One small step for studios, one big leap for Hollywood films? China Film Group to pay studios over $200mil in previously disputed past-due film revenue

Let’s face it, we all know China is the new frontier.  Film’s “gold rush.”  But historically, Hollywood films have run into near-debilitating roadblocks to accessing the billions of dollars in revenue that would come from the billion or so potential movie-goers in China.  At first, the problem was censorship.  Nearly 40 minutes of the film Cloud Atlas was cut to exclude both gay and straight love scenes.   In the film Skyfall, a scene that took place in a Shanghai skyscraper that included the assassination of a Chinese security guard was taken out.  And the famous scene in Titanic where DiCaprio sketches the near-nude Kate Winslet was modified to focus in on just her back and shoulders, for fear that in the 3-D viewing, audiences may be tempted to reach out and touch her body.  I’m not making this up.  The State Administration of Radio, Film and Television said so in an official statement.

Cut to today, where censorship remains a major hurdle, stemming in part from the Chinese government’s fear of American propaganda penetrating its masses through glorious, fascinating images and stories.  Clearly, there is an acknowledgment of the power of film.  But it wasn’t until China realized they, too, could influence its population through subtle and oft not-so-subtle modifications to US films distributed through China, that the country began to lax some of the roadblocks studios were facing.  Or maybe it came down to the usual: money. 

As of 2012, China allows 34 foreign (mainly U.S.) films (previously only 20) to receive theatrical distribution in China, and this distribution is via only 2 companies, China Film Group and Huaxia Film Distribution, both of which are state-owned.

Today, studios receive a fixed 25% of net box office sales in China (up from between 13% and 17% before 2012), and the Chinese distributor pays all taxes and P&A costs.

This 25% that studios are entitled to, per a 2012 memorandum of understanding between the U.S.’s Vice President Joe Biden, and China’s president, was not paid to U.S. studios, for films including Skyfall and Life of Pi, a number reported by Variety to possibly be over $200 million.

This $200 million only reflects revenues from March/April until now.  And the Chinese market continues to grow, up 36% to roughly $1.79 billion this year alone to-date.   Yet imported films fell by 21% to $670 million.  Why do you think this is?

September, Chinese audiences can expect to see films such as Jobs, Smurfs 2, The Lone Ranger, and Elysium.  I’m curious to see how China will censor the Smurfs movie.

 

 

 

 

 

 

 

**figures obtained from Variety

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