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After ‘Star Wars,’ Studios Ready to Battle for 2016 Chinese Film Slots

Star Wars: The Force Awakens” will be the first Hollywood film to play in China in 2016, with a Jan. 9 release date. Unusually, it is expected to get an uninterrupted three-week run.

But now that the annual CineAsia convention has ended in Hong Kong, executives from each Hollywood studio will begin campaigning to see which other films will be the winners of the quota sweepstakes.

It’s a lucrative contest: China’s theatrical box office was worth $6.3 billion in the first 48 weeks of the year, a figure that makes 2014’s $4.9 billion look puny, and yet will almost certainly be dwarfed in 2017.

Decisions on which Hollywood films will get berths are made after the studios have each held private screenings for the Film Bureau and state-owned distributor China Film Group, and lobbied for the titles they most want to get in to the Middle Kingdom.

After the “Star Wars” release in January, the state-controlled releasing calendar rapidly becomes complicated by Chinese holidays (Chinese New Year starts Feb. 8 next year) and competition from Chinese movies.

Each studio will hope between four and six titles get picked for 2016. And as China Film Group is a revenue partner, the emphasis is largely about selecting the biggest, safest titles. But the further off a possible theatrical debut is, the higher the uncertainties become.

“The only thing that we can be sure of is that the market-share requirements are here to stay,” said one executive dolefully, referring to the measures taken by Chinese regulators to ensure that local films enjoy more than half the nation’s box office.

Studios feel that the blackout periods and government-selected release dates are often set so that Hollywood movies overlap and cannibalize each other.

“China is becoming a one-week market,” said another executive. He pointed to “Spectre,” which opened strongly, with $44.5 million, but lost 72% in its second week and 81% in its third, for a cume of $83.5 million so far. Another pointed to the September 2015 crush when “Mission: Impossible — Rogue Nation,” “Pixels,” and “Minions” all collided.

“We are still being punished for 2012 (a year in which Hollywood movies beat the score achieved by local titles),” said one executive. Another posited that Hollywood is being punished for the success of U.S. titles in the first half of the year.

One piece of good news: A likely contender for next year’s biggest movie in China is already guaranteed to get a release, as “Kung Fu Panda 3” is being made in Shanghai by Oriental Dreamworks, and will be considered as a local Chinese title. That saves Fox the effort of lobbying to get it in, and also lifts the market share for Chinese pictures.

One representative said that his studio will not be increasing co-production in China — often seen as a route around the import quotas — but that it will instead be seeking more local partnerships with Chinese companies. These, he said, could range from marketing deals to bringing in Chinese investment in individual titles. (Alibaba Pictures was an investor this year in “Rogue Nation,” while China Film Corp. owned a piece of “Furious 7.”)

Under the current arrangement, China Film Group officially assumes the burden of distributing and advertising Hollywood’s revenue-sharing import movies. But in practice the studios’ China offices have been ratcheting up their own promotional and marketing efforts alongside.

“We’ve been doing this for the past few years, and have been known to spend up to $8 million,” said one executive. Others said that the more typical figure these days is $4 million to $5 million per picture.

China is currently drafting a major film industry reform law, which will codify and modernize industry regulations. But it is not known when the draft will be finalized. And from an external and Hollywood point of view, the proposed law is largely domestic and unlikely to have much impact.

“We’ve heard all the rumors about quota changes and ratings systems, but we don’t foresee any major change over the next year,” said one of the studio executives in Hong Kong last week. Rather, the Hollywood studios are waiting for February 2017, when the current set of U.S.-Chinese agreements can begin to be renegotiated.

The studios are not directly involved in the talks. Instead, negotiations are conducted by the U.S. Trade Representative, with input from the Motion Picture Association (lobbying on behalf of the Hollywood majors) and from the Independent Film & Television Alliance, standing up for U.S. and foreign independents.

Given that the “long form agreement” that put in writing the current arrangement was only finalized in the last few months, nobody is betting that the next round of negotiations and eventual agreement will be completed any time soon. It could take years.

“Of course we will be asking for a bigger revenue share than the current 25%. The box office today compared with what it was when the deal was done in 2012 means we are leaving a lot of money on the table in China,” said one executive. “And of course we will be asking for more films to get in.”

But another executive another cautioned what quota changes might mean in practice. “There is no guarantee that an enlarged import quota would all go to Hollywood titles. It could mean more films from elsewhere,” he said. “And more films might mean more competition among imports, if the blackouts and (release) dating systems are left unchanged. It is hard to believe, but even with 30,000 theaters, China is still under-screened.”

“The studios want everything: more films, more revenue, more control over their own destiny,” said one senior executive at the convention. “But ultimately you get only what the Chinese government want to give you.”

STUDIOS COULD SEEK SLOTS FOR POSSIBLE TITLES INCLUDING:

Fox: “Ice Age: Collision Course,” “X-Men: Apocalypse,” “Independence Day: Resurgence,” “Deadpool”
Paramount: “Teenage Mutant Ninja Turtles: Out of the Shadows,” “Ben-Hur,” “Star Trek: Beyond,” “Jack Reacher: Never Go Back,” “13 Hours”
Disney: “Captain America: Civil War,” “The Jungle Book,” “Finding Dory,” “Alice Through the Looking Glass,” “The Finest Hours”
Warners: “Batman v Superman,” “Tarzan,” “Suicide Squad,” “Fantastic Beasts and Where to Find Them”
Sony: “Inferno,” “Angry Birds”
Universal “The Huntsman: Winter’s War”

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