Chinese authorities hold absolute control over film distribution in the world’s largest film market, thanks to strict censorship, protectionist policies limiting the import of foreign content, and control over release dates.
New data from Chinese sources show that control made life harder for foreign films in 2021.
Foreign films can formally only be distributed in China through one of two centralized state-owned enterprises, and are imported as either one of a limited quota of 34 “revenue-share” films, for which the studio gets a cut of the box office, or on “flat fee” (aka “buy-out”) terms. The China rights are licensed for a lump sum by a local firm that then takes on the risks and reaps the rewards of getting the work through censorship. Efforts to change the system and bring China into closer compliance with its WTO obligations have stalled, and no progress is expected in the coming year.
Public data organized by influential Chinese film blog Theatrical Film Database portrays the China film market of 2021 as increasingly insular and out of sync with the rest of the world.
The U.S.’s share of both revenue-share and flat-fee foreign film dropped: just 39% of all films imported last year were American, down from 46% in 2020 and 47% in 2019.
Less than a third (28%) of the foreign films screened last year were 2021 titles. Most were older, and a tenth of them were archive titles that dated from before 2010.
For many years, U.S. studios have criticized Chinese authorities for belated censorship and screening approvals. This allows them little time to create effective marketing campaigns in China and puts Hollywood titles at a disadvantage compared with Chinese films which are given months to prepare and build awareness.
Last year, approvals were granted later than ever, often just days in advance.
“In 2021, many films were almost released purely symbolically, with the release dates often fixed [so late] that film hard drives couldn’t even be distributed to theaters in time for the premiere,” the blog said in a commentary.
The data showed that box office numbers across the board suffered as a consequence, with more flops and fewer hits. Last year, 67% of all imported films grossed less than $7.84 million (RMB50 million), up from 61% in 2019, while only 24% of films grossed more than $15.7 million (RMB100 million), down from 33% in 2019.
Among the 67 foreign films released last year were 25 revenue-share titles — 21 of them labeled as American — that collectively accounted for 12.5% of the annual box office (RMB5.89 billion). That figure is up from 11% in 2020, but significantly down from 29% in 2019 and way down on years not so long ago when Hollywood vied with Chinese titles for the box office crown.
Some 40% of revenue-share films this year earned less than RMB50 million, while only 8% of films earned more than RMB1 billion. That stands in stark contrast with the ledger for 2019, when only 14% of films grossed less than RMB50 million and 14% grossed more than 1 billion.
The highest earning revenue-share import of last year was “Fast & Furious 9,” with receipts of $217 million (RMB1.39 billion), while the lowest was “The High Note” with $41,000 (RMB260,000), both of which were distributed overseas by Universal.
Around 36% of the revenue-share films released last year were sequels or part of franchises. None were classified as R-rated back home in the U.S., though 68% were rated PG-13. China does not have an official classification or rating system, but regulators may impose cuts instead. An estimated 8% of U.S. films experienced some form of censorship or cut in China in 2021.
Warner Bros. was the most successful as getting its films into China in 2021, screening six titles. Disney followed with four, then Sony, Paramount and Universal with three apiece and (Disney’s) 20th Century Studios with two. China’s National Alliance of Arthouse Cinemas also imported four films.
The Hollywood studios’ share of the China box office, however, broke down differently. Universal led the pack off the back of “F9” with a 32% share of the box office sales earned by revenue-share foreign films in China, just ahead of Warner Bros. at 31%. In third, was 20th Century Studios, with 18% share. Lagging far behind were Disney (7.5%), bereft of its Marvel titles, Paramount (6.9%), and Sony (4%), having missed the opportunity to release surefire hit “Spider-Man: No Way Home.”
Last year’s revenue-share films were generally newer than the flat-fee imports but were, however, notably delayed compared to years past. Only 28% of films were released in China ahead of the U.S. or within three days of their North American premiere, up from 2020, when the pandemic wreaked havoc on scheduling, but notably down from 2019, when more than half (58%) of revenue-share films benefitted from day-and-date or even early releases.
The picture for flat-fee imports was bleaker. There were just 42 of them last year, down from 87 in 2019, and the majority flopped.
Nearly half of them earned less than $784,000 (RMB5 million), while less than a tenth of them broke the $15.7 million (RMB100 million) mark. Together, they accounted for just 2.7% of the total annual box office (RMB1.27 billion), down from 4.4% in 2020 and 6.8% in 2019.
Last year’s line-up of flat-fee films included eleven from Japan, five from the U.S., four from Italy, three from Russia, two from the U.K., and one apiece from Argentina, Ireland, Pakistan, Belgium, Poland, Denmark, Germany, France, S. Korea, the Netherlands, Mexico, Norway, Thailand, Spain, and Hungary.
Japan was also the leading flat-fee country in 2020 and 2019, source of about 27% of approved titles across all three years, thanks to its animation franchises. The proportion of titles accorded to American independents has shrunk, however, from 18% in 2019 to 12% last year. In contrast, there was a rise in imports from disparate smaller countries that China deemed diplomatically appropriate.
The top flat-fee title in 2021 was the Japanese 3D computer animated “Stand By Me Doraemon 2,” which grossed $43.6 million (RMB278 million). The worst-performing title, Mexico’s “Coco” look-alike animated “Dia de los Muertos,” which earned less than $10,000.
About 19% of flat fee films were censored in some fashion, the blog estimated, down from around a quarter in the two years prior. Only 7% of flat fee films released hailed from 2021. The lag time underlines just how slow and unpredictable the approval process has become for flat-fee import films.
Delays will continue into 2022, a year when what will be distributed when is expected to be less predictable than ever.