Profits do not follow China's box office boom

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Box Office Opinion

The December 2009 to February 2010 period was the most lucrative ever edition of what is annually the most lucrative season at the Chinese box office. But issues of profitability and seasonality must deflate some of the hot-aired headlines and seriously worry all but a few of the producers who braved the 'holiday season.'

Total box office in the three month period, which neatly brackets the end of calendar year/Christmas bonanza and the Chinese New Year season, was an astonishing RMB3.2 billion ($469 million). That is approximately four times the size of China's full year box office at its low point in 2001. Even just looking at the combined take of the Chinese films, which faced the might of the world's highest grossing film of all time, they managed a huge RMB1.52 billion ($223 million).

On the face of it then the property developers and local municipalities which invested in new multiplexes and digital screening equipment should be happy. Their recent capital outlay was justified quicker than they imagined. But they must still be concerned that the Chinese film industry is not yet a stable one – and will be asking themselves where the next locally made blockbusters are going to come from. There is a gap in the calendar until May.

The Chinese industry fired off nearly all its available big guns just to equal the firepower of Avatar, though some films have seemingly pushed back their release dates. And that is not counting the double-tap that Hollywood delivered with 2012.

That points to a certain, understandable miscalculation about Avatar. But it also highlights how too many Chinese films of similar genre were crowded into the same season. And it shows that for all that China is adding cinema screens at the rate of more than one per day, the country still has nowhere near enough screens to cope with what is, after all, a hit driven business. Too many films fighting for too few screens almost certainly led to cannibalisation.

But the question 'how much better would the Chinese films have played if the black swan that was Avatar had been taken out of the equation?' is a particularly tricky one to try to answer. The most interesting box office analysis is actually picking between the Chinese films that played the 2009-10 season.

Starting with the good news again, seven Chinese films passed the RMB100 million ($14.7 million) mark, a milestone which was only exceeded a couple of times per year five years back.

But the counterpointing bad news is the budgetary inflation that means only a few titles released recently can be profitable. Bodyguards and Assassins (十月圍城), Treasure Hunter (刺陵), Mulan (花木蘭), Confucius (孔子) and True Legend (蘇乞兒) were films with budgets in the tens of millions of dollars and needed to score nearer the RMB 200 million mark if they were going to perform financially.

Possibly the most profitable films of the season were A Simple Noodle Story (三槍拍案驚奇, since retitled A Woman, A Gun, A Noodle Shop in export markets beyond Asia), the animation Pleasant Goat and Big Big Wolf 2 (喜羊羊與灰太狼之虎虎生威) and latterly Hot Summer Days (全城熱戀). All were relatively low-budget audience-pleasing affairs. A second sequel for Pleasant Goat is understood to be in the works already.

Bodyguards and Assassins has been reported in some media as a loss-maker. But theatrical performances in a single territory need not represent a film's sole chance of recoupment. In addition to its mega gross in Chinese theatres, Bodyguards also performed well at box offices overseas. And, as the second highest grossing Chinese film of all time will almost certainly have shelf life on TV and ancillary markets.

(That may be less true for Noodle Story, Pleasant Goat and HSD, which all absolutely failed to set light other audiences in 'Greater China' or the wider Asia region. HSD earned a miserable HK$2.83 million ($360,000) in its first two weeks in Hong Kong, where it is partially set and where its directors hail from.)

Far worse performances were registered by Storm Warriors (風雲Ⅱ), Treasure Hunter, True Legend and Confucius. All were poorly executed films, apparently made with the attitude that throwing large quantities of money at the ever expanding number of screens would be a recipe for success. 

Mulan may also belong to that club – one of its shareholders Wang Zhe, chairman of Starlight International Media Group (北京星光國際傳媒有限公司), says it lost RMB15 million – but it probably limited the damage by releasing ahead of 2012 and it may crawl its way back to breakeven over time. 14 Blades (錦衣衛) and Little Big Soldier (大兵小將) may also have made some of their investors happy, but likely not all.  

There were lower budget films too that messed up. These include Panda Express (熊貓大俠) and The Robbers (苦竹林) which would have done better avoiding the crush.

Another lesson driven home by the recent releasing season is that the 'Greater China' market scarcely exists except for martial arts films. Audiences in Hong Kong, Taiwan and China are not the same. They are not even uniform within China, where there exist taste differences between North and South and of course between cities and rural areas.

One explanation is Hong Kong audiences in particular see vehicles like Pleasant Goat and Hot Summer Days as China films despite having HK directors. The same may be true in the other direction too. Hong Kong comedy 72 Tenants of Prosperity (72家租客) scored an excellent HK$31 million ($4 million) at home, but scraped past RMB30 million ($4.4 million) in all of the rest of China.

It will be interesting to see which exhibitors, distributors and producers heed the budgetary, quality and scheduling lessons of the Christmas-New Year 2009-10. Or whether there will continue to be a spate of foolish new investors into Chinese cinema who almost wilfully only read the headline growth numbers.

Key Releases at the Chinese Box office 1 Dec 2009- 28 Feb 2010.

Int'l Title	Chinese Title	RMB	Days
Avatar	阿凡達	1,230,000,000	56
2012	2012世界末日	466,000,000	59
Bodyguards and Assassins	十月圍城	293,000,000	46
A Simple Noodle Story	三槍拍案驚奇	261,000,000	39
14 Blades	錦衣衛	137,000,000	25
Pleasant Goat and Big Big Wolf 2	喜羊羊與灰太狼2	125,000,000	31
Little Big Soldier	大兵小將	122,000,000	15
Hot Summer Days	全城熱戀	110,000,000	18
Confucius	孔子	99,500,000	17
Mulan	花木蘭	83,220,000	24
Treasure Hunter	刺陵	67,750,000	33
The Spy Next Door	鄰家特工	64,100,000	24
The Storm Warriors	風雲2	59,530,000	33
All's Well Ends Well 2010	花田囍事	54,800,000	18
True Legend	蘇乞兒	46,900,000	20
Sherlock Holmes	大偵探福爾摩斯	30,000,000	4
72 Tenants of Prosperity	七十二家租客	30,000,000	18
Poker King	撲克王	14,790,000	20
Alvin and the Chipmunks: The Squeakquel	鼠來寶：明星俱樂部	8,300,000	14
Detective Conan: The Raven Chaser	名偵探柯南：漆黑的追蹤者	8,150,000	25
Arthur et la vengeance de Maltazard	亞瑟和他的迷你王國	4,450,000	13
Di huang xia	鎧甲勇士之帝皇俠	3,400,000	10

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