Earlier this year, Black Panther became one of the biggest films of all time at the worldwide box office largely without China’s help. That, combined with the ongoing trend of Star Wars movies annually cracking a billion worldwide despite complete indifference from China, led many analysts to argue Hollywood needs to realize its blockbusters can still play everywhere without always pandering to Chinese tastes. Easier said than done, obviously.
But suddenly Ready Player One, Steven Spielberg’s VR-inclined ode to the 80s, has been saved by China, which is now responsible for 41% of the film’s worldwide gross (compared to just 8% of Black Panther‘s). Without its record-setting run in the Middle Kingdom, the highest for any Warner Bros. title and one of the biggest for any Hollywood movie ever, Ready Player One would be a financial disaster for the studio and its financier, Village Roadshow, which spent $175m on the budget and who knows how much more on marketing. It’s been estimated Ready needs to hit around $450m worldwide to be considered a success, and while it’s not quite there yet it will likely make it eventually. Without China, it wouldn’t have even come close.
It’s not the only time that’s happened this year, either. Tomb Raider and Pacific Rim: Uprising each made more in China than anywhere else. Still, it’s not always so simple. Tomb Raider’s domestic failure led to the sudden firing of the MGM boss responsible for the film and Uprising is still wildly underperforming.
So, who’s right? For Hollywood, is it China or bust? Or is there a path forward in blockbuster land where the question “Yeah, but how will this play in China?” doesn’t dominate? Can one really afford to ignore what will soon be the world’s leading film market?
Moreover, does China even want Hollywood blockbusters anymore? For the first time in history, China’s box office surpassed North America’s this past fiscal quarter, and it did so largely on the strength of its own films, with around two-thirds of the country’s overall gross coming from local productions. Our market is flat or contracting whereas theirs is again booming, surpassing us in quarterly revenue and even overall number of movie screens (54,000 versus our 45,000), and their local film industry has developed rapidly. As a result, two of the 2018’s biggest global grossers are Chinese: Operation Red Sea ($568m) and Detective Chinatown 2 ($395m).
Then there’s the Trump of it all.
As of this writing, we are not technically in a trade war with China, but we’re damn close. So, as the United States and China trade barbs en route to a potential trade war and nationalistic tendencies overwhelm both countries, Hollywood might just be cut off – not in the sense that our movies will be banned over there, more in the sense that China’s state-run film industry will make things especially hard for us – from its last true cash cow, if it hasn’t been already. What happens then?
Well, then you just move on to the next big fish, like rolling out the red carpet and trying to get into bed with a Middle East human rights violator who recently turned a Ritz Carlton into a prison for his country’s elite. That’s exactly what happened last week when Saudi Arabian crown prince Mohammed bin Salman was wined and dined at Rupert Murdoch’s house alongside fellow dinner guests like Disney’s Bob Iger, The Rock, and other Hollywood elite, including the heads of every major studio. Shortly after that, it was announced AMC – the Chinese-owned AMC, I’ll add – will be the ones to open the country’s first new theater on April 18, Black Panther will be the first film to screen in that theater, and it will soon be followed by Avengers: Infinity War.
Hollywood did this because Salman lifted the country’s 35-year cinema ban, thus setting off a veritable new gold rush of studio suits and exhibitors looking to plant their flag in what just might be the world’s last great untapped market – an oil-rich country of 32 million people, 70% of them under the age of 30. That means the majority of the people have grown up in a land where the only way to see a movie in a theater was to visit a nearby country or Dubai. The pent-up demand could catapult Saudi Arabia into becoming the world’s 10th biggest movie market within 5 years, if not sooner.
Deja vu, right? The same basic process has played out over the past couple of decades in various countries that have newly opened their borders to western films.
Now, it’s just on to the next target, business as usual. Because despite the perception of Hollywood being drive by liberal principles it is actually as capitalist as it gets, forever in pursuit of the almighty dollar, wherever that quest might lead. The history of Hollywood over the last half-century, after all, largely centers on the perpetual search for new sources of money. Each new source, be it due to technology, audience tastes, and/or general globalization trends, eventually dries up. Home video? Cable revenue? 3D? Even China? Not what they used to be. So, hello Saudi Arabia.
The irony here is that China’s locally made films thrive within their borders but do next to nothing outside of them whereas, increasingly, Hollywood’s native productions can’t pull nearly enough North Americans away from their Netflix accounts and have to desperately hope for salvation overseas, be it in China or just the entire international market combined.
To bring things back to Black Panther and Ready Player One, i’s not like Black Panther didn’t pander at least a little bit to the Asian market with its South Korea-set casino-chase sequence. That helped it score $42m in South Korea, good enough for third biggest foreign total behind the UK and China. For its part, Ready Player One cast a Japanese pop star, Win Morisaki, in a vital supporting role, but it has yet to open in Japan. In fact, other than China (and North America), it’s not doing much of anything anywhere else, with South Korea its second-leading foreign market with a haul of just $8m.
What does this teach us? Mostly that it is still possible for blockbusters to make hay without leaning so heavily on China (look at Black Panther, Last Jedi, and Jumanji), but at the same time nothing can save a blockbuster from financial ruin quite like an unexpected run of good fortune in China. However, with China increasingly favoring homegrown product over foreign imports Hollywood is left in a quandary over what to do.
The simple answer is just to make better movies geared toward 2018 audiences, not 1998, but with budgets ever escalating and jobs on the line the too-many-cooks-in-the-kitchen problem has become increasingly systemic. That’s caused talent to run away screaming to the more artistically nourishing world of streaming and TV and left behind a bunch of MBAs to run the film studios, who all busy themselves with trying to make product that can be everything to everyone.
Meanwhile, audiences are just being pummeled with choices. Netflix added 100 new movies, TV shows, and specials in the last week alone! And the studios can’t compete with the new tech companies that operate according to completely different business models. The profit margins for theatrical distribution have always been thin, but that’s the business Hollywood is in, along with cable rights, merchandise, and streaming sales. MoviePass, Netflix, Amazon, and Apple, meanwhile, use long-term debt financing, loss leader principles, and simple tax return riches to pursue strategies where they don’t seem to sweat it if they lose money. How the heck can Hollywood hope to compete with that?
I see the traditional film industry in a bit of a death spiral and inevitable state of contraction. The future will be fewer films in theaters and fewer theaters overall. But that doesn’t mean good films, new and old, aren’t out there to be found. That’s why I’ve been focusing on reviewing so many streaming movies and shows, particularly the Netflix ones, recently. Veronica, if you somehow haven’t seen it yet, is among the finest films I’ve seen all year, and older classics like A.I. and The Omen are still waiting to be discovered by new audiences on various streaming services.
So, if you’re a longtime reader or even new reader of this site what do you want from me? Have you enjoyed the content curation mode I’ve switched to in recent months? Do you miss the industry analysis, like that provided in this very article, and editorials I used to churn out on a more regular basis? Or do you kind of wish I would either do both or pick one or the other and focus on that? Let me know in the comments. Also, out of curiosity, what’s the best thing you’ve watched recently? And was it in a theater?