Record Growth in Chinese Demand for Hollywood Films Driving Revenues and Investment

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by Bowrun Hou
China has grown to be the largest importer of Hollywood films globally, and is set to become the largest film market overall in the near future. Image: Inhabitat

Propelled by the success of action movies such as Avengers, Jurassic World, and Furious 7, Hollywood films now account for 53% of all Chinese box office revenues. In an unprecedented feat, Chinese revenue for the recent films, Pacific Rim, Transformers: Age of Extinction, and Furious 7 exceeded the respective box office revenues in the US. In 2015, Furious 7 became the highest grossing imported US film and the 2nd highest grossing film of all time in China with $390 million in box office sales. The Chinese movie market has grown from 10% of the global market in 2013 to 17% in 2015, and is projected to become the largest single movie market by 2017.

Dalian Wanda’s recent acquisition of American entertainment company, Legendary Pictures, in a $3.5 billion deal underscores this trend. The Chinese conglomerate’s interest in Legendary Pictures lies not only in gaining access to the special effects department that contributed to the blockbusters Pacific Rim and Godzilla, but also to bring more Hollywood films into China, bypassing quota regulations on imported movies. Better access to the Chinese market is important for Hollywood as well, as American box office revenue has been stagnant over the past 5 years, fluctuating between $10 billion and $11 billion. By contrast, Chinese box office revenue for Hollywood films has grown by an average of 29.2% annually in the same period. This equates to a growth in revenue from $724 million in 2010 to $2.61 billion in 2015. In addition, by coproducing films with Chinese partners, Legendary’s films may gain state support in distribution and marketing, and avoid being tallied by the government in the quota of 34 international films allowed in China every year.

Dalian Wanda’s investment in Legendary Entertainment compliments its 2012 acquisition of AMC, the largest movie theatre chain in the US. The company has continued to build theaters, increasing its number of screens by 40%, to 32,000 nationwide in 2015. This has allowed it to bring more Chinese movies to the US that might otherwise struggle to get screen time.

Bowrun Hou is a Research Intern at the East-West Center in Washington and a student at the University of Sydney.