Hollywood is making more money in China's booming film market than ever. But US productions are losing market share to domestic rivals with bigger budgets, sharper scripts—and government backing
It is a scene to warm the hearts of Hollywood executives. Friday night in the trendy Sanlitun shopping district in Beijing, and the movie theater is heaving with people eager to escape the stifling August humidity and enjoy the latest summer blockbuster.
The film is The Meg, a US-China co-production about a giant shark causing chaos at an offshore research station, and it stars British action star Jason Statham and Chinese actress Li Bingbing.
Movies like The Meg are the great white hope of the American film industry, a joint production with a Chinese studio that beat the odds and succeeded on both sides of the Pacific. The film grossed $45 million in North America and $50 million in China on its opening weekend.
Learning how to please mainland audiences without alienating moviegoers in the United States is becoming important for Hollywood as box office receipts stagnate in its home market but explode in China. Quarterly ticket revenues in China surpassed those in North America for the first time ever in the first three months of 2018, with Chinese cinemas netting $3.15 billion compared to $2.85 billion in Canada and the US.
Those figures were boosted by massive takings during the Lunar New Year holiday, always a peak time for Chinese cinemas, but China could become the world’s largest film market in whole-year terms as early as next year.
There are now more cinema screens in China than the US, with the number of Chinese screens doubling from 20,000 to 40,900 between 2013 and 2016. But there are still only 23 screens per million people compared to 125 in America, according to researchers IHS Markit, suggesting huge potential for further growth.
[This article has been reproduced with permission from CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business (CKGSB), China's leading independent business school. For more articles on China business strategy, please visit CKGSB Knowledge.]