china- how to get into the game
TRANSCRIPT
Why You’re Not Doing Enough About China And How to Get Into the Game
Harvardwood Salon Series December 13, 2010
Robert Cain StoryArk Media [+1] 310-663-8811 [email protected]
1
Chinese Film Market Overview
• For nearly a decade China has been the world’s fastest growing major entertainment market
• Domestic Chinese box office has exploded
• Since 2003, compound annual growth of 43 percent
• China has grown from 20th largest film market in 2004 to 5th largest in 2010
• China will continue to be the world’s growth story for years to come
• Huge and growing middle class
• High ticket prices
• Severely under-screened, with vast cinema expansion under way
• 5,000 modern movie screens in China – 1 screen for every 270,000 people
• U.S. has 1 screen for every 7,500 people
• In 3-4 years China will surpass Japan to become 2nd largest film market, after U.S.
StoryArk Media December 13, 2010
2
China is by far the world’s fastest growing major territory Box Office Growth Rate (CAGR) of in Major Territories 2004-2010
StoryArk Media December 13, 2010
Source: Screen Digest, Boxofficemojo.com
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
US
UK
Spain
Japan
France
Germany
Canada
South Korea
Australia
Italy
Mexico
India
Russian Federation
China
CAGR
3
China’s Growth vs. Other Major Territories
StoryArk Media December 13, 2010
Annual Box Office in China, France, UK and Germany 2004-2010
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2004 2005 2006 2007 2008 2009 2010E
France
UK
Germany
China
Box Office ($US MM)
Source: Screen Digest, Boxofficemojo.com
4
Revenue of Hit Films Has Grown Exponentially
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0
50
100
150
200
250
2007 2008 2009 2010
Box Office of #1 Film, 2007-2010
Box Office ($US MM)
Avatar
2012 Red Cliff, Part I Transformers
$202m
$67m $47m $37m
Source: SARFT, Boxofficemojo.com
5
China has enormous appetite (and financing) for quality films, but limited capacity to supply them
• Plenty of funding is available for film production in China • In 2009, 456 feature films were produced in China, even though cinemas could
only handle 130 • Several distributors (e.g., Huayi Bros, Poly Bona, Enlight, Galloping Horse) are
flush with cash; numerous funds and high net worth investors are ready to finance films
• But aside from cash, virtually every other factor input for making films is in short supply • Creative capabilities are sparse • Skilled screenwriters are practically non-existent • Few experienced producers • Demand for capable directors, cinematographers, star actors, etc. far outstrips
supply • Limited executive talent in finance, legal, marketing, distribution, etc.
StoryArk Media December 13, 2010
6
Avoiding the Censors—Taboo Subjects and Content
From a 2008 release on SARFT’s website: • Films that depict hardcore sexual activity, rape, prostitution or nudity.
Vulgar dialogue or music and sound effects with a sexual connotation • Any content involving murder, violence, horror, evil spirits and devils • Excessively terrifying scenes, conversations, background music and
sound effects" • Films that distort the civilization and history of China or other nations • Films that tarnish the image of revolutionary leaders, heroes, important
historic characters, members of the armed forces, police and judicial bodies.
• Films that reconstruct crimes • Films that reveal police investigatory techniques. • Movies that advocate nihilism, environmental damage, animal abuse and
the capture or killing of rare animals
StoryArk Media December 13, 2010
7
How to Get in, and Succeed, in the Chinese Film Market
• Focus on the needs of Chinese investors and distributors • Acute need for strong local language (Mandarin) films and co-productions
• Securing distribution for foreign-made films in Chinese theaters is nearly impossible if you are not a major Hollywood studio
• Chinese investors will invest primarily based on what they think they can recoup from the Chinese market– global markets are interesting, but scary for most • However, the right co-production can be attractive • Chinese can invest up to USD 5 - 10mm so long as the films can be shown
in China. If not, the most they will invest is about 10 percent of the budget
• Understand and stay current on what is working in the Chinese market
• Action, drama, fantasy have excelled in 2010
• Top hits: Avatar, Aftershock (Chinese action/melodrama), Inception, Detective Dee… (Chinese crime/action/thriller), Ip Man 2 (Hong Kong action film), Alice in Wonderland, The Expendables, Harry Potter and the Deathly Hallows
• Be prepared to commit time and energy to establishing a presence in China and building a network
• Work with local partners who know the ropes and are connected to government and film industry decision-makers
StoryArk Media December 13, 2010