Storm clouds might be hovering on the Hollywood-China entertainment horizon, with Washington and Beijing stuck in their trade war and bilateral industry talks stalled. But there are strong reasons to believe that Hollywood is poised for a sunnier year at the Chinese box office in 2019 than it had in 2018.
January has already brought the unexpected news of the Middle Kingdom release of “Deadpool 2” on Jan. 25, albeit in censored form. Another surprising choice, “Escape Room,” also came out this month, while Oscar-nominated “Green Book,” the kind of intimate American dramedy that tends to elicit a shrug from Chinese moviegoers, hits theaters March 1. Even Quentin Tarantino’s “Once Upon a Time in Hollywood,” set against the backdrop of the Charles Manson murders, could have a China outing in the summer. Such unusual releases might raise eyebrows under normal circumstances, but 2019 is not expected to be a normal year for the Chinese entertainment business.
That’s because the local industry is still reeling from the twin hits of the tax-evasion scandal surrounding Chinese superstar Fan Bingbing and, in recent months, the government’s move to tighten enforcement of national tax rules and close regional loopholes. The combined effect has been to sharply slow the greenlighting of homegrown movies and TV series, to drive numerous small production companies into bankruptcy, and to scare off some outside speculators. Last September, the number of registrations per month for new film projects dropped below 200, compared with 300 earlier in the year.
Some of the speculative money might have been exiting anyway, as evidenced by the slowed growth of China’s film industry last year. Theatrical exhibition revenues expanded by only 9% to $8.9 billion in 2018, even as the market share enjoyed by Chinese films leaped to 62%, up from 54% in 2017. Foreign titles from the U.S., India and Japan saw their returns fall in real terms from $3.76 billion in 2017 to $3.34 billion in 2018.
In 2019, the shoe is likely to be on the other foot. Industry insiders expect that the production slowdown in China will mean a weak supply of local movies, especially in the second half of the year, after the movies that were in the pipeline before the Fan Bingbing scandal have had their run in cinemas. To keep turnstiles spinning, China’s film authorities are expected to allow in more Hollywood fare, including R-rated titles, alongside the staple superhero and action franchises.
Not that this should be taken as a relaxation of Chinese censorship standards. But movies that can meet those standards — through changes or cuts, as with “Deadpool 2,” for instance — could have a better shot than before at getting in, as China’s Film Bureau scrambles to ensure that box office revenues hit their officially set target.
Such flexibility and expediency was in evidence during the last quarter of 2018. The push to hit RMB 60 billion ($8.83 billion) at the box office led to a surge of Hollywood imports beyond the official quota of 34 revenue-sharing films per year, to more than 40. Also unusual was the decision to grant releases during Christmas, a period normally reserved for new Chinese fare, to “Spider-Man: Into the Spider-Verse,” “Searching” and India’s “Thugs of Hindostan.”
“To ensure reaching the RMB 60 billion target, it made sense to play films with the greatest commercial potential at this time, including year-end import titles,” said Rance Pow, a principal at consulting firm Artisan Gateway.
Beijing-based attorney Matthew Dresden of Harris Bricken also sees a blurring of the line between revenue-sharing imports and “buyout” films allowed into China on flat-fee terms. “If there is a convergence between the revenue-sharing terms of buyout films and quota films, it’s only because the Chinese authorities want that to happen or at least are allowing it to happen,” Dresden said. The net effect is that more high-profile international films are making it over the Great Wall.
If regulators aim for a further 10% increase in box office revenue in 2019, they may need all the help they can get from imported movies, particularly from Hollywood. Already this year, the China haul for “Transformers” spinoff “Bumblebee” has surpassed its take in North America, racking up $134 million as of Jan. 22. Next up in Chinese theaters are “Alita: Battle Angel” (Feb. 22), “Green Book” and “How to Train Your Dragon: The Hidden World” (March 1) and “Captain Marvel” (March 8).
Beyond that, the release schedule is subject to conjecture, since imported titles don’t normally receive their confirmed dates in China until just six weeks beforehand. But one cinema chain has put out a tentative list of upcoming releases through the beginning of summer, which includes “Once Upon a Time in Hollywood” and “Call of the Wild,” besides expected tentpoles such as “Avengers: Endgame” and “Godzilla: King of the Monsters.”
This year marks a quarter century since “The Fugitive” became the first Hollywood studio film of the modern era to be released in China. The local industry is catching up quickly, but it looks like Hollywood is going to outrun its Chinese pursuers for a while yet.