CHINAWOOD: Emerging trends

Hollywood. Bollywood. Chinawood

Chinese film industry is reaching a “golden age” with new carriers, an influx of capital and innovative business models all propelling the country’s film industry to the “top of the film pyramid.”

1. The number of films made by Chinese studios is soaring.

In 2005, 43 Chinese films were screened in mainland China. By 2014, it was 308 films.

Hollywood imports into China account for only around 10% of annual releases — they have so far retained their position at the top of the Chinese box office. Taking accounted for 38% of China’s box office in 2015, even though the government allows only 34 non-Chinese films in its theatres each year.

2. The increasing Chinese investment is reshaping the American and global entertainment industry.

In 2015, Chinese studio Bona Film Group announced plans to invest US$235 million in six big-budget 20th Century Fox movies.

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Multiplex cinemas, leveraging the thriving commercial real estate, has been an investor favourite. For example, the Wanda Group, China’s leading real estate developer, acquired the AMC cinema chain, the second-largest cinema chain in the US, for US$2.6bn in 2012.

The Wanda Group also paid $3.5 billion for a controlling stake in Hollywood studio Legendary Entertainment (maker of Jurassic World) and acquired Europe’s biggest cinema group, Odeon and UCI. The increasing Chinese investment is reshaping the American and global entertainment industry.

2. The growing Chinese investment is reshaping the American and global entertainment industry.

Wanda Group also recently unveiled plans for a massive US$8.2 billion production facility in Qingdao, that could make China a competitor on the global film production stage, with state-of-the-art facilities that could draw production away from the US, London or Australia.

The Qingdao Studio boasts fifteen sound stages, two water tanks, 221 acres of the backlot. The facility is the centrepiece of a much larger real estate development called the Qingdao Movie Metropolis. The title isn’t hyperbolic: Wanda is effectively building a city from the ground up.

Residing atop Wanda’s newly reclaimed artificial island will be luxury hotels, restaurants and bars, upscale condos, Asia’s largest theatre, an international hospital and even a school. Next to the studio on the mainland are more condos, a convention centre, a shopping mall, four indoor theme parks and on and on. Wanda is calling it the largest mixed-use entertainment development ever.

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3D model of Qingdao Movie Metropolis project

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Island overview of Wanda Studios Qingdao

3. Private equities’ involvement continues to rise because of the market potential and the market demand.

Chinese private equity firms are increasingly finding lucrative returns in film production. The participation of professional investors in film production has shaken up the traditional structure of Chinese film financing which has traditionally been funded by wealthy individuals on a film-by-film basis.

4. An emerging creative class and workforce are transforming the film industry. 

An emerging Chinese creative class is concurrently changing the production of film and television. In 2009, about 5% of the 19 million students in Chinese universities were studying arts and design — more than were majoring in economics, chemistry, math or law. As a result, a wave of low-cost artists, animators, video game designers and other creative professionals have surged into the Chinese workforce.

5. Internet companies are restructuring the country’s burgeoning film industry with their technology and online platforms.

Three Internet giants, Baidu, Alibaba and Tencent, control over 50% of all Chinese smartphone Internet usage. Their apps and services are how Chinese consumers search, shop, chat, play games, watch videos, book their taxis, and pay for almost everything. And these three cash-rich companies are aggressively moving into movies and television.

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Tencent has launched its own film subsidiary, Penguin Pictures. One of Tencent’s previous investments, Monster Hunt was the top-grossing film in China in 2015. Tencent has a joint venture with Hollywood sports and entertainment powerhouse WME-IMG. It bought Supercell (maker of Clash of Clans) for $8.6 billion last year, and it also has equity stakes in mini-studio STX Entertainment (Bad Moms) and foreign sales and film finance outfit IM Global (Hacksaw Ridge).

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Alibaba Pictures has launched a Netflix-type subscription service and invested in movie ticketing software. It co-financed Mission Impossible: Rogue Nation and has crowd-sourced other film investments. Alibaba Digital Media and Entertainment Group pledged to invest $7.2 billion (RMB50 billion) in media and entertainment over the next three years.

Baidu has a streaming platform called iQiyi. It also crowdfunds films and has invested in Hong Kong’s SMI Holdings Group, which has film and TV production studios.

China’s movie industry is not only growing but also maturing rapidly.

Today, CHINAWOOD is fast and furious.

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