This year for the first time ever the largest market for films won’t be the Unites State. It will be China, according to Bloomberg the People’s Republic of China is on track to bring $10.4 billion in 2017 compared to $10.2 billion estimates for the US market. A country that was hardly given a consideration as a contender to become a market leader in Hollywood a couple of decades ago will now be the biggest market for movies. If China is not able to surpass the US this year for sure it will surpass next year there is no doubt about it.
How come China is surpassing the US. The answer is quite simple the growth in the middle class in China is creating new opportunities to make money for the film industry. According to IHS Markit, China is building an average of 27 new cinema screen every day. At the end of the third quarter last year, China had 39,194 cinema screens compared to an estimated 40,475 in the US according to the same report. Keep in mind, this was in 2016, probably today China has already more cinema screens that the US.
There are a couple of things that make movies studios scare that China is becoming the biggest market for movies. One of the problems is China has a quota only 34 foreign movies are allowed to be shown each year.
There is good news for movies studios, this year on February 17, China planned to expand their foreign film quota as the Motion Picture Association of America (MPAA) will be re-negotiate the deal with the Chinese government. As of right know, only 34 foreign are allowed but the government has reduced is blackout period compare to years prior. The blackout period is a period where theater only shows Chinese movies. One way for a studio to show their movie in China if there are not selected as one of the 34 movies is to sell their movie to a Chinese distributor were the distributor collect all the revenue.
The quota is a problem for movies studios but the biggest issue by far is censorship, the Chinese government has the right to block the movie in the mainland. This can destroy a movie box office let take “Ghostbusters” for an example, the movie was blocked in China. The movies brought $128,350,574 domestically and $100,796,935 internationally. If the movies were allowed in China it would have brought a bigger box office results. Let take another example, Warcraft only brought $47,365,290 domestic and a whopping $386,311,893 internationally and about $220.8 million was from China. China has the power to make or break a movie.
Nowadays there are a lot of co-production arrangement between U.S. filmmaker and China which is an advantage for China the can learn and adapt their technology and transfer to the rest of movies industry which can help promote the Communist Party of China propaganda.
All this is affecting us, here is North America we will see movies more adapted to the Chinese culture and less the American culture because China will rule the movies market with their bigger box office results.