The film market is constantly changing due to factors like streaming services, coronavirus, studio competition and technology. Recently there has been one potentially seismic shift: the rejection of Hollywood properties by China.
China emerged in the 2010s as one of the leading markets for internatinal film distribution, often 'saving' or massively boosting the profits of Hollywood blockbusters. Pacific Rim made $411 million worldwide in 2013 from a $190 million budget, an amount that meant it barely pushed through a profit. Of that total, a symmetrical $114 million came from China alone, its biggest market. This breakout success earned it a sequel. Similarly, in 2014 Transformers: Age of Extinction made a record-breaking $300 million in China, almost double the $167 million gross of 2011's Transformers: Dark of the Moon. This boost in China secured the film $1 billion worldwide, even while it grossed significantly less in other markets than Dark of the Moon.
More recent examples include the success of the Fast and Furious films, Warcraft and Venom, which made an outstanding $262 million in China alone, contributing to a whopping $856 million worldwide. Superhero films and 'dumb' action films seem to be Hollywood's most successful film exports to the Middle Kingdom, with the MCU, whilst not relying on China for profit, often finding success there. DC's Aquaman surprised everyone with its mammoth performance in China as well. This therefore created a mutually beneficial relationshiop between Hollywood and China: films that underperform in the USA can make it back with overperformances in China, whilst already big blockbusters like Avengers: Endgame can challenge Avatar for the title of highest grossing film ever because of China's massive expanse of cinemas and audiences.
This model has changed of late. The effect of the pandemic has challenged filmmaking in the West, with delays in production and scheduling creating a vacuum internationally, as countries like China and New Zealand managed to evade long lockdowns and kept cinemas open. Looking at the highest grossing films of 2020, half of the top ten are Chinese films (and one is Japanese). This emphasises how the domestic takings in China for their own films far surpassed those of Hollywood's and cemented in the Chinese film industry's mind that they did not need Hollywood to keep their cinemas open- they were making enough blockbusters already. In 2021, even with film business largely going back to normal in the second half of the year, three of the top ten were again Chinese films. Of note is The Battle of Lake Changjin which earned over $900 million in its domestic market; the second biggest single gross for a country behind The Force Awakens' $937 million gross in the USA. Elsewhere on the list, the performances of F9 and Godzilla vs Kong were only so strong because of China's massive boosts (both much larger than their success in the US).
In 2021, four Marvel films were released in varying situations: Black Widow had a simulataenous release with Disney+, Shang-chi and the Legend of the Ten Rings and Eternals were outright banned from China, and Spider-man: No Way Home emerged with the Omicron variant but still managed to gross about $600 million more than those three combined, even without China. Because of a Marvel film's standard $200 million budget, they often need to make over $600 million before they become profitable. Without China, Eternals and Shang-chi are technically flops, even if they did perform better than other pandemic films. On the other hand, the smaller budgeted Venom 2 also didn't get a Chinese release but still made a very respectable $502 million worldwide. This number is perhaps closer to what pundits expected the first Venom to make before it exploded in China, meaning that the sequel was a worthy hit still. But what is the impact of all of this?
Well, in the case of No Way Home, it means that Hollywood should not rely on China to cross a billion dollars. The Dark Knight and Joker also accomplished this feat without a Chinese release. Even Endgame would have passed $2 billion without China. But are these anomalies? No Way Home and Endgame were generational events designed to tap into nostalgia, the necessity to watch with packed audiences and to appeal to a large demographic. The Dark Knight and Joker are equally zeitgeist-hitting films that succedded on sheer word of mouth, controversy and awards potential. So not every Hollywood can guarantee to be a generational event or a nerve-striking critical success.
But what must be considered is that a lot of films have relied on China for success and to cross a billion worldwide. China is perhaps responsible for the Transformers franchise continued existence, as well as the surival of the MonsterVerse and the Fast saga. Complications arrive when it comes to the Chinese censors not allowing films in: in the case of Eternals it was due to director Chloe Zhao's comments on the Chinese government (and probably the film's depiction of a gay relationship a la certain Middle-eatern countries). With Hollywood increasingly promoting representation of minorities and the LGBT+ community, decisions will have to be made about whether the studios should forget trying to appeal to China by removing such things in the trailers and films, or whether they should have an actual backbone and maintain the footage and see if the film never needed China to begin with (in the case of Eternals, it probably did need it).
The next factor is the delayed release of Hollywood films in China. Uncharted, which has modestly overperformed in the West, has a Chinese release on March 14th, weeks after its initial release. The Batman's Chinese release is March 18th, again two weeks after its US release. The problem is that by the time these films get to China, momentum has subsided as pirated versions find themselves alone for Chinese fans to watch. The Batman is the first tentpole superhero film to release in China for a long time, so its underperformance from pirating will be a clear indication of the problems facing Hollywood.
China has not shut out Hollywood quickly. Dune and No Time to Die had slight, if underwhelming, grosses there. Looking ahead, it is more than likely that a great deal of 2022's slate like Avatar 2, Aquaman 2 and Jurassic World: Dominion will also get profitable releases in the Middle Kingdom. But with the delayed release dates, rise of HD-piracy due to at home streaming and the strength and love for China's own film industry, it looks like box office success is no longer guaranteed. How can Hollywood combat this?
For starters- lower budgets. Unless a film is an event film in the vein of Avengers, Star Wars or any other popular IP, it would seem folly to keep pushing budgets of up to a quarter of a billion dollars on films if the return on investment is stunted by a lack of release in China or a delayed release there. A film like No Way Home can profit from a $200 million price tag because, as a Spider-man film, as an 'important' MCU film and as a multi-generational crowd-pleaser, it was a guaranteed smash hit in the US and abroad. Lower budget films have been gradually erased from Hollywood in the last decade. In the 1990s and early 00s, films that cost between $50-$100 million were very popular, often boasting one or two popular actors and fun action sequences. These are films like Enemy of the State, Ocean's 11 and The Bourne Identity, all of which were moderate box office successes for their studios. But since the serialisation of big franchises and the obsession with nostalgic classic films in the 2010s, the mid-budget film has lost its place, with only films like John Wick and The Revenant finding large audiences despite not belonging to an IP or being a tentpole film.
It looks like Hollywood has already responded however. The Batman, despite a near three-hour runtime, has (according to Deadline) a budget of $100 million. Whilst others have seen it as closer to $185 million, the point remains that the film has a lot smaller budget than previous superhero films, meaning it won't have to break records to succeed. Uncharted has a reported $90 million price tag which seems a mature choice: a flop won't cost the studio too much and if the film is a hit, which it seemingly is, it can turn a profit quite quickly. Uncharted was produced for Sony Pictures, and Sony have now had four hit movies in the pandemic with No Way Home, Venom 2 and Ghostbusters: Afterlife. The latter two cost $110 million and $75 million respectively, and both became profitable films. Sony has surprised with its strong track record (the two recent Jumanji films both grossed over $800 million on $90-$130 million budgets) and it seems with the upcoming Morbius they can replicate their winning formula: don't give successful films massively upscaled budgets, keep budgets below $130 million, and keep runtimes at or under two hours to increase the amount of screenings in a day. Will other studios follow?
Disney is the largest film studio in the world, capable of churning out a frankly ridiculous volume of hyper-budgeted films a year through its Marvel, Star Wars, Disney Animation, Pixar and 20th Century Fox properties, not to mention its live-action remakes and wannabe franchise starters like Jungle Cruise. The length of production for animated films means they are almost always going to cost extorionate amounts, but these are almost always hits (particularly if they are musicals as the radio can boost media attention). When cinemas fully return to the same levels of business as 2019, Disney will still be churning out these enormous films because they know families will turn up for them (and then stream them on Disney+ two months later. But with future Star Wars films in limbo, live-action remakes running out of material and the decline of the MCU's most expensive stars like Robert Downey Jr., Scarlett Johansson and Chris Evans, it does not seem too improbable that Marvel films will slacken off to 'mere' $150 million budgets, a move that will make things easier without certain Chinese release dates.
As the 2022 film calendar starts taking shape, here's hoping that mid-budget efforts like Bullet Train and The Lost City perform well among the tentpoles, proving to Hollywood that going big does not always mean better.
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