The past year was a wobbly one for Asian film finance, with the sector making a few steps forward and taking almost as many backward.
Major disappointments in the region last year included the relative sidelining of joint production venture Warner China HG, the only modest progress of sophisticated bank finance and the high-speed retreat of most venture capital in Korea.
Since the “Korean Wave” started to ebb in 2005, the biggest boost to the Asian movie industry has been a belief that China is on course to become a new flood tide that will lift all boats in the region.
Where the Wave energized the region through its exemplary creativity, production values and infrastructure building, China’s strongest pitch is simply scale. And in 2007, the country did just about enough to keep those dreams afloat.
“Progress may not always be evident in the short term, but taking a long-term view, we see film and music in Asia growing. We are looking to step up our investments,” says Buddy Marini, managing director of Avex Asia, the movie offshoot of Japanese music and talent giant Avex.
“As Asia grows,” he adds, “it is coming together more. The Korean Wave may have crashed, but it left behind a market for Korean product that did not exist five years ago.”
Most Chinese-made movies continued to struggle in 2007 to connect with auds, although a few — including “The Warlords” ($27.5 million) and “The Assembly” ($37.2 million) — delivered boffo numbers at the end of the year that went some way to justifying their big budgets.
Performances such as these can only have helped the cause for those raising $70 million for “The Forbidden Kingdom” and $80 million for “Red Cliff.”
Marking helmer John Woo’s return to Asia with his Hollywood producing partner, Terence Chang, “Red Cliff” is notable for having been financed almost entirely from Asian sources. Commitment from Avex exceeds $30 million, based on a belief that this film can win over Japanese auds.
“Kingdom” pairs Asia’s two biggest action stars, Jet Li and Jackie Chan, in an English-language mix that found backing from China’s biggest private-sector movie player, Huayi Brothers, U.S. equity group Relativity Media and the Weinstein Co.’s newly hatched Asian fund.
Other TWC fund investments include “Blueberry Nights,” Thai actioner “Ong-Bak 2” and a slate of video pictures produced by Andrew Lau and Tony Krantz. The fund has an ongoing commitment to deliver six movies a year including one blockbuster and at least one acquired title. A “Seven Samurai” remake is now in pre-production, while “Shanghai,” a lush romantic actioner with Gong Li and John Cusack, is skedded to lense in March.
The TWC fund, which attracted $285 million, mostly from non-Asian sources, stands in contrast to a succession of wannabe pan-Asian funds that were pitched by financiers and former producers but have not yet succeeded in raising the promised sums.
Part of the problem may be in how little China needs the coin that comes with covenants and credit committees. “There’s no lack of deep-pocketed single-project investors in China,” says Bey Logan, TWC’s Asia VP of acquisitions and co-productions. “Rather, script and project development is the challenge we face in China.”
Avex, which established its movie HQ in Hong Kong — still Asia’s film finance capital — is balancing its content efforts with structural expansion. Avex bought a big stake in Chinese talent agency and production house Chengtian and backed the Chinese firm as it bought a 25% stake in Hong Kong’s Golden Harvest.
Chengtian joins a growing handful of private-sector mainland firms — including Huayi, Polybona, Enlight Media and a newly reconfigured Asian Union — which have ambition and credible finance. Meanwhile state-backed giant China Film Group is aiming to achieve a stock market listing in 2008.