China: Hollywood Heads For The Wild, Wild East

  • Piracy runs rampant and even stars don’t give you the same bang for your box-office buck anymore. What’s a poor international media conglomerate to do?Titanic-3D
    Words John Lopez
    Illustrations Alexander Wells

    It’s hard to be a movie studio these days. The new generation of filmgoers spends more time on Facebook than at the cinema, piracy runs rampant – and even stars don’t give you the same bang for your box-office buck anymore. What’s a poor international media conglomerate to do?

    Fortunately, a golden goose of sorts is on the horizon: China. In 2012, it surpassed Japan to become the number-two film market in the world, and a recent report by Ernst & Young says that, by 2020, it could become the largest in the world – period. “It’s gone from about a decade ago being really a backwater, unimportant market [to] the biggest international territory outside of North America,” says Robert Cain, whose Pacific Bridge Pictures advises studios and filmmakers how to do business there.

  • Administered by the State Administration of Radio Film and Television (SARFT), the aim of the quota system is both to censor questionable material and to protect local productions from being swamped by non-native big-budget spectacles. Even after a film is approved, SARFT decides when it gets released, usually giving studios a mere month to market it.

    It’s an open secret that SARFT creates blackout periods during prime movie-going months when Hollywood fare is rarely screened. When it is screened, the films open all at once – forcing them to compete with each other. Despite this, foreign films still accounted for over 50 percent of the ¥17 billion (or £1.75 billion) generated by the Chinese box office in 2012.

    Hollywood is preparing to service its new customer base with aplomb. Beverly Hills-based RealD, for one, is banking on Chinese audiences’ love of 3D (Titanic 3D did 40 percent of its global box office in China). It has equipped 1,000 screens with its projection technology and has 1,000 more under contract to be installed. RealD’s chairman and cofounder Michael V Lewis says that China’s box office has grown 30 percent nine years in a row. “You cannot ignore that type of growth. Needless to say, China is a huge priority for RealD.”

    Producers and studios are on the lookout for opportunities to form lucrative coproduction deals – partnering with local Chinese companies, adding Chinese elements to stories and hiring Chinese actors – which let films bypass the quota system and receive a larger take of the profits. Unlike other countries that actively lureFilmPolice
    Hollywood productions with tax incentives, the Chinese are more circumspect when Tinseltown executives come calling. Studios may woo Chinese officials with set visits and star-schmoozing but, as Cain points out, these officials are obliged to carry out the Communist Party’s will: “They’re dealing with a regime that doesn’t look favourably upon Western culture and wants to send its own message to its own people and to the world.”

    It’s not just a question of avoiding sensitive politics, but of presenting a non-trivial image of China. DJ Guggenheim, Executive Vice President of Development and Production at Inferno Entertainment, explains: “It’s very important for the Chinese government that, if they’re going to sanction a movie as a co-production, it has relevance.” Cain thinks the studios still have a way to go: “The studios, I think rather cynically, are trying to shoe-horn in.”

  • IronmanThe current question in Hollywood is if Disney’s Iron Man 3 will indeed end up a full, official co-production after shooting in Beijing, casting Chinese actor Wang Xueqi, and partnering with China-based DMG Entertainment. The film is set in China and features Ben Kingsley as the villainous Mandarin. DMG partnered on Looper last year, which re-set part of its story in Shanghai in hopes of qualifying. Even though it didn’t quite make the cut, it did get its preferred release date and “assisted co-production status”, i.e. a bigger take of the profits.

    Looper’s producer Ram Bergman has admitted that “we did not know what to expect”. Studios thrive on predictability and, until they really understand the Chinese system, the potential largesse is still more potential than largesse. “When people say, ‘I know that this movie’s going to do X amount out of China,’” Bergman says, “I look at them like, ‘You don’t really know.’ The reality is no one really knows.”

    Read our feature on the financial rise of film industry China’s here