What’s next for the Chinese box office as Covid and politics are an unpredictable mix

Reading the China 2023 tea leaves is even more difficult than usual. The country’s reversal of its long-standing zero-Covid policy has consequences from geopolitics to the economy and, closer to Hollywood’s homeland, the state of the market after a bleak 2022. It is with those consequences that suspicions come into play.

On the one hand, the easing of restrictions appears to have already led to more tickets being sold at on-site theaters. On the other hand, the sudden resurgence of a large population with little natural or vaccine-derived protection is likely to cause a wildfire of infections and emerging variants not seen since the pandemic began.

China’s box office dropped an estimated 36% last year to reach $4.35 billion with just two domestic titles in the world’s top 10, compared to three last year that ranked much higher.

For its part, Hollywood has achieved relative success Jurassic world domination and recently Avatar: the way of water. But increasingly late or no release dates were announced – there were only 12 studio films available for entry (2021 was also under 20 compared to over 30 in 2019), and there still hasn’t been a Marvel film since the title launched . Spider-Man: Far From Home. Even domestic films struggled with short run times in 2022.

While there were closures throughout the year, there were theaters where theaters could certainly benefit from large imports, but some of the biggest global wholesalers never saw a screen in the Middle Kingdom. And then, amid a wave of local protest movements, China lifted its zero-Covid policy, causing massive spikes in infections and fears for much of the population to leave their homes.

How big these spikes are is up for debate. Cases rose by 45% in the past week, with 218,019 cases reported, according to data available in the World Health Organization’s weekly epidemiological update. The number of deaths in the country rose by 48%, with 648 reported in the week. These percentages can tell us more than these totals, as China is believed to be undermining its Covid-related totals

Mike Ryan, Executive Director of WHO’s Health Emergencies Programme, said: “We believe the current figure released from China underestimates the true impact of the disease in terms of hospitalizations, ICU admissions and especially deaths.”

In fact, tests conducted this weekend on passengers arriving in South Korea and Taiwan from China revealed infection rates of more than 20%. And it’s not just Asian countries.

Different Covid prevention requirements now apply for travelers from China to the following countries: USA, UK, Japan, Italy, France, Spain, Germany, Sweden, Australia, Canada, Korea, India, Israel, Qatar and Malaysia. These vary, although most require mandatory tests and some are randomly tested on arrival. Morocco has completely banned Chinese visitors.

In Italy, all arrivals from the Middle Kingdom must be weaned. Authorities there found passengers on two flights from China in late December, about a third who tested positive on one flight and half on another.

The fear of infection peaks initially delayed the opening Avatar: the way of waterbut signs were encouraging as the film held strong and is now expected to take around $220 million through local ticketing platform Maoyan.

Yet at this point there is no clear picture of when the latest waves will stop rolling. It has been said that there could be a Covid surge as early as March – and with Chinese New Year starting on January 22 this year, it remains to be seen what will become of what is typically a lucrative time for local films. (The Chinese New Year is often cited by epidemiologists as a major cause of seasonal flu spikes each year.) Expected follow-up The Wandering Earth II then it comes, as well as possible eruptions like the Zhang Yimou drama Full river redhistorical drama/thriller Hidden knifecomedy Five hundred miles and animated photos deep sea and Boonie Bears: Guardian Code. If these films can reach the level of last year’s New Year numbers, a viewer will say, “I put (the market) on an upward curve.”

further away, The Meg 2: The Trench could be a bright spot on the horizon. The Warner Bros sequel, a Chinese co-production, is expected to be released in August. That’s around the same time the original grossed over $150 million in 2018.

But across the board, except only during the Lunar New Year or Golden Week in October, the exhibition needs films. “There can’t be three months without a new film,” exclaims an international manager. The impact of Covid in 2022 has affected local production, meaning that releases this year could be slim, even if China aims to maintain (at least) a 55% market share for its films. Gower Street Analytics, which is cautious about China, forecasts $5.55 billion in 2023, up from 2022 but well below 2021 levels.

Meanwhile, the government is encouraging exhibitors to build more cinemas to boost mall attendance, but is still struggling to gain access to some of the year’s biggest titles worldwide.

“How can you tell them to keep growing if they don’t allow films?” asked a veteran international manager. This person continues: “Bureaucrats are killing the company because they are so afraid of losing their government jobs. At some point, someone in higher government has to say, ‘You’ve got to start relicensing films so the theaters don’t go broke,’ because that’s what they’re going to do. I don’t know how we don’t get mass bankruptcies if the cash register doesn’t come back in a big way.

Zhu Yuqing, secretary general of the film department of the Beijing Cultural Industry Investment and Financing Association, told Sixth Tone in late December: “Those of us in the film industry felt very desperate and lost this year… and film-related politics, we had no direction for production, shooting, investment and promotion. Such disarray has led to a dearth of new films, which have been scarce for the past three years.”

And yet, now that the 20th National Congress of the Chinese Communist Party is behind us, as well as the party’s 100th anniversary in 2021, we hear that there is less fear among government agencies. That’s the big problem, many say: no one wanted to make decisions or be seen as wrong at a time of geopolitical uncertainty and uncertainty within China.

A number of (non-Disney) executives we spoke to suggested that the return of Disney CEO Bob Iger could spread some Magic Kingdom magic in China for Hollywood. One of them was like, “Is Bob Iger going over there to smooth things over?” Will it reopen the market? If he wants to be a diplomat, a trip to China on behalf of Disney will show the government that this is the man we need.”

Indeed, the Marvel question arises. The next step for the mega-brand is pending Ant-Man and the Wasp: Quantumania which launches internationally on February 15. To secure a day-and-date release in the domestic market, Disney must submit it in the coming weeks before Chinese New Year.

China expert and USC professor Stanley Rosen isn’t optimistic about the studio’s prospects, telling us, “I don’t think the market for Hollywood will go back to what it was. No, I just don’t see that possibility. “

Despite studios collecting only 25% of gross profits from China, it remains an important market with a population of 1.4 billion, but as audiences there are weaned off Hollywood films, the mystery is that there might a new generation of viewers is being missed. .

Yu Dong, chairman of the Bona Film Group and producer of patriotic films, spoke at a forum during the Hainan Island International Film Festival in December. The Battle of Changjin Lake and its sequel seemed to hit Hollywood for lack of originality. According to China.org, he said: “Hollywood studios are looking for profit. They keep making multiple sequels and multiple superhero blockbusters. But now China’s film industry has more originality after sufficient development, and besides, China is in a great era where can produce more stories with zeitgeist, which is very inspiring for Chinese directors and producers.”

Rosen notes that this is a “very challenging time for China and films are at the bottom of the list… They want the patriotic films, they want the films that socialize the population, and there is no real advantage given China. ” upwards, at least that’s how it looks to me in the short and medium term, because I’m the biggest film market in the world.”

Citing a meeting and photo op for Chinese President Xi Jinping when he met US President Joe Biden on the sidelines of the G20 summit in Bali in November, as well as the PRC’s newfound ties with Australia, Rosen says that China “kind of on a charm offensive at the moment.”

He explains: “There will be relaxation and then tightening. It goes back and forth and they are in a cycle right now where the economy and everything else is not looking good. They loosen up to be nice, even with the US.” And part of that means that “it’s possible that some Hollywood product will be let into this entertainment cycle. But it’s a short-term position, it’s not really a long-term position. .”

Rosen adds: “China’s concern with soft power is domestic rather than international and not the most important thing for them. The influence of getting people to do what you want them to do and not do what you don’t want them to do is much more important to them.

A long-term deal between China and Hollywood that the studios had hoped would increase box office share and provide more clarity on release dates has been put on hold during the Trump years and does not appear to be renegotiated anytime soon. Rosen joked when we asked when he thought that might happen, “2203.”

A veteran of international sales says, “I stopped predicting China,” but this person thinks the Xi/Biden meeting was helpful as it was reported positively in the market.

But now that Republicans control the House of Representatives, there is “no chance” that those protracted negotiations will resume. However, since they do not have a large majority, it could have been worse. “It’s the wild card in terms of what the Americans do and whether they anger China.”

Some people are cautiously optimistic about 2023.

“We hope there will be positive developments in the new year, but we won’t know until the actual time arrives,” says a well-informed China watcher.