to be a big advantage vis a vis Furious in that it faces no major competition for nearly a month after its release. Still, Marvel and Disney should hold off on making any victory laps until SARFT reveals its hand.

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

Sly and Arnold’s Career Re-birth in China

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By Robert Cain for China Film Biz (Bennett, Janet and Thomas, this one’s for you)

November 14, 2013

Long before they reach retirement age, most action movie stars naturally slide (or sometimes plummet) into box office obscurity. At 67 and 66 years of age, respectively, Sylvester Stallone and Arnold Schwarzenegger have valiantly fought this trend, but they are long past their peak box office years in most places around the world.

But not in China. PRC audiences have embraced these two senior citizens and breathed new life into their action movie careers. In a land where the young are taught to treat their elders with respect, Schwarzenegger and Stallone’s recent film offerings have gotten lots of love from China’s teenaged and twenty-something filmgoers.

Take the pair’s current action-thriller, Escape Plan. In its first 10 days of release the picture has already grossed more in China, with nearly $26 million, than it will earn in its entire North American run. It nearly won last week’s box office crown against the far costlier Thor: The Dark World, with a 128 million RMB total versus Thor’s 129 million, despite Thor’s huge advantages of a bigger screen count, higher 3D ticket prices, and a rare day-and-date PRC release. Escape Plan will wind up with around $35 million in China, making it the highest grossing buyout film this year.

In fact, between them Sly and Arnold have appeared in 5 films that have each grossed more than 100 million RMB at China’s theaters, an exceptional record that is matched by few Chinese stars.  Their core audience in China has no doubt grown up watching the pantheon of Rocky, Rambo and Terminator movies on TV and DVD, and is now finally getting their chance to see their movie heroes on the big screen.

With such a big, welcoming audience in China, Sly and Arnold are undoubtedly looking for more movie vehicles to propel their newly vibrant careers. So I offer a few ideas below, completely free of charge (just send me my participation checks when the profits roll in):

Not So Total Recall. This action flick kicks follows a geriatric man who goes for a virtual vacation but is tragically unable to enjoy the early-bird Chinese buffet because he’s forgotten to bring along his virtual dentures.

The Lost Action Hero. A young Chinese fanboy’s dream of teaming up with his favorite 80’s action movie hero turns sour when he finds the now enfeebled and amnesia-prone codger stuck on Beijing’s 3rd ring road, unable to find a way to exit and make his way back to the retirement village.

The Dependables – a team of elderly mercenaries are stymied in their attempt to eliminate a North Korean dictator when the dictator’s henchmen cruelly cut off their supply of adult diapers.

Stop or My Great Granddaughter Will Shoot – a once-tough detective’s life and work are disrupted by a Golden Week visit from his 6 year-old, pacifier sucking descendant, who embarrasses him by turning out to be a better crime-fighter than he is.

Rocky Rolls – 78 year-old Rocky Balboa comes back for one more title bout staged in the Forbidden City, fighting this time from his electric wheelchair. You’ll cry tears of nostalgia as you watch Rocky slowly glide up the steps of Beijing’s Temple of Heaven, arms raised in victory, in his wheelchair stair climber.

For the week ending November 10th, PRC box office totaled a solid $56 million, 43 percent better than the same frame last year. After the one-two finish of Thor and Escape Plan, Hotel Transylvania took in $3.5 million in its second week of release for a two-week cume of $9.3 million, quite respectable considering its status as a buyout film and its China release delay of more than a year.

Box office for week ending Nov 10, 2013

Russia’s Stalingrad crumbled against the Hollywood competition, dropping by nearly 70 percent in its second week. Although it debuted at number one in the prior week—making it the first non-Hollywood, non-Chinese movie to top the charts in China—the film has quickly faded and will fail to reach the 100 million RMB level.

The rest of November and December will witness a crush of new releases, more than in any previous year. On Singles Day (an unofficial holiday on 11-11) nine new domestic releases cannibalized each other, leaving nearly all of them with dismal results. November 15th will see Red 2 and Olympus Has Fallen open against each other, and early next week Gravity, Rush, and the Hunger Games sequel Catching Fire will all open within a few days of one other.

Although China’s box office results in November have so far fallen a little short of general expectations, the rest of the year should be flush with activity and the year-end tally should well exceed $3.5 billion.

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.

I Want My DVD: Video Piracy in China

By Robert Cain

November 30, 2011 (originally published in 2004)

Several requests have come in recently for information about video piracy in China. I wrote a piece on this topic back in 2004 when I was consulting to Shanghai Media Group, and since things haven’t changed much in the intervening years, I have reproduced the article below.

Arnold Schwarzenegger probably doesn’t realize it, but he has become a poster boy of sorts for DVD piracy in China.

It seems that during his visit to the People’s Republic a few years ago to support an event connected with the Special Olympics, Mr. Schwarzenegger took the opportunity to pick up some extra cash by endorsing the products of Bubugao, a prominent local consumer electronics manufacturer.  For a time his grinning photo adorned Chinese billboards and print ads that touted the company’s products, inextricably linking his image with that of the company in the minds of Chinese consumers.

He couldn’t have known it at the time, but Bubugao has since become a major supplier of DVD players known for their superior ability to play pirated DVDs.  With their error-correction features that enhance the sound and picture of “low quality” (i.e., pirated) disks, and their ability to circumvent the zone encoding meant to restrict unauthorized disk distribution, Bubugao’s DVD players have become popular fixtures in the millions of Chinese households that purchase illegally copied DVDs.

Of course, Mr. Schwarzenegger is hardly alone in having his images co-opted by China’s sprawling video piracy industry.  Pirated Hollywood movies and television programs are the lifeblood of a vast, sophisticated and highly profitable trade that has created fortunes for Chinese profiteers, yet returned little to the creators and distributors of those films.

Viewed up close from, say, the streets and cafes of Shanghai, China’s piracy machine is a marvel of distribution efficiency and entrepreneurial initiative. Hollywood’s home video executives can only dream about the levels of product exposure and promotion achieved in Shanghai—a DVD collector’s paradise—with an extraordinary variety of movies and television shows, old and new, offered for sale in cafes, pubs, restaurants, subways and buses, and even in workplaces like office buildings and factories.  DVD peddlers can be found everywhere, lugging tote bags full of DVDs and dropping stacks of the shiny disks on restaurant and coffee shop tables for patrons to peruse while they dine.  All the latest hit movies are available; catalog titles abound; and even American television shows are popular, with programs like Sex and the City and 24 eagerly anticipated each week.

The system operates with awe-inspiring speed: within a few days after (and often before) a film opens in the U.S., China’s pirate manufacturers will have secured a master copy, subtitled the film in Chinese, and distributed millions of illicit disks to every corner of the country.

China’s DVD buyers love the prices too: about one dollar for a quality video; three dollars for a complete disk with all the bonus features.  Those who wish to save space can buy  “double features” with different movies on each side of the disk for about two dollars.

The problem for the Hollywood home video executive—where the dream turns into a nightmare—is that virtually all of these transactions involve pirated disks, meaning that not a single cent, or yuan, as the case may be, has flowed back to the copyright owners’ coffers.

Despite intense pressure from Hollywood lobbyists and genuine efforts by China’s central government to stem the illegal DVD tide, the situation is unlikely to improve any time soon.  There are simply too many economic and structural impediments to positive change.

For one thing, there is a huge imbalance between China’s voracious demand for filmed entertainment and its constrained “legitimate” supply.  Ideology-driven government quotas severely limit legal import and distribution of films and television shows; the cash-poor domestic cable television industry offers only a sparse array of entertainment programming options; and modern cinema screens are in short supply, even in major cities.  The black market has emerged to meet a need that would otherwise go largely unfilled.

Secondly, there is too much money at stake.  With its 1.3 billion population, rapidly rising incomes, and strong household penetration of DVD players, China is probably the world’s second-largest DVD market behind the United States.  When illicit exports to other territories are included, China may well be the world’s largest producer of DVDs.  Even at modest retail prices of just a dollar a disk, huge volumes and their attendant scale economies have made piracy highly profitable.  And in a job-hungry economy, piracy creates hundreds of thousands of jobs that the government may be reluctant to threaten with more rigorous anti-piracy measures.

Although Hollywood has recently won a few symbolic victories—such as a Shanghai court’s verdicts ordering two Chinese companies to pay fines ranging from $4,000 to $12,000 to Fox, Disney and Universal—the pirates maintain the upper hand.  Jim Lambert, an American documentary producer based in Beijing, is skeptical about the legislative approach.  “ I don’t think Hollywood has a full appreciation for just how difficult it is to completely eradicate piracy here,” he says. “The studios want the Chinese to enjoy their movies, but they don’t present them with feasible options, the way the pirates do. An average movie ticket here costs six times as much as a DVD, so for most Chinese the choice between a high-priced movie and a cheap DVD becomes obvious.”

The studios can at least take some comfort in the knowledge that they are not alone in their fight: Chinese producers feel the ill effects of piracy even more than their Hollywood brethren.  As China’s domestic film industry has grown with the success of such films as Ang Lee’s “Crouching Tiger, Hidden Dragon” and Zhang Yimou’s “Hero” (which grossed an unprecedented US $30 million in Chinese theaters), Chinese producers and distributors have been increasingly affected by the problems that video piracy engender. One recent victim was the major motion picture “The Touch,” whose ticket sales plummeted when black market copies of the movie became ubiquitously available four days after its opening.

Philip Lee, a producer with credits on both “Crouching Tiger” and “Hero” and a professor at Hong Kong University’s School of Creative Media, says that “Piracy cuts deeply into the theatrical income of a film. It forces the legitimate video distributors to release DVDs as early as possible, sometimes when the film is still showing in theaters. Theatrical distributors try to pay less for the film by complaining that they have to compete not only with the pirates, but also with the legitimate video release. The producers get stuck in the middle of this kind of conflict and they suffer the most.”

Solving the problem will require a multi-pronged attack.  China’s accession to the World Trade Organization last year seems to have helped, by requiring China to revise its copyright, trademark and patent laws to bring them into line with international standards.  China is eager to be viewed as a legitimate equal with the world’s great economic powers, and so has recently become more responsive to lobbying pressure from Washington, making periodic crackdowns on pirate manufacturing operations, seizing duplication equipment and recorded disks.

Aggrieved studio distributors would also be wise to consider other approaches in addition to lobbying and diplomacy.  The pirate companies, several of which have grown into very large operations, are increasingly open to more legitimate business methods because they realize their pirating days may be numbered.  William Brent, an American partner in Shanghai production company Cinezoic, points out that the shift toward semi-legitimacy was given notable impetus with last year’s video rights sale for “Hero,” which was purchased at auction by a Chinese video distributor for the “previously unheard-of sum of 18 million Yuan” (US $2.12 million).

Jim Lambert suggest that co-option may be more effective than combat.  He asks, “Would it not be a wise move to join forces with the illegal producers of DVDs, working with them rather than against them? Their distribution network is unparalleled, as is their knowledge of what the public wants and doesn’t want. Why not strike a deal and work with them to nudge ever so slightly towards legitimacy?  In the meantime, you have access to what any foreign company would dream of: an incredibly profitable, widespread distribution network.”

If all else fails, perhaps Governor Schwarzenegger can be persuaded to return to China to try and clean up the mess.  If he can somehow figure out how to fix California’s complex fiscal problems, then dealing with video piracy might just be a walk in the park.

Note: According to a report in China’s state-run media, the country’s pirate DVD industry raked in $6 billion in 2010.

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.