MCLC: US box office heroes mortal in China

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: US box office heroes mortal in China
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Source: NYT (4/21/13):
http://www.nytimes.com/2013/04/22/business/media/hollywoods-box-office-hero
es-proving-mortal-in-china.html

U.S. Box Office Heroes Proving Mortal in China
By MICHAEL CIEPLY 

LOS ANGELES — Hollywood’s global business strategy, which counts on huge
ticket sales in China for high-budget fantasies in 3-D and large-screen
Imax formats, is coming unhinged.

Last year, helped by a high-level deal that expanded the number of foreign
films for release there, American blockbusters like “Mission: Impossible —
Ghost Protocol” led the Chinese box office for 23 straight weeks, and
received a disproportionately large share of their ticket sales from China.

More big releases were on the way, and the floodgates in the world’s
second-largest film market appeared ready to swing open.

But something unexpected happened on the way to the bank: demand tapered
off sharply.

In the first quarter this year, ticket sales for American movies in China
— including films as prominent as “The Hobbit: An Unexpected Journey” and
“Skyfall” — fell 65 percent, to about $200 million, while sales for
Chinese-language films rose 128 percent, to well over $500 million,
according to 
<http://chinafilmbiz.com/2013/03/31/oz-blahs-or-why-china-is-not-going-to-s
ave-hollywood-but-might-buy-it/> the online publication Chinafilmbiz.com.

The weekend brought one sign of a rebound for Hollywood: “G.I. Joe:
Retaliation” from Paramount Pictures, took in a respectable $33 million at
the Chinese box office, matching roughly 75 percent of its ticket sales
when it opened in the North American market on March 28.

But if the preferences of Chinese moviegoers continue to shift to domestic
releases, China will maintain control of its own film market just as
Hollywood was ready to seize it.

When “Iron Man 3,” an action heavyweight from Disney’s Marvel
Entertainment, opens in coming days, it will slug it out with a small,
domestically made romance called “So Young,” about a Chinese woman who
reconnects with her college sweethearts. It is hard to be certain which
film will be the underdog.

In fact, a succession of domestic Chinese films, including the comedies
“Lost in Thailand” (a close cousin to “The Hangover Part II”) and “Finding
Mr. Right” (China’s answer to “Sleepless in Seattle”), have unexpectedly
clobbered expensive American fare like “Oz the Great and Powerful,” “The
Hobbit” and “Jack the Giant Slayer” on Chinese screens.

The abrupt shift toward local favorites may have something to do with
market manipulation. As American films gained traction in China last year,
alarmed officials imposed an unusual two-month blackout that kept most
foreign movies off screens during the summer season.

They also forced “The Dark Knight Rises” and “The Amazing Spider-Man” into
direct competition with each other, and promised to pay theater owners
<http://mediadecoder.blogs.nytimes.com/2012/11/29/chinese-theaters-to-get-r
ebates-for-showing-chinese-movies/> an annual bonus if their receipts from
domestic films matched revenue from foreign films for the year.

Still, executives and China watchers here suspect something potentially
more threatening to Hollywood: a rapid evolution in the tastes of Chinese
audiences, which are quickly turning away from the spectacles American
companies have assumed they crave.

“I know what they don’t seem to want,” said Rob Cain, who runs
Chinafilmbiz.com and is a consultant to producers and others doing
business in China. “They don’t want the same old thing, over and over
again, the action blockbusters with lots of explosions.”

The apparent shift is helping Chinese films like “Lost in Thailand,” which
was an eye-opener last year when it posted more than $200 million in
ticket sales in China. It surpassed “Avatar” to become the country’s best
seller in terms of total admissions (though not revenue, as “Avatar” had
heavy 3-D sales at premium prices). It led a string of Chinese-language
hits that outstripped Hollywood films like “Stolen,” “Jack Reacher,” and
even “A Good Day to Die Hard,” which briefly claimed the top spot in China.

Richard L. Gelfond, chief executive of the Imax Corporation, whose screens
in China play both American-made and Chinese-made films, said he was
confident that viewed over a long period of time, “China is opening up to
Hollywood.”

But lately, Mr. Gelfond acknowledged, the shift toward domestic films has
been “dramatic.” In early 2012, he said, American studios did well in
China partly because the available Chinese films lacked audience appeal.
Later, he noted, Chinese officials delayed the release of “Skyfall” and
“The Hobbit” until those films had played elsewhere, which allowed video
pirates time to put a dent in the potential audience.

Mr. Gelfond said he expected American films to rebound in China over the
next few months, as more of them are released on or near their opening
dates elsewhere in the world.

But others say that will happen only if American studios acknowledge the
sophistication of Chinese viewers, a large number of whom are
college-educated, and not easily beguiled by routine action and fantasy
imports.

“The change is that Chinese audiences want more from Hollywood movies —
not just spectacle, but stories that engage them,” said Michael Andreen, a
consultant to the Chinese media firm Le Vision Pictures, which will make
and acquire films for release both in China and around the world.

Correctly gauging the Chinese market is crucial for big American studios,
which have banked on rapid growth in revenue there to shore up relatively
stagnant domestic returns. Last year, China’s box office reached about
$2.7 billion. Ticket sales there are expected to surpass those in the
United States by about 2018.

For the moment, Hollywood’s best hope remains “Iron Man 3.”

Shot partly in China, “Iron Man 3” has been heavily promoted there for the
last year, including at a star-studded event at the Tai Miao temple in
Beijing this month. It will also have extra scenes tailored to the Chinese
audience, with an assist from a financial backer based in China, DMG
Entertainment.

The first two “Iron Man” films did well in China, and “The Avengers,”
which included the Iron Man character, took in about $90 million at the
Chinese box office last year.

But Marvel and its backers have to sweat out their matchup with “So
Young.” Partly, they will have to be sure theater operators do not assign
some of the revenue from American movies to other films to protect the
bonus tied to the success of domestic movies.

Whether the two films will be released head to head on April 26, as widely
reported, remains unclear. After some last-minute work on a
Chinese-language version, “Iron Man 3” still awaits an official opening
date in China.

At the same time, “So Young” has some inherent advantages. It is the first
film directed by a popular actress, Zhao Wei, who is known for her
performances in “Red Cliff” and “Shaolin Soccer.” And it is based on a
much-read novel, whose title is sometimes translated “To Our Youth That Is
Fading Away.”

Still, it is impossible to tell whether those advantages are strong enough
to give it an edge on Marvel’s juggernaut, given the lack of sophisticated
prerelease tracking in China.

Regardless of which movie wins the face-off, Mr. Cain of Chinafilmbiz.com
said, Hollywood will have to accept that Chinese viewers are perhaps even
less predictable than those at home.

After all, their favorite English-language films of late have included the
time-bending epic “Cloud Atlas,” which did little business in the United
States, and the fable “Life of Pi,” whose spiritual themes might seem at
odds with China’s governing principles.

“They want to see films that challenge them,” Mr. Cain said.