Piracy still slices huge chunk off DVD revenues

Hua Xia — The big distribution story in China last year was Zhang Yimou’s “Hero.”

2003 STATS
Top film: “Hero” (Beijing New Picture Film Co./China Film Group; $30 million)
Top import: “Harry Potter and the Chamber of Secrets” (China Film Group; $6.3 million)
Total B.O.: $114 million
Imported film B.O.: roughly $60 million
Total releases: about 90
Imported releases: about 40, of which 21 shared revenue with copyright holders
“Cold Mountain” (Hua Xia)
“Master and Commander” (Hua Xia)
“The Lord of the Rings: Return of the King” (China Film Group & Hua Xia)
“The Rundown” (CFG)
Note: All pic imports — studio or indie pics — are distributed by China Film Group Corp.

Funded with local money (though later picked up by Miramax for overseas distribution), the film was released in late 2002. It performed strongly into the new year, taking over 240 million yuan ($30 million) at the domestic box office, making it the most successful local film ever and second overall to “Titanic.”

While local pics have the freedom to pick and choose among domestic distribs, foreign imports are restricted to the duopoly of state-backed China Film Group and newcomer Hua Xia. Around 20 revenue-sharing imported films per year are released in China, with a further 20 or so bought on a flat fee basis.

The quota is likely to remain in place for 2004, though there has been speculation that the number of films may rise in 2005 and beyond.

In a market still saturated by pirated DVDs, post-theatrical sales in China are disappointing. Once again, however, “Hero” bucked the trend, with a $2.2 million DVD deal signed with local distrib Guangdong Weikai Audio & Video. But sales were ultimately low, reportedly only $483,000, though the film is suspected to have sold well nationwide on pirated copies.

Pay TV continues to underperform as well. Last year, China’s State Administration of Radio, Film and TV predicted 30 million subscribers would sign up within the first year of the new digital pay TV services that launched in early 2003. But by January this year, subs totaled less than 210,000. However, several new dedicated movie channels, most notably in Shanghai, are providing new outlets for foreign film product. And cable services are booming, with 100 million subscribers across the country.