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China’s leading film studios were forced to cancel the holiday release of their biggest movies of the year yesterday after the growing coronavirus epidemic cast a pall over the country’s annual Lunar New Year festivities.
Now, rising film company Huanxi Media is responding to the setback with a bold but fan-pleasing move: The studio has decided to release its much-anticipated comedy tentpole Lost in Russia online for free.
Lost in Russia, directed by and starring comedy superstar Xu Zheng, was widely expected to be one of the big winners of China’s 2020 New Year box office, which, prior to the coronavirus outbreak, was forecasted to generate as much as $1 billion in ticket sales over the coming week. The first two films in the Lost In franchise earned a combined $473 million in 2012 and 2015 — at a time when China’s box office was much smaller than it is now.
Huanxi told The Hollywood Reporter Friday morning that Lost In Russia will be made available for free viewing over its in-house streaming platform Huanxi Premium at midnight tonight. Before the coronavirus cancellation, the film was set to get a huge nationwide theatrical release today.
The move is all but certain to delight fans, as mass moviegoing has become a big Lunar New Year tradition in China, and cinemas across the country are currently shuttered because of the government’s advice to avoid congregating in crowded places.
Lost in Russia‘s Chinese title roughly translates to “Awkward Mother.” The film follows the bumpy journey through Russia of a manipulative older Chinese mother and her middle-aged son who still wants to rebel and escape his mother’s smothering influence. Xu, famous for his comedy touch, said his goal was to make viewers reflect on the often funny but deeply loving nature of the mother-child relationship in China.
In a blast of promotional material set to be released midday in China announcing the free streaming plan, Huanxi told the anxious Chinese populace to “stay safely at home and watch Lost in Russia with your mom.”
Aside from its obvious promotional savvy — and public health benefits — Huanxi’s move has an interesting business logic. Underlying the plan is a surprise new deal with internet powerhouse ByteDance, the company behind China’s wildly popular Toutiao and Douyin services, and the international social media phenomenon TikTok.
On Friday, Huanxi revealed that it has entered into a cooperation agreement with ByteDance that will involve the companies working together to leverage Huanxi’s premium film and television content across both of their video platforms. Under the deal, ByteDance will pay Huanxi a one-time fee of 700 million Hong Kong dollars (just under $100 million). The two companies’ video services will pool content, cross-promote and also share advertising and transactional video-on-demand revenue.
The giveaway of Lost in Russia (the local equivalent of Disney deciding to open the paywall to Disney+ and release a new Avengers movie for free) — at a time when hundreds of millions of Chinese are nervously stuck at home with little to do — ensures that the new partnership starts with a bang. The attendant advertising revenue of the free online release could also prove enormous.
In a Friday filing to the Hong Kong stock exchange, where Huanxi is listed, the company said that the current partnership with ByteDance constitutes a “phase 1” agreement that will run for six months. The two parties are currently at work in negotiating a longer-lasting “phase 2” deal, which will entail the joint development of their longform streaming channels, as well as shared investments in producing and acquiring high-end film and TV content.
Huanxi also has retained the theatrical rights to Lost in Russia, should it decide to bring the film out in cinemas after the public health crisis is resolved.
The late-hour surprise online release was made possible by the fact that Huanxi fully owns Lost in Russia, a rarity in China, where nearly all major films are co-financed and cut up into small equity pieces (star Xu Zheng is a significant shareholder in Huanxi and one its founding partners). The company previously had inked a minimum guarantee agreement with distributor Hengdian Film, which was promising a minimum box office performance of RMB 2.4 billion ($345 million) for Lost in Russia. That agreement was voided late Thursday and Huanxi is expected to return the RMB 600 million ($86.5 million) fee that Hengdian had paid for the theatrical rights.
Huanxi also has a large stake in Peter Chan’s widely anticipated Chinese New Year film Leap, an inspirational sports drama about China’s Olympic volleyball team. Leap and the various other Chinese New Year theatrical tentpoles — including Wanda’s comedy action sequel Detective Chinatown 3, Dante Lam’s patriotic action epic The Rescue, and animations Boonie Bears: The Wild Life and Jiang Ziya, among others — are currently in a holding pattern, awaiting official indications of how the coronavirus emergency will unfold.
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