Why China’s Box Office May Not Save the Film Industry After All — CinemaCon 2017
Back in October, Dalian Wanda Group chairman Wang Jianlin had to admit that, after years of exponential growth, the China box office was slowing. The numbers proved him right: 2016’s worldwide box office of $38.6 billion rose just 1 percent, mostly because of a drop in China. While 71% of the global box office is international, it’s now North America that’s growing.
Ouch.
If those are our bragging rights, they come at a very high cost. After several years of massive, 30 percent-40 percent growth, China seemed like the answer to the nagging problem of North America’s thoroughly mature theatrical market. DVDs might be dead, theater chains aren’t growing, admissions are stagnant — but hey, China has more than 1.3 billion people! And suddenly, “Now You See Me” was a global franchise.
Now, the 2016 box office decline in China ($6.6 billion, down from $6.8 billion in 2015) may not bode well for the studios’ current trend to produce franchises that may make more sense overseas. That said, the Asia Pacific region continues to expand overall.
“We are the second-largest market in the world,” said John Zeng in his CinemaCon keynote. As CEO and board director of Wanda Cinemas, which also owns America’s largest theater chain, AMC Theatres, Zeng has reason to remain bullish. However, China once claimed it would overtake North American box office — but with North America’s record 2016 box office of $11.4 billion, that’s not going to happen any time soon.
Here’s some of the top trends facing international distributors.
Theaters continue to expand
With 164,000 total screens around the world, the Asia Pacific region was up 18 percent. China continues to expand from urban areas to less populated ones, with lower-tier cinemas continuing to grow apace. (North America has 93 theater circuits; China has over 400.)
China is letting the right imports in
More Hollywood movies play China. As Jackie Chan and others push China to relax its quotas, market forces encourage China to loosen those controls. Compared to 2015, when 41.6 percent of China’s box office came from imports, it was 80 percent in 2016.
China loves 3D
More than any other market, China eats up 3D action fare along with the same brand-name properties that play well all over the world. “Zootopia” and “Warcraft” played better in China than North American leaders “Rogue One: A Star Wars Story” and “Finding Dory.” The movies that don’t play as well in Asia are the more recognizably American or unbranded original titles.
Sci-fi is the least popular genre
Zeng provided a reverse pyramid of popular genres in China. Sci-fi, drama, and romance bring up the rear, followed by comedy, fantasy, and animation. VFX-packed action is by far the most popular: actioners “Now You See Me 2, “Resident Evil: Final Chapter,” “Warcraft,” and “xXx: Return of Xander Cage” all performed better in China than in North America.
Opening weekends are key
They’re figuring out what we’ve learned: Big opening weekends are key to success. For imported movies, the percentage of box office attributed to opening weekends increased from 38.5 percent in 2014, to 45.2 percent in 2o15, to 50.7 percent in 2016.
“Warcraft” flopped stateside and kicked ass in China
Based on a hugely popular videogame in China, “Warcraft” benefitted from months of advance marketing that included theaters devoted to showcasing the game, fan events, and merchandising. “Warcraft” supplied 50.8% of the global box office of $433 million, ranking third in annual worldwide box office and second of all the imported movies in China in 2016. In North America, the movie grossed just $47 million.
China reforms reduced their box office numbers
Zeng blamed the “minor slide in the box office” on bad movies: “Chinese-made films and Hollywood production content were weaker than previous market results.” The strong dollar made the Chinese 2016 box office look weaker than it was, Zeng said, and cited lower ticket prices in China as well as the fact that the government tracks only urban cinemas, not rural ones. But clearly things are slowing down. The Chinese government also removed subsidies that encouraged consumers to adopt the moviegoing habit, and cracked down on numbers inflation and corruption.
China’s audience is younger
Compared to North America, China’s 18-39 audience is the biggest, 71 percent, especially the 18-24 demo; in the U.S., it’s 47 percent. Zeng reminded the conference that younger demos need to be reached via digital technology such as cell phones, online marketing, and social media.
Threats from digitalization
In his sidebar Monday morning address to global theater owners, Twentieth Century Fox International president Andrew Cripps said that as choices for moviegoers’ leisure time proliferates, one of the issues is reaching audiences who are “harder to connect with by traditional means,” he said. “Cinemas are just one choice among many. We have to motivate the digital consumer to pursue leisure cinema.”
Please let us use your data
Digital cinema ticket sales via online platforms is one area of growth for exhibitors. As third-party data wranglers offer access to data and what can be done with it, Cripps begged exhibitors and distributors to share their information with each other, not third parties. “Distributors spend millions on data on consumer moviegoing” to track and profile customers, Cripps said. “In interesting times, audiences respond to brilliantly marketed event movies shown in movie palaces with state-of-the-art technology.”
