A good turn­ing point for Chi­nese films

China Daily (Canada) - - COMMENT -

Last year can be viewed as a turn­ing point for the do­mes­tic film in­dus­try, as Chi­nese films ac­counted for 58 per­cent of the year’s 21.7 bil­lion yuan ($3.6 bil­lion) box of­fice re­turns, up from 48 per­cent in 2012. This was de­spite the re­duced ad­min­is­tra­tive pro­tec­tion for do­mes­tic films, with the num­ber of for­eign films al­lowed to be screened in China up since 2012, when the im­port quota was in­creased.

So in­stead of wor­ry­ing about whether the Chi­nese film in­dus­try can sur­vive or not, the fo­cus is now on its sus­tain­able progress, and there were some ad­van­ta­geous changes in 2013 that should en­sure Chi­nese films are more com­pet­i­tive in the fu­ture.

Most no­tably there has been a change in au­di­ence struc­ture, as au­di­ences have be­come younger. Ac­cord­ing to a re­cent sur­vey of En­tgroup, a re­search in­sti­tute of China’s en­ter­tain­ment in­dus­try, the av­er­age age of film view­ers has fallen to be­low 25, and it is still drop­ping. Part of the rea­son for this is more cine­mas and screens have been opened in sec­on­dand third-tier cities, and the new cin­ema­go­ers in the smaller cities are mainly young peo­ple. A to­tal of 5,077 new screens opened in China last year, and the box of­fice re­turns from first-tier cities ac­counted for only 47.8 per­cent of the to­tal box of­fice. It is pre­dicted that the pro­por­tion of re­turns from first-tier cine­mas in the to­tal box of­fice will con­tinue to fall over the next few years.

This in turn has led to a change in the types of films be­ing made, as film­mak­ers are tar­get­ing their prod­uct at teenagers and young adults. Among the top ten box of­fice earn­ers in 2013, seven films were do­mes­tic films, of which five tar­geted an au­di­ence born af­ter 1980. For ex­am­ple, debu­tant di­rec­tor and fa­mous ac­tress Zhao Wei’s So Young por­trays the lives of a group of stu­dents in the 1990s and their loss of in­no­cence. Not sur­pris­ingly, it was a huge hit and it was the year’s third­high­est earner at the box of­fice, rak­ing in about 720 mil­lion yuan.

To some ex­tent, this change in au­di­ence struc­ture and film sub­jects pro­vides a solid foun­da­tion for a sus­tain­able mar­ket in the fu­ture, and it is pre­dicted that China will grow from be­ing the sec­ond-largest film mar­ket to the largest in the next 10 years, sur­pass­ing that of the United States.

In ad­di­tion to this change in the do­mes­tic mar­ket, there have been pos­i­tive de­vel­op­ments in the struc­ture of China’s film in­dus­try, as it is has trans­formed from a large-scale and in­te­grated stu­dio sys­tem to de­cen­tral­ized, flex­i­ble and spe­cial­ized film in­dus­try, a trans­for­ma­tion sim­i­lar to the one Hol­ly­wood ex­pe­ri­enced in the 1950s and 1960s.

Some spe­cial­ized sec­tors have al­ready achieved good de­vel­op­ment. Take film mar­ket­ing for ex­am­ple, which used to be con­ducted by the pro­duc­tion com­pa­nies them­selves. Nowa­days, spe­cial­ized mar­ket­ing com­pa­nies have taken over this role and this has helped raise the pro­file of do­mes­tic films. Data shows, that of the 26 do­mes­tic films that made more than 100 mil­lion yuan at the box of­fice in the first half of 2013, third-party spe­cial­ist com­pa­nies con­ducted the mar­ket­ing for 17 of them.

The In­ter­net has ac­cel­er­ated the process of third-party mar­ket­ing of do­mes­tic films. The pop­u­lar­ity of video web­sites, so­cial me­dia and “online to off­line” view­ing has re­placed some tra­di­tional mar­ket­ing and ad­ver­tis­ing strate­gies. Take Tiny Times for ex­am­ple, it tar­geted teenagers and young adults, mainly 15 to 25 year-old girls, by in­cor­po­rat­ing many of the hot is­sues dis­cussed on mi­cro blogs into the plots, and the film’s di­rec­tor and stars would dis­cuss th­ese online cre­at­ing pre-re­lease hype for the film. This helped build an au­di­ence for the movie, and many cin­ema­go­ers paid well in ad­vance to en­sure they were among the first to see the film, which fi­nally made nearly 500 mil­lion yuan at the box of­fice and recorded the high­est rate of re­turn on its pro­duc­tion costs of any film screened last year.

Lastly, there has been more fi­nan­cial sup­port for do­mes­tic films, which has boosted the de­vel­op­ment po­ten­tial of China’s film in­dus­try. The co­op­er­a­tion and in­ter­ac­tion be­tween fi­nanc­ing com­pa­nies and film com­pa­nies has be­come in­creas­ingly prom­i­nent, as the grow­ing suc­cess of do­mes­tic movies is at­tract­ing greater in­vest­ment. This in turn has led to Chi­nese film­mak­ers fo­cus­ing on more com­mer­cial projects in or­der to max­i­mize the re­turn on in­vest­ments. For ex­am­ple, Feng Xiao­gang’s new movie Per­sonal Tai­lor, was pro­duced by Huayi Me­dia Group, which is listed on the Shen­zhen stock ex­change. The film was re­leased on Dec 19 and made 570 mil­lion yuan at the box of­fice in two weeks.

It is re­ported that Chi­nese com­mer­cial banks is­sued credit funds of over 600 mil­lion yuan to the film in­dus­try from 2006 to 2011. By the end of 2013, the amount of pri­vate eq­uity in­vested in the film and TV in­dus­try ex­ceeded 32 bil­lion yuan. Such a huge amount of cap­i­tal and lever­age can help the in­dus­try re­al­ize economies of scale and the in­te­grated op­ti­miza­tion of the in­dus­trial chain. How­ever, sup­port­ing mech­a­nisms, such as risk as­sess­ment and guar­an­tee sys­tems, are needed to at­tract more cap­i­tal to the do­mes­tic film in­dus­try.

Whether the Chi­nese film in­dus­try can main­tain the above ad­van­tages will be sig­nif­i­cant for its fu­ture de­vel­op­ment, but cer­tainly they will serve to sup­port the boom this year. The au­thor is a writer with China Daily zhu­jin@chi­nadaily.com.cn

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