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Hollywood’s flops are finding redemption in booming China

April 30, 2018

Age of disruption: Hollywood reads the tea leaves

The state of affairs that helps explain the uneven earnings of, say, the giant robots sequel “Pacific Rim: Uprising” ($58.6 million in the U.S., $100.4 million in China) has been building for at least six years.

In 2012, China eased up on historical fears of Western imperialism — Rocky and Rambo could be agents of American propaganda, after all — and loosened its quota for international movie imports, agreeing to admit about 34 a year. Chinese box office revenues for American-made movies have since grown every year.

“Chinese audiences love the spectacle of big-budget American franchises,” Fritz said. “And for a middle-class Chinese person who may have been born in rural poverty, it’s still a big deal to spend a night at the theater.”

Hollywood’s flops are finding redemption in booming ChinaHollywood’s flops are finding redemption in booming China

Chinese moviegoers who spoke to NBC News last week said they adored the world-class production values of American genre fare — especially superhero projects like the new Marvel extravaganza, “Avengers: Infinity War.” The movie, which racked up $250 million at the U.S. box office over the weekend, is set to open in China on May 11.

“Hollywood movies are sophisticated, streamlined productions … so I think they are worth spending money on,” said Wang Hui, 25, an English teacher in Beijing, who added that most big-city moviegoers she knew were young and superhero-mad.

And yet even as China has opened its doors to Marvel, Pixar and Despicable Me, the arrangement hasn’t been without its asterisks for American producers and distributors.

This is a monumental change for an industry that once focused almost exclusively on North America.

This is a monumental change for an industry that once focused almost exclusively on North America.

China still puts careful limits on the number of American movies allowed into the marketplace, and regulators occasionally impose “blackouts” on American fare so local products get a chance to shine. U.S.-based studios only get about 25 percent of ticket sales from Chinese box offices — roughly half of what they get stateside.

But the relationship between the two superpowers, at least when it comes to making movies, has become increasingly collaborative, according to analysts. Chinese financial backers and producers, like the state-run China Film Group, have a hand in various Hollywood projects.

“Warcraft” and both “Pacific Rim” outings were co-produced by Legendary Pictures, a California-based production company that was acquired by the Chinese conglomerate Wanda Group in 2016 and boasts major marketing muscle. (Wanda also owns AMC Entertainment, the second-largest theater chain in America.)

American studios have also tailored some of their output with Chinese tastes — and Chinese censors — firmly in mind, occasionally casting Chinese actors in supporting roles, filming key scenes in the country, or modifying storylines that might cause offense.

U.S. audiences might want to bear that in mind when they see trailers for “Skyscraper,” an upcoming action film, starring Dwayne “The Rock” Johnson, set at a Hong Kong skyscraper that comes under attack by terrorists.

Many industry observers have questioned whether Hollywood should just skip over domestic releases and take their products straight to China, where the general appetite for effects-heavy epics tied to well-known brands, like Marvel, shows no sign of waning.

That kind of business model could be in the cards, but the risk might come with dwindling rewards. Hollywood may not dominate the Chinese market indefinitely.

How China could beat Hollywood at its own game

China’s theatrical box office revenue overtook North America’s in the first quarter of 2018, according to data assembled by the trade publication Variety. And many industry analysts, with an eye on market trends, have predicted that China’s box office will be the largest in the world by 2020.

But so far this year, Chinese growth has largely not been driven by American hits like “Black Panther.” The real growth-drivers are a trio of Chinese-made hits that Hollywood had virtually nothing to do with: “Operation Red Sea” ($579 million), “Detective Chinatown 2” ($541 million), and “Monster Hunt 2” ($356 million).

Those three movies were the product of what has become, under the nationalist government of Chinese President Xi Jinping, an increasingly assertive and profitable homegrown film industry, according to Richard Gelfond, the chief executive of IMAX.

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