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CORRECTED-China box office falters ahead of key Hollywood talks
December 16, 2016 / 11:09 AM / a year ago

CORRECTED-China box office falters ahead of key Hollywood talks

(Corrects revenue description in paragraph 3; corrects quote in paragraph 4)

* China box office up 4.4 percent to $6 billion over Jan-Nov

* Steep slowdown from 50 percent rise last year

* Execs still see huge potential, want more access

By Lisa Richwine and Adam Jourdan

LOS ANGELES/SHANGHAI, Dec 16 (Reuters) - China’s box office is set for its smallest growth in a decade in 2016 with viewers spending less as the economy slows, clouding the outlook at a time when Hollywood is pushing for a higher number of foreign films to be screened in Chinese theatres.

Beijing allows 34 foreign films into the country each year under a revenue-sharing deal. That quota - which Hollywood wants to increase - is scheduled to be reviewed in 2017.

China accounted for 18.8 percent of worldwide movie ticket sales last year, versus 7.5 percent in 2012, according to research firm comScore. But U.S.-based studios currently collect just a quarter of Chinese sales, versus the roughly 40 percent average in other international markets.

While a recent drop in ticket sales in China could muddy the outlook for foreign movies in the country, Sanford Panitch, president of Sony Corp’s Columbia Pictures, shrugged it off, saying: “We’ll take this slowdown in any territory in the world. It’s still an incredible story of a big growth market.”

Over January to November, tickets worth 41.4 billion yuan ($5.97 billion) were sold in China, data from industry tracker EntGroup shows, up 4.4 percent on 2015 - sharply slower than last year’s 50 percent growth and on track for the slowest annual growth in a decade.

But given the potential of the Chinese market, the Motion Picture Association of America remains eager for Beijing to open its doors wider to Hollywood. Box office experts say China will overtake the United States and Canada within the next few years.

An MPAA official said it was “very encouraging” that U.S. and Chinese officials had agreed in recent talks to address issues including increasing the annual film quota and the share of revenue foreign studios receive. For now, co-productions are helping bring the two sides together.

On Friday, Chinese theatres are debuting “The Great Wall”, starring Matt Damon and produced by Legendary Entertainment - the Hollywood studio purchased by China’s Dalian Wanda - along with China Film Group and others. The movie was partly filmed at Wanda’s new studio in the eastern Chinese city of Qingdao.

But the focus is on getting a better deal for fully U.S.-produced films, no easy task as China juggles its desire to welcome U.S. films, its investments in Hollywood and efforts to protect its industry.

“Culturally, they are very (suspicious) of having too many American imports flood their country. They want their citizens to see homegrown hits and Chinese stories,” said Jonathan Papish, analyst for China Film Insider.

HEADWINDS: TRUMP EFFECT, IMPROVING LOCAL FARE

Adding to the uncertainty of China’s relationship with Hollywood is the election of Donald Trump in the United States.

President-elect Trump has recently stoked tensions with China by speaking to the president of Taiwan and suggesting the “one China” principle was up for negotiation.

U.S.-based media executives had been hoping for improved relations with China in 2017, said Matt Lieberman, a director at PwC and a consultant to major Hollywood studios. “That question is now up in the air.”

Trump’s transition team did not respond to a request for comment.

China’s cinemagoers may also make it harder for Hollywood imports to succeed, with many pointing to improving local fare.

“Before, local cinema was really low-end and poorly made,” said Wang Ziyi, 27, a consultant in Shanghai. “But I‘m starting to change my mind.”

Reporting by Adam Jourdan

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