It is more challenging than ever to read the tea leaves regarding China 2023. China’s abrupt change of heart on its zero-Covid long-standing policy has implications for geopolitics, economics, and even closer to Hollywood: the future state of the stock market following a disappointing 2022. It is difficult to know exactly what these implications mean.
One, it seems that the ease of restrictions has already led to increased sales in local cinemas. The other is the possibility that a large population without natural or vaccine-derived immunity will suddenly resurface, causing a wildfire in infection and new variants not seen since the beginning of the pandemic.
“Avatar: The Way Of Water” Flies past $1.7B global, 7th biggest movie ever; “Puss in Boots” A Whisker from $200M WW – International Box Office
China’s box office fell by 36% in 2013, reaching $4.35 Billion with just two titles from the local Top 10 compared to three that were much more prominent the year before.
Hollywood had its own relative successes. Jurassic World Dominion And more recent The Way of Water: Avatar. It had to contend with delayed or non-existent release dates. There were 12 movies from studios to be admitted (compared to 30+ in 2019, and still no Marvel titles on the market). Spider-Man Far from Home. In 2022, even local movies struggled to meet their deadlines.
Although there were many lockdowns during the year there were still windows in which theaters could have been benefited from large imports. However, some of the world’s biggest grossers did not see a Middle Kingdom screen. Then, China ended its zero-Covid policy amid protests from many local groups, leading to large infections and concerns among the populace about their ability to leave.
It is still unclear how large these spikes were. Data from the World Health Organization’s Weekly Epidemiological Update shows that cases rose by 45% over the week ending June 1, with 218,019 reports. The country saw an increase of 48% in deaths, 648 were reported during the week. These percentages could tell us more about China than these totals because China seems to vastly underestimate its Covid-related numbers
Mike Ryan, the executive director for the WHO’s health emergencies program stated that “We think the current numbers being published in China underestimate the true impact of this disease in terms hospital admissions, ICU admissions, and especially in terms deaths.”
In fact, tests on passengers flying from China to South Korea or Taiwan this weekend revealed that the infection rate was more than 20%. It’s not only Asian countries.
Travelers from China must comply with the Covid-prevention regulations. They vary but all require testing. Some will also be tested randomly upon arrival. Morocco bans Chinese tourists altogether.
All Middle Kingdom arrivals must be teased in Italy. In late December authorities discovered that about one third of the passengers aboard two Chinese flights were positive.
Initial fears about infection spikes were a hindrance to the opening. The Way of Water: AvatarHowever, signs are encouraging. The movie received strong reviews and was projected to close at $220M according to Maoyan’s local ticketing platform.
However, it is not clear when the last waves will stop rolling. There could be a Covid spike as late as March. With the Chinese New Year starting early in this year (January 22), it is still unknown what will happen to the usually lucrative period for local movie productions. Epidemiologists often cite Chinese New Year as the main driver for spikes in seasonal flu cases each year. Anticipated sequel Wandering Earth II It is now, and so are potential breakouts like the Zhang Yimou drama Full River RedHistorical drama/thriller Hidden BladeComedy Five Hundred Miles Animations Deep Sea And Boonie Bears: Guardian Code. One observer says that if these movies reach last year’s New Year figures, then “I put the market on an upward trajectory”.
Continue reading The Meg 2 is The Trench This could prove to be a promising area. The Warner Bros sequel, a Chinese coproduction, is due to be released in August. This is around the time that the original movie grossed over $150M in 2018.
Exhibitions need movies all year, not just in the Lunar New Year, or the Golden Week of October. One international executive says, “It can’t go three months without a film.” Covid’s 2022 impact had an adverse effect on local production. This could mean that releases may be less this year, even though China is keen to retain at least 55% of the market for its films. Gower Street Analytics is cautious about China and projects $5.55 billion for 2023. This is a slight increase over 2022, but still a lot less than its 2021 projection.
The government encouraged exhibitors to open more cinemas to boost foot traffic to shopping centers, but it still delayed access to some of the most important titles in the world.
One veteran executive from international business wonders, “How are they supposed to tell them that they need to continue growing?” Another person says that bureaucrats are destroying the business as they fear losing their government assignments. Someone higher up in government must say that they have to allow movies to be shown again in order to keep the theatres in business. If the box office isn’t returning in large numbers, I’m not sure how that can prevent us from seeing huge bankruptcies.
Zhu Yuqing was the secretary-general for the Beijing Cultural Industry Investment and Financing Association’s film division. He told Sixth Tone that in December “many people in the industry felt extremely desperate and lost… Because of uncertainties from Covid and film related policies, there wasn’t any guidance on production, filming, investment, promotion, or other matters. This disorder resulted in a lack of new films. It was uncommon over the last three years.
Despite the fact that both the 20th National Congress and the 100th anniversary celebrations of the Party in 2021 are over, there is less fear among government agencies. Many believe this was the main issue: In a period of uncertainty in China’s geopolitical and internal affairs, no one wants to be wrong or make any decisions.
A variety of non-Disney executives we talked to suggested that Bob Iger’s return could spread some Magic Kingdom magic throughout the Middle Kingdom. One asked, “Does Bob Iger smoothen things over? Is that enough to open up the market? He could be a diplomat if he wanted to, and then he would go to China for Disney.
Marvel is a big question indeed. The next step for this mega-brand is Quantumania: Ant-Man and The Wasp The international rollout of the movie begins on February 15. Disney must submit the date-and-time release to domestic in order to be eligible for a day and date release. This will take place prior to Chinese New Year.
Stanley Rosen, a USC professor and China expert, isn’t bullish about studio prospects. He told us that he believes the Hollywood market will not return to its former state. “No, that’s not what I see.”
Even though studios are only able to recoup 25% from China’s grosses, China is still a significant market. However, if China’s population has been drained of Hollywood films, they could be missing out on an entire new generation.
Yu Dong (Bona Film Group Chairman, producer of patriotic films) addressed a group at the Hainan Island International Film Festival, December. Battle at Lake Changjin The sequel and the original, seemed to criticize Hollywood’s lack of innovation. China.org reports that he stated, “The Hollywood studios want to make profits.” There are many sequels to these movies and numerous superhero blockbusters. The Chinese film industry is now more innovative after enough development. Plus, China has a golden age that allows them to produce stories that are zeitgeist-driven. For Chinese producers and directors, this is very encouraging.
Rosen points out that this is a very difficult time in China and film is not high up on their list. They are looking for patriotic films and films to socialize the people. There’s no benefit from China giving up. It seems, at the least, in the short-term and intermediate terms, China will continue to be the biggest film market in the entire world.
Rosen still believes that China is on a charm offensive, citing a photo-op with President Xi Jinping and U.S. President Joe Biden at the G20 summit, Bali, November.
According to him, there will be both a tightening and a loosening of the belt. They go back and forth. Right now, things aren’t looking great for the economy or everything else. The Americans are being more friendly, and it’s possible for some Hollywood products to be allowed in during this period of relaxation. It’s temporary, but it isn’t a long-term situation.
Rosen says that China’s concerns about soft power are more domestically focused than they are with international affairs and is not their most important concern. They value the ability to influence people so that they do what you wish and don’t do things you don’t like.
The studios had hoped that a long-form agreement between China and Hollywood would help increase box office share, provide clarity about release dates and give more certainty to movie releases. However, it was put on the backburner during Trump’s years. It doesn’t seem likely that this contract will be reached anytime soon. When we asked Rosen when that would happen, he replied “2203”.
An international distribution veteran says, “I have given up trying to forecast China.” However, this individual believes that the Xi/Biden Meeting was beneficial as it was widely reported in the market as a positive.
Despite this, the Republicans still control the House of Representatives and there is “no possibility” that long-form negotiations will be restarted. They don’t have the majority they need, so things can get worse. That’s the “wild card” in the US, both as to what they do and how they react to China.
Some people are cautiously optimistic about 2023.
One well-informed China observer says, “We hope that there will positive developments in this new year, but we just don’t know until it actually happens.”