China a great wall to surmount

But producers find success with flat-fee sales, video

Filmmakers from around the world are eager to tap into the vast potential of China's entertainment market, but many hurdles bar the way, panelists said Wednesday during a Shanghai International Film Festival session.

The good news is that the number of screens, people who can afford tickets and boxoffice revenue are all rapidly increasing, European Producers Club president Jean Cazes said.

China is adding 300-400 screens annually, and boxoffice revenue climbed from $197 million in 2004 to about $340 million in 2006.

"Everyone is interested because China retains a huge untapped potential, but many obstacles remain, and the situation is not improving," Cazes said.

The discussion touched on such problems as quotas, the lack of a pay TV market, strict censorship, rampant piracy and the fact that only China Film Corp. can import foreign films — issues foreign producers have long faced in China.

Warner Bros. vp Ellen Eliasoph has blazed the trail in this frontier. In part through her efforts lobbying the government, 2004's "The Fugitive" was the first revenue-sharing film in China. Although competition for the 20 slots available each year remains hot, only blockbusters can capitalize on these opportunities, she cautioned.

Eliasoph pointed out that there are many opportunities to be exploited by independent and European films. Flat-fee sales are one example and, though the price is often quite low, China allows a greater number of these. Up to one-third of China's total theatrical releases can be foreign.

Those films require assisted promotion and an intimate knowledge to identify and market effectively to the film's audience, she said. "Valiant" and "Tristan & Isolde" are recent films that found success through this channel.

Eliasoph also cited digital-only releases that are not subject to the theatrical quota as well as opportunities in the growing home video market. "We can produce home video at a price that competes with the pirates," she said.

She added that the DVD unit sales of Warners' low-budget offering "Crazy Stone" were comparable to a blockbuster like the most recent "Harry Potter" movie and credited the eagerness of the director and cast to support the film at its theatrical and video premieres.

The panel members, including Li Chuan of ERG Media and Liu Ying of France-based Tang Media, agreed that one of the most needed changes in China's film industry — for foreign and local producers alike — is the emergence of a ratings system that could help movies pass censorship.