Rough times for Hong Kong indies

Distributors are finding fewer and fewer screens available for art house fare

How many is too many?

In a land of fewer than 200 screens, is seven movies opening on the same day too many? How about eight? Or 10?

In 2008, 247 films were released in Hong Kong; a year later, the number jumped to 268, an 8.5% boost. However, the number of Chinese-language films dropped, and the imports -- from Hollywood, Europe, Japan, Korea, Taiwan and so on -- surged from 192 to 217. Considering that the number of major releases for holiday time slots remained more or less the same, the increase in acquisitions by independent distributors was significant. Indeed, during the past four years, movie imports have been rising steadily, creating an increasingly ferocious competitive environment for distributors.

It has been more and more difficult for art house and independent films, local indie distributors unanimously attest.

"When an average of seven to eight films open per week, it is very hard for independent distributors," says Gilky Wan, senior distribution and marketing manager at Deltamac, which has released such hits as the "Lord of the Rings" trilogy and Martin Scorsese's "The Aviator." "From our point of view, we would like to continue to bring quality films to Hong Kong, but it is not easy to make a profit. We have to strike a delicate balance."

But why the surge of imported films? One theory is that there are fewer big-budget potential blockbusters than before, especially after the implosion of New Line.

"New Line was the ninth major studio to us; in the past, it had supplied us with a number of hits," says Audrey Lee, sales and acquisition GM of Edko Films, whose releases include New Line's "Rush Hour" series, the second and third "Austin Powers" movies and a string of Jim Carrey hits. "When there are less potential blockbusters, we tend to buy smaller films, which seem like a bargain comparatively."

But low-priced surprise hits are things of the past, Lee says.

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"We used to be able to capitalize on the sleeper hits we bought at relatively low prices," she says, citing the 1998 Brazilian drama "Central Station" and Aardman's "Wallace & Gromit" claymation series, which made several million Hong Kong dollars at the local boxoffice.

More importantly, the reason for the avalanche of film imports is too many buyers.

"At all the film markets, I have never seen anywhere else that has as many film buyers as Hong Kong, absolutely nowhere else -- not Singapore, Malaysia or even South Korea," Lee says. "There are as many as 10 buyers from Hong Kong at most film markets. I scratch my head and cannot figure out why. The market is now telling us it cannot sustain such enthusiasms."

Lee buys 25-30 titles for Edko each year. Some hit big -- like last year's Oscar winner "Slumdog Millionaire," which took HK$24 million -- but more did not.

As competition grows more fierce, grosses for individual films logically take a plunge.

"For some releases, we could not even break even or recoup the marketing fee we have spent," Wan says. "Even with a big-name star in the lead, such as 'Edge of Darkness' with Mel Gibson, business was weak. If a film flops overseas, it would most likely fail here, too."

The spectacular emergence of a few major studio blockbusters does not help overall film business either, independent distributors say.

"The local boxoffice looks rosy this year because of the HK$180 million Hong Kong gross of 'Avatar,' but if we look at it from another way, the film was like a black hole that sucked in everything else in its proximity," Lee says. "It was tough for all the films that came after it. When the economy is down and inflation is high, the public tends to be more careful with their spending. When they chose to again and again watch 'Avatar,' an undoubtedly excellent film, it cut into the films released at the same period or those that came after it."

At this rate, things will come back full circle, and distributors worry that audiences will be left with fewer choices.

"We can see it happening in other countries, such as Japan," says Winnie Tsang, founder and managing director of Golden Scene. "I'm afraid we might follow in their footsteps and miss out on a lot of good foreign films."

It seems only genre films are reliable nowadays. Wan notes that even when grosses for U.S. indies and foreign-language films fall, the horror genre retains a group of die-hard devotees, evident in the boxoffice receipts of the "Saw" series, which her company distributed. Other distributors might try the literary-adaptation tactic, like Golden Scene, which distributed the "Twilight" series to impressive results and picked up the Nicholas Sparks adaptation "Dear John" because of the author's popularity among teenagers, Tsang says. The company tried to pinpoint the teen market with its previous releases "Step Up" and "Fame" and the upcoming Robert Pattinson starrer "Remember Me."

"I don't want to bring films here that are meaningless, those that I don't want to watch personally, and I don't like to chase trends; the core audience nowadays is young people, so I try to focus on what teenagers and women would like," says Tsang, who nonetheless would consider buying fewer non-English-language films if her buys -- like last year's French cute-fest "Ricky" from auteur Francois Ozon -- failed to perform as expected in Hong Kong.



"Audiences here follow what American audiences like; they tend to get their film information from English-language websites online, so they are less interested in non-English-language films," she adds. "Besides, exhibitors might not support non-English-language films."

Too many films, declining audience numbers and interest results in the remaining cineastes being spread too thin, as are exhibitors. Theater owners are an integral part of this vicious circle, as nonmajor distributors lament the fewer and less opportune spots, as well as shorter runs, allocated to their releases.

Priority is given to major releases with international buzz and generous marketing budgets, which usually take up half or more of the screens at a given multiplex during their opening week, and smaller indies are left to fight for the remaining slots. Often, during busy periods, a foreign-language film might not even garner a full show on its opening day and could be relegated to matinee or afternoon shows during the opening weekend.

When the blockbuster season arrives -- early May now counts as the start of summer season and November the beginning of Christmas -- the cutthroat atmosphere is even more intensified.

"No room during blockbuster season and overload during off-season" is how independent distributors see the situation. The range of choices for multiplex owners, coupled with the cold, hard "business is business" attitude of multiplex bookers who without hesitation ax films with less-than-stellar opening numbers, makes the process of slowly building a film's word-of-mouth a relic of bygone days.

Even theater bookers admit that it's harsh for independent distributors, but they follow a carefully considered set of guidelines, says Mandy Lam, booking manager of Broadway Cinemas, a sister company of Edko Films.

"We look at the capacity percentage every day," she says. "If a film only reaches 15%-20% capacity on its opening day, we would cut the number of shows for the weekend. If it reaches 60%-70% during the weekend, we would try to hold it over for the second week. We do uphold the principle of giving a film a full show on its opening day as much as possible. Even if it was a very crowded week, we would try to give it at least one night show. When more than a dozen films open within a two-week period, we would have no choice but to eliminate those whose performances are weak."

In this survival-of-the-fittest environment, art house and indie films suffer the most, especially because their target audiences are not accustomed to the opening-rush mentality traditionally reserved for major studio releases.

"We are in a dilemma, too," Lam says. "Distributors push their films even during a crowded slot, and nobody wants to move their release date. We do not recommend such competitiveness. At the end, some distributors are willing to take as few as two shows a day."

It is hard to fault distributors, either. If a release is postponed locally, it might not beat the parallel imports of DVDs and online movie downloads. Parallel imports have been a major issue for local distributors for more than a decade, but a countermeasure has not been found. As much as the industry has worked with customs departments to tighten legislation, multinational music and video retailers continue to stock shelves with parallel imports.

"According to the law, retailers would ask distributors for proof of release, but since international film sales often involve a number of indirect parties, it takes time for distributors to gather their own documents," says Brian Chung, CEO of the Hong Kong Motion Pictures Industry Assn. "In the meantime, parallel imported DVDs have already flooded the shops."

The only winning formula seems to be the one-stop-shop approach of distributor-exhibitors, says Perry Yung, managing director of Intercontinental, which distributes not only its independent buys and local films from Shaw Brothers and Win's Movies but also releases from Paramount, Buena Vista and DreamWorks through its MCL theaters group.

"The fact that we have our own multiplexes is definitely an advantage," he says. "Our theaters do give priority to our own releases. It also helps us to begin a film's promotion earlier. It is the way to move forward. We intend to put more investment into expanding our theatrical chain and installing the latest digital projectors."

Apart from having a strong lineup from its major studio labels -- especially with 3D like Tim Burton's "Alice in Wonderland," which has raked in HK$45 million since its March opening, and franchises including "Transformers" and "Iron Man" -- the company plans to double its number of independent buys.

"Our upcoming plan is aggressive," Yung says. "We want to introduce a wider diversity of products to satisfy the audiences' different needs. We are sending four buyers to Cannes this year."

So there will be even more buyers from Hong Kong in Cannes this year. How will the current situation affect this year's Marche du Film? Except for Intercontinental, most say they will think twice before committing to buying a title, and they most likely will buy fewer titles than before.

Moreover, local distributors also note that foreign sellers are unwavering in setting film prices for Hong Kong buyers. If one deems the price too high, there would be others who rush to snatch the title at the same price. But when the Hong Kong market for foreign films cools, sales agents might have to face the reality, too.
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