The market was rescued from a more serious crash by surging ticket sales for imported Hollywood films, the data showed. Revenue from imported U.S. films climbed 14.5 percent in the first half of 2019, totaling 12.6 billion yuan ($1.83 billion) compared to 11 billion yuan during the same period in 2018.
The results reflect a downbeat production and distribution cycle for domestic Chinese films — a phenomenon many Beijing industry leaders have taken to calling the "cold winter" of the Chinese film business. Box office revenue for Chinese films totaled 15.8 billion yuan, down 16.8 percent from the 19 billion yuan of sales in the first half of 2018. (Artisan Gateway's estimated first-half total includes forecasted sales for the current weekend, ending June 30.)
Despite various challenges, China's box-office rebounded to 9 percent year-on-year growth in 2018. Turning the market around in the latter half of 2019 may be more challenging, though.
China's regulators, usually deft at tweaking various market levers to reach desired outcomes, have painted themselves somewhat into a corner this year. For the past decade, Beijing officials regularly have highlighted China's galloping box-office growth as one of the most visible indicators of the country's economic vitality. The message has been hammered home so consistently that any slowdown, let alone a box-office crash, would naturally be perceived by the Chinese public as an alarming bellwether.
Compounding the challenges, Beijing instituted a crackdown on tax evasion in the local industry in late 2018. The cleanup forced local studios to pay out an estimated $1.7 billion in back taxes — sudden bills that bankrupted many smaller companies, while leading to belt-tightening at even the most established studios. An aggressive uptick in censorship control over Chinese content in 2019 has rattled the local industry further, while also preventing some very salable product from reaching the market (see the blocked release of Zhang Yimou's One Second, or Huayi Brothers' much anticipated war epic The Eight Hundred).
China's regulators use various protectionist strategies — import quotas and blackouts on foreign film releases during lucrative moviegoing periods — to ensure that local Chinese movies maintain an edge over Hollywood imports in terms of total market share. But when the local industry has gone soft, regulators have tended to open the gates to more Hollywood releases to prop up overall growth and save cinema chains from losses. In 2016, for example, China allowed over 40 U.S. studio films into the market, compared to the usual quota of 34 titles.
The strategy of leaning on Hollywood product in times of need has been complicated by the ongoing U.S.-China trade war. So far, Beijing has resisted hitting Hollywood imports in retaliation for Trump's escalating tariffs on Chinese goods. But flooding the Chinese market with even more U.S. movie product isn't thought to be at all appealing to Chinese regulators in the current political climate. In fact, most Chinese film distributors have already stopped acquiring small- and mid-budget U.S. movies, for fear that they won't be able to get official permission to bring new U.S. product to release.
Regulators have encouraged local distributors to diversify the market with non-Hollywood imports as much as possible — a push that is readily apparent in the data. Ticket sales for non-U.S. film imports surged 38.5 percent in the first half of the year, climbing to 2.8 billion yuan from 2 billion yuan in the first half of 2018. Standout examples included Lebanese art-house drama Capernaum ($54 million) and the rerelease of Japanese anime classic Spirited Away ($45 million and counting).
But the five biggest releases in China so far in 2019 were all still Chinese or American, of course. They include: Beijing Culture's Chinese sci-fi blockbuster The Wandering Earth ($691 million), Disney's Avengers: Endgame ($614 million), and Ning Hao's Crazy Alien ($328 million), Bona Film Group's Pegasus ($256 million) and Paramount's Bumblebee ($170 million).
Beijing regulators will need help from another surprise Chinese mega-blockbuster or two, or a trade deal — or both — to stave off a deeper downturn in the second half of 2019.
Source: The Hollywood Reporter by