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Why You’re Not Doing Enough About China And How to Get Into the Game
Harvardwood Salon Series December 13, 2010
Robert Cain StoryArk Media [+1] 310-663-8811 [email protected]
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Chinese Film Market Overview
• For nearly a decade China has been the world’s fastest growing major entertainment market
• Domestic Chinese box office has exploded
• Since 2003, compound annual growth of 43 percent
• China has grown from 20th largest film market in 2004 to 5th largest in 2010
• China will continue to be the world’s growth story for years to come
• Huge and growing middle class
• High ticket prices
• Severely under-screened, with vast cinema expansion under way
• 5,000 modern movie screens in China – 1 screen for every 270,000 people
• U.S. has 1 screen for every 7,500 people
• In 3-4 years China will surpass Japan to become 2nd largest film market, after U.S.
StoryArk Media December 13, 2010
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China is by far the world’s fastest growing major territory Box Office Growth Rate (CAGR) of in Major Territories 2004-2010
StoryArk Media December 13, 2010
Source: Screen Digest, Boxofficemojo.com
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
US
UK
Spain
Japan
France
Germany
Canada
South Korea
Australia
Italy
Mexico
India
Russian Federation
China
CAGR
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China’s Growth vs. Other Major Territories
StoryArk Media December 13, 2010
Annual Box Office in China, France, UK and Germany 2004-2010
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2004 2005 2006 2007 2008 2009 2010E
France
UK
Germany
China
Box Office ($US MM)
Source: Screen Digest, Boxofficemojo.com
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Revenue of Hit Films Has Grown Exponentially
StoryArk Media December 13, 2010
0
50
100
150
200
250
2007 2008 2009 2010
Box Office of #1 Film, 2007-2010
Box Office ($US MM)
Avatar
2012 Red Cliff, Part I Transformers
$202m
$67m $47m $37m
Source: SARFT, Boxofficemojo.com
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China has enormous appetite (and financing) for quality films, but limited capacity to supply them
• Plenty of funding is available for film production in China • In 2009, 456 feature films were produced in China, even though cinemas could
only handle 130 • Several distributors (e.g., Huayi Bros, Poly Bona, Enlight, Galloping Horse) are
flush with cash; numerous funds and high net worth investors are ready to finance films
• But aside from cash, virtually every other factor input for making films is in short supply • Creative capabilities are sparse • Skilled screenwriters are practically non-existent • Few experienced producers • Demand for capable directors, cinematographers, star actors, etc. far outstrips
supply • Limited executive talent in finance, legal, marketing, distribution, etc.
StoryArk Media December 13, 2010
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Avoiding the Censors—Taboo Subjects and Content
From a 2008 release on SARFT’s website: • Films that depict hardcore sexual activity, rape, prostitution or nudity.
Vulgar dialogue or music and sound effects with a sexual connotation • Any content involving murder, violence, horror, evil spirits and devils • Excessively terrifying scenes, conversations, background music and
sound effects" • Films that distort the civilization and history of China or other nations • Films that tarnish the image of revolutionary leaders, heroes, important
historic characters, members of the armed forces, police and judicial bodies.
• Films that reconstruct crimes • Films that reveal police investigatory techniques. • Movies that advocate nihilism, environmental damage, animal abuse and
the capture or killing of rare animals
StoryArk Media December 13, 2010
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How to Get in, and Succeed, in the Chinese Film Market
• Focus on the needs of Chinese investors and distributors • Acute need for strong local language (Mandarin) films and co-productions
• Securing distribution for foreign-made films in Chinese theaters is nearly impossible if you are not a major Hollywood studio
• Chinese investors will invest primarily based on what they think they can recoup from the Chinese market– global markets are interesting, but scary for most • However, the right co-production can be attractive • Chinese can invest up to USD 5 - 10mm so long as the films can be shown
in China. If not, the most they will invest is about 10 percent of the budget
• Understand and stay current on what is working in the Chinese market
• Action, drama, fantasy have excelled in 2010
• Top hits: Avatar, Aftershock (Chinese action/melodrama), Inception, Detective Dee… (Chinese crime/action/thriller), Ip Man 2 (Hong Kong action film), Alice in Wonderland, The Expendables, Harry Potter and the Deathly Hallows
• Be prepared to commit time and energy to establishing a presence in China and building a network
• Work with local partners who know the ropes and are connected to government and film industry decision-makers
StoryArk Media December 13, 2010
