For movie studios with big blockbusters to sell, it would be fair to say that market saturation has become something of a problem. Films, particularly English language films, are a global business, with simultaneous release dates around the globe now very much the exception rather than the norm. Furthermore, declines in American box office takings have been comfortably offset in recent times by burgeoning receipts outside the US.
Take, for instance, Sony’s Spider-Man films. Since the release of Sam Raimi’s original movie in 2002, each of the subsequent webslinger adventures has taken less and less at the American box office. The takings outside of the States? The general trend has been more positive than that.
However, in the era where a $1bn-grossing worldwide blockbuster is no longer a novelty – it was only back in 1997 that Titanic became the first film to break that particular barrier on a single release, with it being a further six years before Lord Of The Rings: Return Of The King became the second – the question of growth has been occupying Hollywood’s people in suits.
And inevitably, China has become something of a Holy Grail for those seeking yet more millions.
The problem, of course, is that the Chinese government has the country a difficult place to do business with over the years. And if a non-Chinese company wants to operate in the country, it has to play by stringent rules.
Google, for one, once came in for no shortage of criticism for seemingly backtracking on its principals and allowed a censored version of its service to operate in China. It changed its approach in 2010, but it nonetheless highlighted just how much big companies were willing to compromise or alter their products to get a part of the Chinese market.
In film, China has operated what is known as the ‘great wall’ movie quota for some time. This restricts the number of non-Chinese films that can be released in the country’s cinemas, and has thus excluded many major blockbusters from one of the most lucrative movie markets on the planet. The quota sat at 20 films a year, although it has been relaxed slightly in recent years, to 34 (with stipulations that some have to be IMAX releases).
However, that still left limits on how to break into a market that could add potentially hundreds of millions of dollars to a movie’s takings. And then Iron Man 3 happened.
The Marvel Solution
Iron Man 3 is arguably the first in a growing raft of blockbuster movies that’s been angled to specifically endear itself to the Chinese market. Thus, you may remember that Chinese moviegoers got a special extra scene in the film, which reportedly baffled those who were watching it. Shot in China, and starring Chinese actor Wang Xueqi, here’s a taster of what everyone else in the world didn’t get to see…
Whatever the Chinese is for ‘WTF’, that’s roughly the feedback said scene got.
So why did Marvel do it? Why was such a baffling, unnecessary scene included in the film in China alone?
Well, it’s a business decision.
By including said scene, it allowed Marvel to present the film as a co-production with China. By doing so, the film was no longer bound by the quota system, and its release in China was a certainty. Here’s the Marvel’s press release that announced the news, if you’re interested.
The crucial line: “under the arrangement, DMG Entertainment will make an investment in the production of Iron Man 3, manage the Chinese co-production process, and jointly produce the film in China”. Now, Iron Man 3 was backed by Marvel, which in turn is owned by Disney. It did not need fresh investment, and could afford to pay the film’s budget itself. But by getting physical buy-in from a Chinese company, and putting in a superfluous scene, it became a partly Chinese film.
Did this approach work? Yes. Iron Man 3 took $121m at the Chinese box office alone, before its home formats release. And if you want further proof of the power of the Chinese movie economy, then the same year, Pacific Rim took more in China than it did in the US, grossing $111m against $100m. These is a caveat to all of this: a film that grossed $100m in the US is going to return more to its makers than $100m taken in China. But it’s not a great leap to suggest that if Pacific Rim hadn’t got a Chinese release and done so well, then we would not be getting Pacific Rim 2 in 2017. Furthermore, if you’re listed as a Chinese co-production, then you get a significantly bigger cut of a ticket price in your bank account than if you’re not (reportedly roughly 20% versus 38%).
The Michael Bay Solution
Moving forward to this year, and Transformers: Age Of Extinction is set to accelerate the trend for Hollywood blockbusters to partner with Chinese companies. Partly set in China, with Chinese product placement and complaints from said companies about how they were presented, Transformers 4 has been the most overt attempt yet to court Chinese moviegoers with an American blockbuster.
It has been a raging success.
At a point where the appetite for the Transformers films is dwindling in the US, with the latest grossing a series low $244m in America, the film’s take in China has eclipsed its performance in any other territory on the planet. And that’s with the US included. Transformers: Age Of Extinction has grossed $301m in China alone (to put that into context, it’s done around $33m in the UK). No film has made that much at the American box office at all this year. Not a single one.
And that’s why China is now, more than ever, the most sought after new market for American blockbuster films. With slightly relaxed quotas, and more importantly a successful loophole via the co-production approach, more and more big American films have found their way into Chinese cinemas.
The overall Chinese box office is benefitting too, and is heading for a record-breaking $5bn year (at a point where the American box office is set to be 10-15% down). By 2020, argues the Financial Times, the Chinese movie market will be bigger than the American one.
The offshoot of this? More big American films are going to target the Chinese market. Not as an afterthought but, as with Transformers 4, seemingly as a top priority.
But should that bother us as moviegoers? Blockbuster movies have always been a business, and it’s hardly a shocker that a studio will look for new revenue opportunities and exploit them as best they can. How many special edition DVDs of films we’d bought already did we all snap up in the 2000s?
Well, there’s a difference here. This isn’t just about films targeting a new market. This is about films being shaped specifically so they can get a slice of the pie.
Iron Man 3 is a crude example, as it was an easily excised scene that was added to the film in that instance. In Transformers: Age Of Extinction, the Chinese material is integrated a lot better, likewise X-Men: Days Of Future Past. Countering that, in World War Z, a line about the origin of the zombie outbreak being China was plain cut from the film altogether. It’s not hard to foresee that over the next ten years, more big films will film in China, give plugs to Chinese companies, and cast Chinese actors. Furthermore, fewer antagonists in blockbusters will be of Chinese origin.
Again though, is this a problem? Well, perhaps not at the moment. This latest Hollywood infatuation is in its infancy, and it’ll be interesting to see how it pans out over the next few years. Certainly, there’s no shortage of companies willing to take a sizeable punt on the Chinese movie market. Disney has already inked a multi-year co-production deal with China’s Shanghai Media Group, Sony Pictures is backing new films from a pair of Chinese directors, and a co-production treaty was signed at the end of 2013 between the Chinese and UK governments. DreamWorks Animation, meanwhile, now has a production facility in China.
For now, it’s akin to a box office land grab, and for the next few years, it’ll be the growing influence and trends of Chinese moviegoers that’ll have a sizeable impact on what blockbusters studios decide to back. Again, Chinese audiences flocked to Pacific Rim, and that’s why we’re getting Pacific Rim 2. But could interesting blockbusters increasingly be at the whims of what can qualify as a Chinese co-production, and how interested Chinese moviegoers are?
Also – and this is something that tends to be overlooked – what’s the impact going to be on China’s booming domestic cinema output? Stephen Chow’s Journey To The West: Conquering The Demons was the country’s number one film at the box office in 2013. But its $196.7m was a good deal shy of those Transformers takings.
There are clearly more questions than answers here, but if there’s been an absolute about Hollywood studios over the history of film, it’s that they follow the money. Every time, they follow the money. There’s no evidence that’s not going to happen here. And it’s going to be interesting to see just how subservient the studios – and the decisions they make – become to the Chinese box office.
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