Studios and exhibitors are both benefitting from China’s emphasis on media, and its newfound love for Hollywood.
For studios, the decision of the Chinese government to allow 14 more 3D or large-format films into Mainland theaters means increased opportunity for tentpoles outside summer or holiday play periods. “The Hunger Games,” released domestically and in most of the world in March, was able to extend its box office life thanks to a June 15 launch in China that generated $9.6 million.
But more important than seeing an additional number of films allowed to enter the territory, studios are now able to take part in a profit-sharing ratio that’s closer to the world norm — thanks to Hollywood being able to see its share of returns rise from 13% to 25%.
That said, revenues from the Mainland haven’t necessarily doubled for studios, which are spending more on marketing in China.
The exhibition sector, meanwhile has multiple facets (and players) set to profit from the expanded Chinese quota.
The country has some 9,200 screens and counting, and is projected to have 16,000 by 2015. The country’s three major chains — Wanda, Stellar and Lark — have struggled to fill screens but the increased quota will help.
Toronto-based Imax stands to be one of the biggest Western companies to benefit from the looser regs, as it continues to increase its Mainland exhibition footprint. The company, with an office in Shanghai, has been operating theaters in China for 12 years. Imax has 74 Imax screens in China, with 217 theaters open or contracted to open by the end of 2015.
Chinese real-estate developers will also see big gains from cozier U.S.-Chinese relations. The increase of theaters — and an allowance for more American product to fill them — has created a need for space in malls and other metropolitan locations in China.
Meanwhile, in a sign that not all the big changes to come due to the increased Chinese influence on the film biz will happen in China, AMC Theaters the second-largest chain in the U.S., was bought by Chinese conglom Dalian Wanda, marking the largest-ever purchase of a U.S. firm by a Chinese corporation. Though the deal is still subject to U.S. regulatory approval, the buyout infused AMC with enough cash to kickstart renovation initiatives it hadn’t yet been able to afford (i.e. dine-in theaters and bar concepts). In late May, the company broke ground on a new dine-in theater located in Marina Del Rey, Calif.
It’s doubtful that another acquisition will occur soon on the scale of the AMC-buyout; talks between AMC and Wanda had been happening for years.
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