WILL CHINA BECOME THE BIGGEST GLOBAL BOX OFFICE MARKET?

By Ryan Ratnam

Over time, the film industry has turned from a culturally western business to a global Leviathan, housing business juggernauts surrounded by a plethora of films, ranging from triple A Blockbusters to low budget Art-House productions. These developments have seen the increasing prominence of China in the box office market, often deciding whether a film will sink or swim. Methods employed by businesses, as well as habits by the average Chinese film-goer will be explored in this essay, leading to the question of whether China will become the biggest box office in the world.

China’s ever increasing population meant that it always had the potential of being the fabled dream of studio suits. However, the heavy censorship rules surrounding China due to the Communist regime, coupled with strong cultural differences due to insulation from the world meant that Hollywood found it very hard to generate interest in the market, let alone permeate it, with films such a Frankenstein (1931) and Ben-Hur (1959)[1] being banned often due to differing with propaganda imbued upon the people by Mao, or presenting ‘superstitious elements’. This led to studios often giving up on Chinese releases, due to the lack of economic gains. But with the resounding failure of the Great Leap Forward (1962) and Mao’s death (1976), China gradually opened up to the world, employing more liberal foreign policy, helping them to become the global mammoth that they are today. With time, films followed suit, and although films such as Back to the Future (1985) and The Dark Knight (2008) have still been banned, the volume of such films is to a much lower degree. Chinese people themselves have become much more globally aware, still obviously interested in their own films like every other culture, but more than willing to pay for a ticket at the cinema to see an international film.

The graph above presents the market share of North America (USA and Canada) against that of China’s between 2002 and 2016. As one can see, North America’s share seems to be in constant decline with China’s share constantly increasing. The slight plateau (2016) in both can be put down to consumer uninterest in China with the films released at the time. China is fast approaching North America in its market share, with many predicting the growing country to take over North America by 2020.  

Such gains can be seen in 2017’s The Fate of the Furious (Fast and Furious 8), where the Chinese box office effectively saved the film. The Fast and Furious franchise is no stranger to big numbers, posting an impressive $1.236 billion3 for Fast and Furious 7, leading to the budget for the next instalment being increased to $250 million. However, the film disappointed in the US, only making $231 million, more than $140 million less than Fast and Furious 7. The film would have been deemed a failure if it were not for the Chinese numbers, bringing in a massive $392 million, meaning that it just surpassed $1 billion dollars, meeting at least some of the expectations set by the previous film. China can often mean the difference between a film surviving or catastrophically failing, upholding multi-billion franchises like Fast and Furious and Pirates of the Caribbean. This has led to studios, who are seeing declining box office results in western regions (specifically North America), to turn their attention to China, directly appealing to them in various films. For example, Iron Man 3 (2013), wrote a whole B-plot involving China and various characters for the film, in order to persuade Chinese audiences to see the film, making over $1 billion. Transformers 4 did something similar, extending their film by a significant amount, to fit the third act into China and spending a large proportion on marketing directly to China in order to increase their numbers. The method worked even better for the latter film, making $320 million in China, nearly $100 million more than in the US (the franchise was actually still doing rather well in America at this point, but is very quickly, relying more and more on China).

Hollywood is also facing its next enemy, one which has not affected China as of yet; streaming services. The most notable streaming service is Netflix, offering not only films and television shows, but hours’ worth of original content for people to ‘binge-watch’. In fact, Netflix saw itself break the boundary of having 100 million subscribers in April 2017, boasting results of around 140 million hours4 being watched each day, equating to almost 1 billion hours watched each week. Shows such as Stranger Things and the Crown have exploded in popularity and some studios in Hollywood have noticed this change with Paramount opting to put Annihilation (2018) on Netflix outside of North America and the third Cloverfield film (2018) is expected to get the same treatment. With shows like Riverdale seeing 400% growth between seasons in the UK due to its presence on Netflix, Hollywood suits are seen to be threatened, as many consumers are opting to spend a few hours watching their favourite show in the comfort of their home, rather than go out and spend $10 to see the most recent film. Coupled with Game of Thrones and Westworld driving forward ‘the golden age of television’, there are fears that significant dents will be seen in the film industry.  However, China does not face any of these problems. When it comes to the entertainment industry, China is still catching up to trends due to the censorship put on the country for years, therefore streaming and television are much less prominent and to a much lower quality than in the West. Without this problem, it would not see the potential hinderances endured by North America, increasing its chances of taking it over as having the largest box office market share.

To conclude, the odds almost seem to be stacked in China’s favour when it comes to their path to dominance in the film industry. The film industry is centred around making money, therefore when it comes to appeal, studios are easily drawn to marketing to China, virtually increasing their market share for them. The effect of China’s prominence has already been seen with the various franchises relying on their support, and with the problem of streaming inexistent, their barriers to becoming more dominant than North America seem very few. This is without mentioning the increasing film production in China itself, helping them to make various global top 10s when it comes to earnings made in one year (Wolf Warrior 2 – 2017). Therefore, I believe that it is inevitable that China will soon become the biggest global box office power with the largest market share.