China’s box office is set to end the year with its smallest growth in a decade, clouding the outlook as Hollywood pushes to show more of its films in theaters in the world’s second-largest movie market.
Beijing caps the number of imported films each year under a revenue-sharing deal reached in 2012. That quota, which Hollywood wants to increase from the official level of 34, is scheduled to be reviewed next year.
China accounted for 18.8 percent of worldwide movie ticket sales last year, versus 7.5 percent in 2012, according to research firm comScore.
For films imported under the cap, 25 percent of China ticket revenue goes to the US film studio, a smaller share than the about 40 percent average in other international markets.
While a drop in China’s ticket sales growth could muddy the outlook for foreign movies, Sanford Panitch, president of Sony Corp’s Columbia Pictures, shrugged it off, saying: “We’ll take this slowdown in any territory in the world. It’s still an incredible story of a big growth market.”
Between January and last month, tickets worth 41.4 billion yuan (US$5.95 billion) were sold in China, industry tracker EntGroup said, up 4.4 percent on last year. That is sharply slower than last year’s 50 percent jump and on track for the slowest annual growth in a decade.
However, given the market’s size and potential, the Motion Picture Association of America (MPAA) remains eager for Beijing to open its doors wider. Box office experts say China’s ticket sales are likely to overtake those in the US and Canada within the next few years.
An MPAA official said it was “very encouraging” that US and Chinese officials had agreed in recent talks to address issues including increasing the annual film quota and the revenue share that foreign studios receive.
For now, coproductions are helping bring the two sides together.
On Friday last week, Chinese theaters debuted The Great Wall, starring Matt Damon and produced by Legendary Entertainment LLC — the Hollywood studio purchased by China’s Dalian Wanda Group Co (大連萬達集團) — along with China Film Group (中國電影集團) and others. The movie was partly filmed at Wanda’s new studio in Qingdao, China. It has been designated an official China coproduction and therefore avoided the cap on US-made movies.
China is juggling its desire to welcome US films, its investments in Hollywood and efforts to protect its industry.
“Culturally, they are very suspect of having too many American imports flood their country. They want their citizens to see homegrown hits and Chinese stories,” China Film Insider analyst Jonathan Papish said.
The five-year 2012 deal governing how many foreign films can be shown in China was announced at the end of a US visit by Chinese President Xi Jinping (習近平). Previously, China let only 20 foreign-made films play in the country each year.
Next year, the two governments could extend the current agreement, or the number of imported films could be increased or decreased, said Greg Frazier, a consultant involved in the 2012 deal as an executive vice president at the MPAA.
He said the agreement “is vulnerable to the changing Chinese film market over the last five years. How dependent does the Chinese film sector and the government think it is on more US product?”
Adding to the uncertainty is the election of Donald Trump as president in the US.
Trump stoked tensions with China by speaking to the president of Taiwan on Dec. 2 and then publicly suggesting the “one China” policy was up for negotiation.
US-based media executives were hoping for improved relations with China next year, said Matt Lieberman, a director at PricewaterhouseCoopers and a consultant to major Hollywood studios.
“That question is now up in the air,” Lieberman said.
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