Hollywood and China: Is It Time To Go Back To The Drawing?

Hollywood and China: Is It Time To Go Back To The Drawing?

From Alina Parker

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Despite the overall global success of The Batman, and even taking into account the impact of new COVID lockdowns in China, it’s clear that Hollywood’s streak of bad luck with film releases in the Middle Kingdom is not over. Is it time to rethink Chinese release strategies entirely? Brandon Blake, entertainment lawyer at Blake & Wang P.A, takes a look at this sticky problem that simply isn’t resolving with the same old strategies. 

Beyond the Pandemic

Of course, let us not downplay the fact that China hitting its worst COVID-19 outbreak since the start of the pandemic has not helped anything. With many key locations in Shanghai and Shenzhen shuttered, and smaller outbreaks affecting 28 other provinces, there was always going to be a muted response to the first major Hollywood release there in two years. 

Plus, let’s not distract from the fact that at least it was a Hollywood release in the area, and seems set to spearhead others. In 2021, we only saw only 20 revenue-sharing US titles released in China at all. 

But Chinese release failures are not all about the pandemic. With the Chinese Communist Party dictating that American fare be shelved in favor of patriotic locally-made content, nationalism has surged and political sensitivity among the general public is at an all-time high not helped by some fraught diplomatic relations. The Batman, Uncharted, Moonfall, Fantastic Beasts: The Secrets of Dumbledore, and Hotel Transylvania: Transformania have at least reached China. But there are lessons from The Batman’s performance there that need to be heeded.

Analysts’ Concerns

Early tracking for The Batman, before the latest outbreak, suggested the Marvel romp would earn in the $25M-$30M range- hardly the old numbers, but comparable to many Chinese films on-screen now. All the same, a few short years ago a superhero film released in the Chinese market could easily expect at least double that- and, for many of those releases, there were less screens in the market, too.

The signs that the Chinese audiences' enthusiasm for Hollywood storytelling is on the wane couldn’t be clearer. With the domestic film sector getting more accomplished at action spectacles of its own, this shouldn’t be too shocking. In 2012, Hollywood took 48.2% of the overall Chinese Box Office. In 2021, it was just 12.3%. Only two Hollywood releases- F9 and Godzilla vs Kong, have cleared $100M in China in the last two years. More than 20 Chinese titles can say the same.

What’s Trending?

Of these, the best performers have been ‘main melody films’, a unique genre in the Chinese industry that covers near-propaganda movies with strong matching ideology to the ruling Communist Party. Needless to say, that doesn’t cross streams with most Hollywood fare.

We’re also seeing a taste diversification between cosmopolitan urban Chinese movies, and more provincial, less developed centers. Movies need to balance both tastes to be successful, and it’s a tough play. The Batman, specifically, pleased China’s large urban centers with its sophisticated noir approach to the story. A connection with moviegoers in semi-rural regions, however, was never certain and hasn’t materialized.

Along with global challenges for the film industry, the encroachment of streaming, and the difficulties of global markets, playing well to both radically different Chinese markets is going to be a difficult ask. 

China has always been a market with a lot of potential, but throttled by both the 25% profit-share limitation (it’s typically 40%-50% in other markets), and lack of control over release dates. Add to that a swing away from attempts to be the top theatrical market in the world, instead focusing on nationalistic product, and it’s hard to sustain much enthusiasm for Chinese release dates as the be-all, end-all of film release plans globally. Even partnership attempts seem to have backfired- instead of entrenching Hollywood as a business partner, it’s simply helped Chinese studios learn to create better films of their own.

It’s easy to see why such a big market, even throttled by political play, remains an alluring drawcard, but it may be time to abandon lofty ideas of China as the next biggest global market for Hollywood altogether despite that lure. For now, there’s too much noise and it’s too difficult to predict. While 2022 may clear up the pandemic-related hurdles, for now, the others remain stumbling blocks with no clear resolution. One thing is certain, however. Any movie heading to China now needs a completely different strategy from what’s worked before, as the market they used to play to has changed forever.

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