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China Market Update: Mainstream Recovery, Marvel & Main Melody Fatigue, Chinese Indies & Streamers
Hardly anyone in North America or Europe seems interested in working with mainland China’s film and TV industries these days. Even before China retreated behind a literal and metaphorical wall during the pandemic, too many fingers had been burned, too many deals never materialised and too many projects scuppered by censorship for anyone to keep this market as an integral part of a business plan.
These sentiments were made even clearer to me last week when I attended TCCF in Taipei, where the film industries of France, Japan and Korea all appeared more interested in working with Taiwan as a funding partner and entry point into Chinese-language content. As the Mandarin-speaking island gears up for an election in January 2024, the current DPP government is spending generously on supporting its own creative industries as well as forging cooperation with the rest of the world (more on Taiwan in the next edition of Streamlined).
So why is this edition of Streamlined focusing on China? Because here’s the thing – China is still the world’s biggest theatrical market outside of North America and it isn’t going anywhere. Although the regulatory environment remains challenging and it would be unwise to count on anything China-related, there are still many producers, filmmakers, investors, buyers and programmers in this market who continue to look beyond China’s borders.
As US President Joe Biden sits down with Chinese President Xi Jinping at the APEC Summit in San Francisco this week, it seems as good a time as any to look at a few recent developments in this market.
China’s Theatrical Recovery Has Been Impressive..
Back in August, I wrote about how China’s summer box office was on fire with a string of local hits, although Hollywood movies were faring less well. While the recent National Day holiday period was softer than expected, the market is still in full recovery mode and box office for the year to date reached $6.9bn last weekend, according to figures from Artisan Gateway, which is 78% ahead of the same point last year, and only 14% down on this point in the pre-pandemic year of 2019. Hits over the National Day holidays included Zhang Yimou’s crime drama Under The Light, which grossed $186m, and romantic comedy The Ex-Files 4: Marriage Plan, which took $137m.
Box office in any part of the world usually defies macroeconomic indicators to perform well during times of economic hardship, as movie-going is a relatively cheap activity, especially in China where online ticketing platforms Maoyan and Taopiaopiao discount ticket prices heavily. On the other hand, Chinese consumers continue to be squeezed by a slowing economy, high unemployment and a heavily indebted property market, so may not be willing to keep spending once the novelty of consuming entertainment outside of the home wears off.
Key to continued recovery is the strength of the film line-up, and so far there appears to be plenty of gas left in the tank for the rest of 2023, with new films from popular directors Gao Qunshu, Cao Baoping and Xin Yukun and Hong Kong-China co-productions I Did It My Way and The Goldfinger, both starring Andy Lau. Ning Hao’s The Movie Emperor, in which Lau plays a send-up of himself, has been pushed back into Chinese New Year 2024. US studio releases scheduled for the last few months of 2023 include Wonka and Aquaman And The Lost Kingdom.
..But Hollywood Is Still Getting The Cold Shoulder
Earlier this week, online ticketing giant Maoyan announced that China’s box office had surpassed RMB50bn ($6.9bn) in 2023, and was trumpeting the fact that the 11 highest-grossing films of the year so far are all local productions (see chart below), giving local content an 83.4% market share. According to Maoyan figures, the highest-grossing Hollywood movie of 2023 is Fast X, which came in at number 12 with $137m. More US studio films have been getting the all-clear since a changing of the guard at the China Film Bureau earlier this year. But Hollywood doesn’t appear again in the 2023 chart until Transformers: Rise Of The Beasts, which is ranking at number 24 with $90m (RMB655m). The Marvels had a disappointing opening last weekend, coming in at number two behind local crime drama Last Suspect.
As Streamlined has discussed in previous editions, there are multiple reasons for the under-performance of Hollywood in China, including a strong line-up of local films, Hollywood superhero fatigue, China’s cultural insularity during the pandemic, and good old-fashioned market manipulation, but we can assume that the current high market share for local films is exactly where the Chinese authorities want it to be.
During their confab at the APEC Summit, Biden and Xi discussed climate change, military communications and regulating fentanyl production and AI. The film and streaming business is not on the agenda and it’s not clear at this point whether a thawing in the US-China trade war would be of any benefit to Hollywood. Not helping the relationship is the hawkish attitude of US legislators towards any hint of Chinese involvement in American content. But if China’s online ticketing giants had an equity position in any Hollywood movies, as they do in local productions, you can bet your bottom dollar they would be getting a bigger push at the Chinese box office.
Main Melody Films Are Losing Momentum
One area that the Chinese authorities seem to have less control over is convincing Chinese audiences that they want to consume a steady diet of ‘main melody’ or propaganda films. While early entrants in the “propaganda with entertaining characteristics” genre, such as Wolf Warrior 2, The Battle At Lake Changjin and My People, My Country racked up record-breaking numbers, there has been less enthusiasm lately.
Chen Kaige’s The Volunteers: To The War – about two battles that China fought during the Korean war against US-backed UN forces – is still in cinemas since its release on September 28 for the National Day holidays and has grossed $112m (RMB816.4m) to date, which is not bad but not on par with previous holiday season propaganda releases. Born To Fly, which was meant to be China’s answer to Top Gun, also failed to find it wings during a spring release.
China’s Indies Face Investment Crunch; Buyers Remain Cautious
Chinese independent filmmakers used to stroll into co-production markets declaring that they didn’t suffer from any lack of finance (我们没缺少钱), but were looking for international distribution partners. That situation changed dramatically during the pandemic when the release of indie films stalled completely while the authorities waved through a constant stream of propaganda movies. At the recent Pingyao International Film Festival (PYIFF), China’s biggest indie film showcase, I spoke to several producers who said that while the backlog of indie films is now slowly being released, it’s difficult to find distributors willing to taking a punt on anything non-mainstream and even harder to find investment for new productions.
On the other hand, since PYIFF took place, Wei Shujun’s Only The River Flows has grossed an impressive $36.7m at the Chinese box office, so that may open a few wallets.
As for Chinese distributors acquiring foreign independent product, talks are happening at and between international film markets, but buyers continue to be ultra-cautious as there are no guarantees of getting anything through censorship. Chinese audiences probably also need a period of being reintroduced to international films, which they didn’t see on the big screen during the pandemic. China’s major film festivals, Shanghai, Beijing and Pingyao, are all back as physical events and are as good a place as any to start.
Proving that the appetite is still there, Pingyao’s screenings for recent international festival titles were packed, although not many foreign filmmakers could attend due to flight schedule and visa issues. PYIFF co-founder Jia Zhangke said that next year he hopes the festival “can welcome many more young foreign filmmakers here in Pingyao”. The festival is also launching a fund to support international films, although having censorship clearance in China is not a condition for funding. There are also other initiatives afoot that could spur the distribution of foreign independent films in China.
Chinese Streamers Struggle With The Same Issues As Their Global Counterparts
China’s three major streamers – iQiyi, Tencent Video and Alibaba-owned Youku – are fighting the same battles as the global streamers; how to turn a profit in a crowded market with high content costs and declining advertising revenue when short video platforms are snapping at your heels. Short video and live streaming platforms such as Bytedance’s Douyin, the Chinese version of TikTok, continue to grow consumer engagement and could frighteningly be augmented by AI-generated content, which China appears to have few regulatory qualms with.
During the pandemic, China’s tech giants also had to endure the government’s clampdown on “disorderly expansion of capital”, which hammered streaming and online education with billion dollar fines and regulatory restrictions as Beijing shifted its focus towards hard tech like semiconductors and AI. With all this and the US-China trade war to contend with, it’s not surprising that Tencent and Alibaba withdrew from international co-financing of Hollywood and other international films.
Now that Beijing’s tech clampdown is over and Xi and Biden are agreeing that the world is big enough for the both of them – could anything change? China’s economic woes might make it more amenable to cooperation and Xi is attending a dinner with US business executives this evening. Biden may have a harder time convincing the US government and business community that it’s time to warm up to China. But as with anything in China, it’s worth watching this space.
CHINA BOX OFFICE 2023 TOP 15 [as of November 13]
1. Full River Red (China) $624m (RMB 4.54bn)
2. The Wandering Earth II (China) $554m (RMB4.03bn)
3. No More Bets (China) $529m (RMB3.85bn)
4. Lost In The Stars (China) $484m (RMB3.52bn)
5. Creation Of The Gods I: Kingdom Of Storms (China) $361m (RMB2.63bn)
6. Never Say Never (China) $304m (RMB2.21bn)
7. Chang An (China) $250m (RMB1.82bn)
8. Boonie Bears: Guardian Code (China) $206m (RMB1.50bn)
9. Under The Light (China) $186m (RMB1.35bn)
10. Godspeed (China) $162m (RMB1.18bn)
11. The Ex-Files 4: Marriage Plan (China) $137m (RMB1bn)
12. Fast X (US) $135m (RMB984m)
13. Hidden Blade (China) $128m (RMB931m)
14. Deep Sea (China) $126m (RMB919m)
15. One And Only (China) $125m (RMB912m)
IN THE TRADES:
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