Digital drives prospects for China biz

Local partners help navigate complex, growing territory

With 50% more buyers from mainland China attending the American Film Market this year than last year, independent filmmakers have new avenues for breaking into the restricted Chinese marketplace.

China’s Film Bureau, part of the State Administration of Radio, Film and TV (SARFT), only allows 20 foreign films to unspool on a revenue-share basis, mostly studio tentpoles, which would seem to limit returns for independents.

But Peter Shiao, CEO of Orb Media Group, says new digital platforms have a stronger presence at AFM this year, presenting more distribution options than even a year ago.

“A lot of these portals are now trying to go legit,” Shiao says. “There’s a lot of new money coming in from these new-media activities.”

Digital platforms are slowly making inroads in China, though piracy concerns are still paramount. In June, China’s biggest online video streaming site, Youku.com, launched its Youku Premium paid content platform after signing a digital distribution agreement with Warner’s China joint venture, CAV Warner Home Entertainment.

Youku’s rival Tudou has streamed the first two films in “The Twilight Saga,” licensed from Summit Entertainment.

But the increased number of buyers is also a signal of the overall boom in the Chinese entertainment biz.

“It’s a result of a growing middle class and … growing entrepreneurship,” said Jonathan Wolf, managing director of the AFM. Wolf credited an increased demand from Chinese consumers with contributing to the country’s growing number of theaters and co-productions.

Hong Kong connection

Filmmakers outside the mainland can often use Hong Kong as an entry route to China. Producers and exhibitors from the territory have language skills and Chinese connections to offer the global filmmaking community.

Major filmmakers in Hong Kong — most of whom have offices in China — have also contributed to a boom in the Chinese entertainment business, and many of them are eager to leverage their foundations for outside partnerships.

But the bureaucracy can be a formidable challenge.

“Usually, when people want to go to mainland China, there’s no better way than going direct,” Shiao says.

Such producers as Barry Glasser, for example, have partnered with individual Chinese equity investors to fund up to half the budgets of their projects.

“The big concern of the Chinese is that these pictures be able to play worldwide,” says Glasser, who used mainland coin for projects including 2007’s “Diamond Dogs” and upcoming project “Cheesecake” from helmer Nadia Tass. “Sure, they want to make sure that these films will open well in China, but they don’t want to make parochial Chinese movies.”

That sentiment is echoed by many buyers at AFM.

“What we’re looking for is great scripts and great stories that will work primarily for Chinese audiences and secondly will travel,” said Milt Barlow, CEO of China Lion. “I think it’s difficult to find a picture that works in China and non-Asian markets … we’re looking for that magic bullet.”

Barlow says that rule applies tor both China Lion’s acquisitions and its co-production choices.

“If the script works, and the story is good and it appeals to a Chinese audience, then we take those conversations further,” he said.

While China Lion is looking for two to four pictures to bring into the country, Barlow acknowledged that Sino censorship presents serious hurdles, and breaking a Chinese picture into the wider global market remains difficult — subtitles, for example, don’t appeal to mainstream auds. Through China Lion’s distribution partnership with AMC and other exhibs, it has released several Chinese pics in North American theaters including “A Beautiful Life” and “The Butcher, the Chef and the Swordsman.”

Some Chinese producers will try to mitigate those risks, sometimes by offering minimum guarantees for China only. But another risk-mitigator, he says, is the buyer’s relationship with the Chinese censors themselves.

Censorship savvy

“Certain buyers have great relationships with the Chinese censors,” Shiao says. “A lot of people won’t talk about this, but many friendly distributors in China right now will have an allocation from the China Film Group, which will effectively say, ‘I give you the ability to recommend to me one movie.’ … Depending on that buyer’s understanding of the process and their judge of content, they’re usually not going to be wrong.”

That market-oriented approach is laying the groundwork for a growing Chinese movie biz — regardless of caps.

In March, China failed to meet a WTO deadline to allow other distributors beside CFG to import movies for theatrical release.

Many buyers, distributors and other companies attending this year’s AFM from China, however, might not be in Santa Monica just to pick up content.

“There’s a general recognition that they have to grow internationally, so the fact that they’ve registered as buyers I think is a little bit misleading,” Shiao says. “Because I know many of them are coming to the AFM as their Hollywood 101 lesson.”