Flipping the script
Chinese movie business is defying odds by thriving without Hollywood
Last year was a heady time at the film box office. The first part of 2019 brought a massive interstellar action spectacle that broke records, while the summer yielded a computer-generated colossus that packed theatres week after week.
The movies in question? Not Avengers: Endgame and The Lion King, the twin blockbusters that anchored the Hollywood calendar. They’re The Wandering Earth and Ne Zha, two Chinese-language films that, though little known in the West, have blossomed into some of the biggest hits in Chinese history.
The two films collectively grossed a whopping $1.3 billion this year in China, the largest one-two punch in the country’s history. That means the three highest-grossing movies ever in China are something once thought impossible: Chinese.
With nearly $9 billion in the box office last year, China has swollen to the second-largest film market in the world. It’s more than quadruple the size of third-place Japan and is closing in on the United States (nearly $12 billion). China is so large that it generates more box office dollars than the next six markets combined.
In recent months, a surprising — and, for Hollywood, troubling — trend has emerged: China is achieving much of that success with its own movies.
“What we’re watching unfold in front of us is the maturation of the Chinese film industry,” said Marc Ganis, the founder of the Asia-oriented entertainment company Jiaflix and an expert on the Chinese movie business. “There’s long been an expectation that movies coming out of Hollywood would always be the top draw there. And it turns out that’s not true.”
For years, conventional wisdom held that the rapid expansion of Chinese movie theatres and film attendance would be a boon for Hollywood. As the country ’s movie-going increased, so would — and did — Hollywood’s fortunes.
Many in Hollywood took as a given that it would long continue. All one needed to do as a studio executive was to obtain a coveted government-awarded distribution slot and pump American product on to China’s 60,000 screens. Profits were sure to follow.
The Chinese surge, however, is flipping that script, offering an ominous portent for one of the United States’ most reliable exports. Experts say Hollywood may be running out of luck — and time — in its most lucrative international market. Far from an Asian landing pad for American blockbusters, China is exhibiting signs of becoming like India or Nigeria, two large movie-going markets with film ecosystems that thrive independently of Hollywood.
Ne Zha and The Wandering Earth are leading the way.
Chinese hits once emphasized patriotism over slick storytelling and visuals. These films mark a departure. Nationalistic themes are moved to the background. Effects are more polished. Stories are given a more traditional western structure. They’re big-budget spectacles that just happen to be Chinese.
It’s part of a push by Chinese studios and financiers, often with government backing, to make movies that compete more directly with Hollywood.
Content diversity exists below the top tier. Among the other 2019 hits in China were the reliable tales of heroism, including anthology film My People, My Country and fact-based airline-rescue movie The Captain. There are also films that wouldn’t be out of place on a Hollywood release schedule, including car-racing drama Pegasus and science-fiction comedy Crazy Alien.
These films are catching on, experts say, because they offer the right combination of local flavour and global product.
“Hollywood studios used to worry about the government stopping them from maximizing their profits,” Ganis said. “But what’s stopping them now has been the genuine interest of Chinese moviegoers in seeing local movies. It’s much more organic.”
One China-focused executive at a U.S. studio, speaking on the condition of anonymity because he was not authorized to talk to the press, said he was not worried because he believed China’s ability to create blockbusters lagged behind Hollywood’s, which will keep audiences seeing studio movies for some time.
The data paint a different picture. Just two U.S. films in the top 10 would be the fewest since the modern theatrical business was launched in China a little more than a decade ago. And even the two hits are holdovers from a time when Hollywood reigned; the franchises of Endgame and Fast & Furious Presents: Hobbs and Shaw each began in the aughts.
China is massively consequential to Hollywood. In a climate of flat domestic box office earnings, the Middle Kingdom remains central to studio profits and Hollywood’s ability to keep producing big-budget movies. Last year, China was responsible for more than $2 billion in ticket sales for studio films. The world’s next-biggest market, Japan, generated only about $500 million.
Whether Hollywood can regain its footing there remains far from certain.
“I think it depends on the kind of studio executive you’re talking about and how they react,” said Rob Moore, the former vice-chairman of Paramount who conducts both extensive entertainment and e-sports business in China. “If you’re willing to put in the work, you can be OK. If you’re not, you won’t. It’s just too radically different a market to have the same marketing plan you have in the rest of the world.”
“The days of studios just making $200 million for showing up, which is what was happening for years, are over,” he said.
One way to ease the pain would be for Hollywood to reap more revenue from the tickets they are already selling. Studios get about 25 per cent from movies in the Chinese box office, and there has been noise about boosting that percentage.
The Chinese boom also comes with one final chilling possibility for Hollywood: that Chinese films begin to compete with Hollywood movies even outside their home country, threatening studios’ dominance around the world.
While it’s unlikely Americans would see a Chinese action-adventure en masse, it’s not unthinkable that audiences in Europe, South America or elsewhere in Asia would. “If you’re not seeing the movie in your native language,” Moore said, “does it really matter if you’re reading subtitles of English or Mandarin?”