Box of­fice in China soar­ing to new highs

Movie­go­ers shell out $2.6 bil­lion on tick­ets so far this year as mul­ti­plexes mul­ti­ply.

Los Angeles Times - - BUSINESS - By Richard Ver­rier

China’s movie busi­ness, which is grow­ing at break­neck speed, has hit another mile­stone: The box-of­fice haul has jumped nearly 50% from a year ear­lier.

Chi­nese movie­go­ers spent $2.6 bil­lion on tick­ets in the first five months of the year, ac­cord­ing to film track­ing firm Ren­trak. This puts the coun­try on pace to within a few years over­take the U.S. and Canada, which have racked up $4.3 bil­lion in sales since Jan­uary.

There’s a conf lu­ence of rea­sons be­hind the ex­pan­sion. China’s ris­ing mid­dle class has led to a mul­ti­plex build­ing spree. Amer­i­can movies are also grow­ing more pop­u­lar, high­lighted by the more than $600-mil­lion draw for “Avengers: Age of Ul­tron” and “Fu­ri­ous 7.”

Hol­ly­wood is pay­ing at­ten­tion. The growth has prompted a f lurry of deal­mak­ing as stu­dios and pro­duc­ers look to gain a foothold in the mar­ket.

“The strength of the mar­ket and dol­lars that are avail­able in China are as­tound­ing,” said Paul Der­garabe­dian, a se­nior an­a­lyst at Ren­trak. “If you leave out China, you’re go­ing to leave a lot of money on the ta­ble.”

That’s never been more ev­i­dent than with “Fu­ri­ous 7” and “Avengers,” which could be a harbinger of big­ger and big­ger re­turns for Hol­ly­wood stu­dios.

Univer­sal’s “Fu­ri­ous 7” pulled in $390.8 mil­lion through May af­ter its April 12 de­but, mak­ing it the high­est gross­ing film ever in China and even sur­pass­ing ticket sales in the U.S. and Canada.

The movie sur­passed the previous record in China set by Para­mount’s “Trans­form­ers: The Age of Ex­tinc­tion,” which ac­cu­mu­lated $319 mil­lion.

Un­like “Trans­form­ers,” “Fu­ri­ous 7” did not in­clude any spe­cific use of Chi­nese ac­tors or lo­ca­tions to make the film more ap­peal­ing to Chi­nese au­di­ences. The movie did, how­ever, ben­e­fit from the sup­port of China Film Group.

The state-owned en­tity, which con­trols the im­port and dis­tri­bu­tion of movies in China, took a nearly 10% stake in “Fu­ri­ous 7,” which had lit­tle com­pe­ti­tion from other for­eign films.

Mean­while, Dis­ney/Marvel’s “Avengers: Age of Ul­tron” also did a ban­ner busi­ness in China. The su­per­hero ac­tion se­quel has gen­er­ated $229.1 mil­lion since its May 12 de­but, more than dou­ble the ticket sales that the first Avengers movie had in China in 2012.

The film’s suc­cess at­tests to the pop­u­lar­ity of the Marvel fran­chise and the “un­be­liev­able ex­pan­sion” of the coun­try’s box of­fice, said Dave Hol­lis, head of in­ter­na­tional dis­tri­bu­tion for Walt Dis­ney Stu­dios.

“It’s hard … to ex­pect num­bers that are as big as what are com­ing out of China on a reg­u­lar ba­sis,” Hol­lis said.

While ticket sales are ex­pected to slow some­what in

the sec­ond half of the year, an­a­lysts pre­dict China will eas­ily sur­pass last year’s record level at the box of­fice, when sales grew 34% to $4.8 bil­lion.

One rea­son for the growth is that the world’s largest coun­try is adding more than 10 new cinema screens a day as de­vel­op­ers open new mul­ti­plexes in ma­jor and sec­ondary cities across the coun­try.

China opened 554 new cin­e­mas and 2,806 screens from Jan­uary to the end of March, bring­ing the na­tion’s to­tal ca­pac­ity to around 5,700 cin­e­mas with 26,000 screens, ac­cord­ing to Ar­ti­san Gate­way, a Shang­hai cinema con­sult­ing firm. Guang­dong, Zhe­jiang and He­nan prov­inces were the top three mar­kets in cinema open­ings.

The wider reach is help­ing de­liver big box-of­fice num­bers for movies such as “Avengers,” which opened on 17,000 screens, most of them in higher-priced 3-D for­mats.

“There has been an in­cred­i­ble de­vel­op­ment in build­ing screens both in key cities and in the B and C cities,” said Dun­can Clark, pres­i­dent of dis­tri­bu­tion for Univer­sal Pic­tures In­ter­na­tional. “That’s a crit­i­cal fac­tor as we can mon­e­tize our po­si­tion by play­ing in such a wide range of screens.”

The ex­pan­sion has pushed stu­dios to grow ever more closer to China through deals and part­ner­ships. For in­stance, Univer­sal opened a new of­fice in Bei­jing last year. The stu­dio next year will re­lease “The Great Wall,” a Chi­nese co­pro­duc­tion with Le­gendary East. The film stars Matt Damon and is cur­rently in pro­duc­tion.

China’s Hu­nan TV closed an agree­ment to in­vest $375 mil­lion in Lionsgate’s movie slate over three years; real es­tate firm Fo­sun last year put $200 mil­lion into Jeff Robi­nov’s new Stu­dio 8 pro­duc­tion com­pany; and Bei­jing-based Huayi Bros. stu­dio an­nounced in March that it was in­vest­ing in an 18pic­ture slate with Robert Si­monds’ STX En­ter­tain­ment.

But Hol­ly­wood’s suc­cess in China also has fu­eled grow­ing spec­u­la­tion that the Chi­nese govern­ment may im­pose new re­stric­tions on for­eign films to boost the do­mes­tic in­dus­try. There are some con­cerns that the govern­ment might move to slow down the flow of for­eign re­leases to boost films made by Chi­nese crews.

“The Chi­nese film in­dus­try is grow­ing in con­fi­dence, but it is a con­cern for China … to have their mar­ket­place dom­i­nated by im­port movies,” said Ellen Elia­soph, chief ex­ec­u­tive of Vil­lage Road­show En­ter­tain­ment Group Asia, at a re­cent con­fer­ence in Hol­ly­wood.

Stu­dios get to keep only a frac­tion of the ticket sales from the movies they show in the coun­try.

China al­lows 34 for­eign films into the coun­try each year un­der rev­enue-shar­ing agree­ments, and stu­dios col­lect only 25% of box-of­fice rev­enues on those ti­tles. How­ever, stu­dios whose movies are made with Chi­nese part­ners and sanc­tioned as co-pro­duc­tions get about 40% of rev­enues. The cur­rent quota ex­pires in 2017.

Its os­ten­si­ble pur­pose is to pro­tect the do­mes­tic film in­dus­try. Each year, China Film Group tries to en­sure a roughly equal split be­tween for­eign films and do­mes­tic movies to en­sure that lo­cal pro­duc­ers aren’t crowded out of the mar­ket.

Chi­nese films have been grow­ing au­di­ences as well. Two of the five high­est­gross­ing films in China this year were home­grown: “From Ve­gas to Ma­cau II” and “Dragon Blade,” which gen­er­ated $148.8 mil­lion and $118.6 mil­lion, re­spec­tively, ac­cord­ing to Ren­trak.

Some in­dus­try ex­perts be­lieve China may seek to bal­ance out the mar­ket this year by ex­pand­ing black­out pe­ri­ods, lim­it­ing how long for­eign movies play or even re­leas­ing sim­i­lar genre ti­tles at the same time.

The prac­tice, known as “dou­ble dat­ing,” sparked con­tro­versy in 2012 when China Film Group re­leased “Dark Knight Rises” and “The Amaz­ing Spi­der-Man” si­mul­ta­ne­ously in the coun­try.

“This is go­ing to be a very in­ter­est­ing year be­cause it’s the first time there has been such over­whelm­ing suc­cess on the part of for­eign im­port movies” early in the year, Elia­soph said dur­ing a panel dis­cus­sion last month at the Pro­duced by Con­fer­ence. “It may be the Chi­nese govern­ment looks at the strength of Chi­nese films right now and says, ‘You know what, we’re not go­ing to do any­thing.’ ”

China’s boom­ing box of­fice

Ma­jor Hol­ly­wood movies are en­joy­ing big in­creases in box-of­fice rev­enue in China, now the sec­ond-largest cinema mar­ket in the world.

Mi Ang Euro­pean Pressphoto Agency

CHI­NESE MOVIE­GO­ERS spent $2.6 bil­lion on tick­ets through May, ac­cord­ing to Ren­trak. Above, Ge­orge Clooney at the Shang­hai pre­miere of “To­mor­row­land.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.