2013 Preview: Keep A Close Eye On China's Box Office

on January 01, 2013 by Phil Contrino
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im3china.jpg2012 was a breakthrough year for the China/Hollywood relationship, but it's only the beginning. 2013 is bound to be full of major Hollywood success stories at the Chinese box office. 

China's box office totaled around $2.7 billion in 2012. Foreign films (read: mostly Hollywood films) made up $1.9 billion of that total. The overall box office should easily pass $3 billion--and that's being modest--in 2013, so even if Hollywood's share of the total remains the same the dollar amount should increase substantially. 

Ernst & Young predicts that China's total box office will pass North America's by the year 2020. Some pundits, like China Film Biz's Rob Cane, predict that it could happen sooner. Hollywood is on high alert. 

STARTING OFF ON A HIGH NOTE

January brings the release of two major Hollywood films: The Hobbit: An Unexpected Journey (January 10) and Skyfall (January 21). China's State Administration of Radio, Film and Television (SARFT) intentionally delayed the release of those two heavyweights in order to allow Chinese films to face less competition. It worked. China's Lost in Thailand, a December 12 release that many are referring to as a Hangover 2 rip-off, is now the #1 homegrown earner of all time with $150.9 million and counting. Chinese filmmakers are learning quickly how best to serve their fellow citizens, but it's not happening fast enough. Lost in Thailand still ranks behind Avatar ($203.8 million) and Transformers: Dark of the Moon ($172.3 million) on China's all-time list. 

Skyfall has already earned more than $700 million overseas, so grosses from China will be icing on the cake. The same goes for The Hobbit. Peter Jackson's prequel is rapidly approaching $500 million overseas and it still has plenty of momentum left. Don't be surprised if both films breeze pass $50 million in China.

PROMISING AMERICAN FILMS

Hollywood expects certain films to do very well in China this year. May's Iron Man 3 is a prime example. Disney/Marvel have been pushing hard to make sure that IM3 can achieve co-production status by involving DMG Entertainment, a Beijing-based studio, and organizing a shoot in Beijing. Snagging the co-production label is the difference between being entitled to 25% of a film's grosses and 40%. 

Iron Man 3 has big shoes to fill. Marvel's The Avengers earned $91.4 million in China compared to $55.6 million for The Dark Knight Rises. Considering how fast the market is growing, a total of around $75-$80 million in China for Iron Man 3 is now a realistic goal. For what it's worth, Iron Man 2 banked $26.3 million in 2010. 

REMAINING COMPETITIVE WITH DOMESTIC GROSSES

Life of Pi earned $90.8 million in China before its run was brought to an end. The stirring drama's North American haul is $85.7 million and counting. Chinese grosses running close to domestic totals is bound to become a more common story as Hollywood focuses more attention on connecting with the country. 

Even when the grosses are not competitive, China is still the most important foreign market for many films. Take Ice Age 4: China was the #1 foreign territory with $73 million in grosses. 

BATTLING THE POWER OF HOLLYWOOD

China clearly wants to protect domestic films, and that's why the use of blackout periods--designated spaces of time in which foreign films are not allowed to open--will be standard for the foreseeable future. The latest blackout period certainly helped Lost in Thailand and Jackie Chan's CZ12 ($76.5 million and counting). 

The relationship between China and Hollywood is a delicate one. Hollywood can't push too hard or it risks overstaying its welcome. 


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