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Donald Trump’s recent escalation of the U.S.-China trade war has torpedoed the sales potential of small and mid-budget American movies just as China’s appetite for such filmmaking appears to be on the rise.
Few analysts believe Beijing is willing to retaliate against Trump’s tariffs by blocking Hollywood’s biggest tentpoles from release, given the vital role such titles play in generating revenue for local cinemas. Smaller U.S. films, however, have been left much more exposed.
“Marvel titles are still going to get released — there’s just too much money at stake for both sides,” says Christopher Spicer, an attorney at Akin Gump who has counseled Chinese studios. “But other U.S. films will absolutely be affected by the trade war. All of the Chinese parties making these investments are now very cautious.”
Chinese buyers’ sudden avoidance of U.S. filmmaking was palpably on display at Cannes in May. In recent years, there tended to be at least one major China sale for a U.S. film on each day of the market; in 2019, there were virtually none the entire week.
No major financing pacts from China were unveiled either. In 2017, China’s Bona Film Group shelled out nearly $80 million for Chinese and international distribution rights to Roland Emmerich’s upcoming WWII film Midway. Emmerich was back in Cannes this year shopping his next project, the sci-fi vehicle Moonfall; but this time the results were essentially reversed. Not only did China not anchor the film’s global sales plans; the country was the only major territory where the title failed to secure any deal whatsoever. Stuart Ford’s AGC and CAA were said to be asking $30 million to $40 million for the China rights, but they found no takers during the duration of the market.
China’s streaming giants — iQiyi, Tencent Video and Alibaba’s Youku — also have stopped acquiring new U.S. film and TV content, Beijing industry players say. This online freeze on U.S. content exploded into view when Tencent abruptly said that it wouldn’t move forward with its streaming of the series finale of Game of Thrones. Tencent blamed the suspension on “transmission medium problems,” but the failure to air was interpreted by fans and industry players as a trade war casualty.
The Chinese market’s de facto block on smaller-budget filmmaking from the U.S. comes at a particularly inopportune time. For China box office watchers, the most exciting story so far this year wasn’t the huge success of Chinese sci-fi The Wandering Earth or Disney’s Avengers: Endgame, but rather the surprise breakthroughs achieved by much smaller dramas. In March, Participant Media’s Green Book rode its Oscar glory to a box office bonanza in China, earning $71 million. One month later, the Lebanese art house drama Capernaum brought in an astonishing $53 million.
Distributors believe the earnings show that Chinese tastes have evolved to an extent that there is now a healthy place for emotionally driven issues films at the Chinese multiplex, even if the particulars of such stories are remote from every day local experience. But American production companies are now at risk of being left out of this market just as China prepares to usurp the U.S. as the world’s biggest box office.
“We just don’t know if it’s going to be possible to get release dates for American movies,” says Ruby Xie, director of international acquisitions for Rise Culture, a Beijing financial holding group that invests in theatrical rights to international films. “Acquiring titles from Europe or other parts of Asia is a much safer investment for us right now.”
A version of this story first appears in the June 5 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
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