Hollywood’s Box Office Heroes Proving Mortal in China

Last year, helped by a high-level deal that expanded the number of foreign films for release there, American blockbusters like “Mission: Impossible — Ghost Protocol” led the Chinese box office for 23 straight weeks, and received a disproportionately large share of their ticket sales from China.

More big releases were on the way, and the floodgates in the world’s second-largest film market appeared ready to swing open.

But something unexpected happened on the way to the bank: demand tapered off sharply.

In the first quarter this year, ticket sales for American movies in China — including films as prominent as “The Hobbit: An Unexpected Journey” and “Skyfall” — fell 65 percent, to about $200 million, while sales for Chinese-language films rose 128 percent, to well over $500 million, according to the online publication Chinafilmbiz.com.

The weekend brought one sign of a rebound for Hollywood: “G.I. Joe: Retaliation” from Paramount Pictures, took in a respectable $33 million at the Chinese box office, matching roughly 75 percent of its ticket sales when it opened in the North American market on March 28.

But if the preferences of Chinese moviegoers continue to shift to domestic releases, China will maintain control of its own film market just as Hollywood was ready to seize it.

When “Iron Man 3,” an action heavyweight from Disney’s Marvel Entertainment, opens in coming days, it will slug it out with a small, domestically made romance called “So Young,” about a Chinese woman who reconnects with her college sweethearts. It is hard to be certain which film will be the underdog.

In fact, a succession of domestic Chinese films, including the comedies “Lost in Thailand” (a close cousin to “The Hangover Part II”) and “Finding Mr. Right” (China’s answer to “Sleepless in Seattle”), have unexpectedly clobbered expensive American fare like “Oz the Great and Powerful,” “The Hobbit” and “Jack the Giant Slayer” on Chinese screens.

The abrupt shift toward local favorites may have something to do with market manipulation. As American films gained traction in China last year, alarmed officials imposed an unusual two-month blackout that kept most foreign movies off screens during the summer season.

They also forced “The Dark Knight Rises” and “The Amazing Spider-Man” into direct competition with each other, and promised to pay theater owners an annual bonus if their receipts from domestic films matched revenue from foreign films for the year.

Still, executives and China watchers here suspect something potentially more threatening to Hollywood: a rapid evolution in the tastes of Chinese audiences, which are quickly turning away from the spectacles American companies have assumed they crave.

“I know what they don’t seem to want,” said Rob Cain, who runs Chinafilmbiz.com and is a consultant to producers and others doing business in China. “They don’t want the same old thing, over and over again, the action blockbusters with lots of explosions.”

The apparent shift is helping Chinese films like “Lost in Thailand,” which was an eye-opener last year when it posted more than $200 million in ticket sales in China. It surpassed “Avatar” to become the country’s best seller in terms of total admissions (though not revenue, as “Avatar” had heavy 3-D sales at premium prices). It led a string of Chinese-language hits that outstripped Hollywood films like “Stolen,” “Jack Reacher,” and even “A Good Day to Die Hard,” which briefly claimed the top spot in China.

Richard L. Gelfond, chief executive of the Imax Corporation, whose screens in China play both American-made and Chinese-made films, said he was confident that viewed over a long period of time, “China is opening up to Hollywood.”

But lately, Mr. Gelfond acknowledged, the shift toward domestic films has been “dramatic.” In early 2012, he said, American studios did well in China partly because the available Chinese films lacked audience appeal. Later, he noted, Chinese officials delayed the release of “Skyfall” and “The Hobbit” until those films had played elsewhere, which allowed video pirates time to put a dent in the potential audience.

Mr. Gelfond said he expected American films to rebound in China over the next few months, as more of them are released on or near their opening dates elsewhere in the world.

Article source: http://www.nytimes.com/2013/04/22/business/media/hollywoods-box-office-heroes-proving-mortal-in-china.html?partner=rss&emc=rss