How Hollywood Film "Fatigue" Is Impacting China

Courtesy of EDKO

"All the sequels are boring people," says one insider as Hong Kong readies for CineAsia, an annual industry confab taking place this year from Dec. 11-14.

One of the earliest exhibitors to invest in movie theaters in China, the Broadway Cinema chain is now enjoying massive growth. Operated by Edko Films and headquartered in Hong Kong, Broadway is a premium brand that owns 47 cineplexes spread around first- and second-tier Chinese cities. On the eve of CineAsia, Edko CEO Tessa Lau talked to THR about why some Hollywood films don't work in China, the "irrational" actions of theater owners and the "hijacking" of the local exhibition industry.

All of Broadway's multiplexes are located in China's first- and second-tier cities, which some say are now saturated. Is there any plan to develop into third- and fourth-tier cities or rural areas?

We mostly follow wherever the property developers go since almost all cinemas in China are located in shopping malls. If the property developers build malls in the rural areas, then we will expand into those areas.

Do you think rural audiences will embrace Hollywood releases?

It depends on the type of movie. There seems to be a type of fatigue in recent years for Hollywood movies. It's because all the sequels are boring people. But there is actually little to fear for the "muscular" Hollywood films and animations. In 2015 and 2017, basically whenever a Fast and Furious installment was released, it soared to the top of the box-office chart. And in the past, in the 1980s, the Rambo films and the like did well around the world. So it showed that rural audiences, relatively unaccustomed to Western influences, enjoy the masculine Hollywood movies as much as the urban ones. But Hollywood dramas, comedies and animations that require some thinking, such as Inside Out, don't translate as well.

What is the downside of the massive theater growth in China?

Fierce competition between cinema operators, especially when some of them are irrational. There is the unique phenomenon of diminishing ticket prices in China — the price falls year after year, and you can't find that anywhere else in the world. It's because of the irrational operating model of some of the cinema operators — they cut the price to attract audiences. And the ticket subsidy by the e-commerce giants, which started in 2015, has deeply hurt the Chinese exhibition industry.

The subsidies greatly boosted the overall box office and admissions in 2015, but cutting the subsidies impacted box office negatively last year.

They don't need to subsidize movie tickets anymore because they already have the market share and have the data of the audience who downloaded their payment gateways. The e-commerce giants are asking the exhibitors and film producers to pay an exorbitant amount of money to advertise on their movie apps. This is what we call the "hijacking" of the cinema industry in China. Now, almost 80 percent of the audience in China buys movie tickets through these apps. Armed with the audience data, they can do whatever they want. They can promote a movie to hundreds of millions of people [simply] with the touch of a button.

This story first appeared in the Dec. 6 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.