China's Film Market Is Growing Up Fast. We Should Keep a Wary Eye on It | QDaily Annual Box Office

This market isn't as good as it looks, but it isn't that bad either.

Detective Chinatown, now in theaters, has two endings. In the first, the truth comes out. The second adds a chilling smile, and a happy resolution turns suspicious again.

That open ending, from the last film of 2015, may be the best way to describe China's film market over the past year.

Just after the new year, still in the middle of the New Year's Day holiday, the Film Bureau rushed to announce how well the mainland market had done last year: total box office passed 40 billion yuan for the first time, reaching 44.069 billion yuan; growth of 48.7% year on year was the highest since 2010; and in the contest with imported films, domestic films came out ahead across the board, with a share of more than 61%.

Behind this cheerful report card lies a more complicated market. It is like a maze whose walls move: the paths you have walked and the marks you have left grow less trustworthy as the walls shift.

Of the 27.1 billion yuan earned by domestic films, more than 61% of the total, nearly 8.6 billion came from adaptations of IP of one kind or another, including most of the top-grossing titles. Whether Chinese filmmakers have actually got better at telling stories is doubtful.

Of the 358 films released in theaters, 86 earned less than 1 million yuan and 179 failed to pass 10 million. Together they make up 74% of releases, and most of their investors lost everything. Whether more people in this market are actually making money is doubtful too.

This market is far less healthy and robust than it looks. Before the rules have even been fully set, some people have started tearing up the ones that exist.

Monster Hunt's purchase of its own tickets to claim the box office crown has become an international scandal. BoxOfficeMojo.com, the best-known box office tracking site, removed the film's figures and even said that because Chinese box office reporting is "too murky," it would stop updating mainland figures altogether.

The messy breakup of the Monkey King: Hero Is Back team and the "catfights" among several New Year's season releases put paid online posters back in the spotlight, so much so that Douban CEO Ah Bei had to issue a public statement distancing Douban from paid posters and defending the site's reputation.

Then there are the "clever tricks" some studios play before release: mass advance paid screenings to grab box office, or handing all of opening day's profit to cinemas in exchange for more screenings. Each adds another footnote to the market's disorder.

Of course, if you are just a film fan, things are simpler. Did you go to the cinema more often last year? Did buying tickets and watching films get better? Did you see more good films that made the ticket feel worth it?

What do you think? According to Film Bureau data, urban cinemas drew 1.26 billion admissions in 2015, up 51.08% from 2014. Ticket prices have barely risen, and buying tickets has become easier.

Bad films are still plentiful, but there were more good ones this year too. In the New Year's season there were Mr. Six, Mojin: The Lost Legend and Detective Chinatown; earlier came The Coffin in the Mountain, The Dead End, Saving Mr. Wu, The Final Master and others. At last cinemas had a batch of domestic films you could actually "sit through."

This market isn't as good as it looks, but it isn't that bad either. Like a teenager, it is changing and growing fast. We should encourage it while keeping a little wariness and skepticism, because going bad is always easier.

Domestic films have (seemingly) routed imports

Look only at the final box office figures and you might fall for the illusion that Chinese cinema has finally arrived.

Of the 44 billion yuan total, domestic films contributed more than 27.1 billion, over 60%. In other words, for every 100 yuan you spent on movies, more than 60 went to domestic films. It is the first overwhelming victory over Hollywood blockbusters in years.

The "victory" shows in individual films too. Of the 8 highest-grossing films of 2014, 5 were Hollywood blockbusters. Of the top 4 in 2015, domestic films took 3, leaving Furious 7 as the lone survivor, and domestic films filled as many as 7 of the top 10 places.

Gone is 2014, when Transformers: Age of Extinction towered over everything and beat the runner-up, Breakup Buddies, by more than 800 million yuan. In 2015 the top film in every major release window, New Year's Day, summer, National Day and the New Year's season, was domestic, and Monster Hunt became the year's box office champion with 2.438 billion yuan, 12 million yuan ahead of Furious 7.

More and more domestic films are drawing audiences into cinemas. But we also have to admit that the current policy of protecting release windows for domestic films played an important part, and the protection went further than in previous years.

In the summer, when students are on holiday, you no longer saw an imported animated blockbuster like Inside Out; the slot went to a domestic animation like Monkey King: Hero Is Back instead. In the end Inside Out took only a little over 97 million yuan in China, while Monkey King went on to 956 million yuan, a new mainland record for an animated film.

Another form of "protection" is to schedule many imported films in the same or adjacent windows, so they eat into each other's box office. Mission: Impossible – Rogue Nation, Minions and Pixels in September, and The Martian, Maze Runner: The Scorch Trials and The Hunger Games: Mockingjay – Part 2 in November, are all cases in point.

So this victory is no reason to feel reassured. If anything, this "nurturing by love" is a little worrying: after so long in a greenhouse, can domestic film survive real competition?

Fortunately, the window this protection provides will not stay open long. Under an earlier agreement between China and the United States on opening the film market, China is to open fully to foreign films in 2017, rather than allowing a few dozen quota films a year and then hemming them in with various arrangements. If that really happens, it will be quite a show.

"Policy discrimination" is only part of it; Hollywood has bigger problems in China

Blaming Hollywood's weak showing in China entirely on policy discrimination is also lazy. The past year should have been a warning to Hollywood studios: even as this market becomes more open and larger, the China figures in their financial statements will not necessarily rise steadily.

It sounds a little absurd, but it is a fact: 20 years after entering the Chinese market, Hollywood studios are once again struggling to adapt to local conditions.

Just as domestic films enjoy certain policy advantages on the mainland, Hollywood films long had advantages of their own: stories, visual spectacle, and big-name stars audiences had never seen before.

These advantages let Hollywood live off its "old capital" in China for many years. Especially after the market took off in 2009 and 2010, films made by Hollywood's industrial system held a clear edge over domestic films made in workshop fashion. Just as domestic cinema began producing some interesting stories, such as Crazy Stone and The Piano in a Factory, the craze for 3D and giant screens set off by Avatar kept Hollywood's big productions hot in China for several more years. To promote these blockbusters, the most effective method was to have Hollywood stars, whom audiences had only ever seen on screen, come to China, make an appearance, climb the Great Wall and say a few words in Chinese.

Once you notice that most imported blockbusters are so hollow that even the spectacle cannot make up for it, and that Hollywood's big names come to China several times a year, the excitement fades. Hollywood studios needed something new to excite Chinese audiences.

Mission: Impossible – Rogue Nation sat Jack Ma down for a conversation with Tom Cruise, Star Wars: The Force Awakens put stormtroopers on the Great Wall, and The Martian even "planted" potatoes in the Guomao subway station. Everyone has realized that the old playbook is losing its power in China, and that it takes more money and more thought to get audiences here to notice and like your film.

For big Hollywood studios still run from headquarters in North America, that shift is not easy.

Nearly every hit was an IP, but the wave will soon pass

Just as Hollywood sequels dominate the North American box office, nearly all of the top-grossing domestic films on the mainland in 2015 belonged to a series or an IP. The exception was the domestic champion, Monster Hunt, which counts as an original film.

In second place, Lost in Hong Kong continued Xu Zheng's "Lost" series, whose previous entry, Lost in Thailand, had already pulled off a 1.2-billion-yuan box office miracle. Right behind it, Mojin: The Lost Legend adapted the last four volumes of the well-known web novel Ghost Blows Out the Light. Goodbye Mr. Loser had been Mahua FunAge's best-selling stage play. Jian Bing Man rested on the 3 billion online views of the Diors Man series. And then there was Monkey King: Hero Is Back: no character sells better than the Monkey King.

Beyond the hits we can all see, harder numbers show the 2015 IP boom in the film industry. According to the Weiying Data Research Institute, films based on IP of various kinds took in 8.587 billion yuan last year, 36.1% of the box office for domestic films.

Novels are the most important source of film stories, accounting for almost half. Just three novel adaptations, Wolf Totem, You Are My Sunshine and Ghost Blows Out the Light, earned nearly 3 billion yuan between them. Once "IP" became a buzzword, TV dramas, web series, novels, variety shows, cartoons, games, even the title of a song all found someone willing to pay a high price to turn them into a film.

Wang Zhonglei, president of Huayi Brothers Pictures, told us in an interview in the middle of the year that China's top 100 hot IPs had already been snapped up. And most film companies treat such films not as projects for careful craftsmanship but as something to develop fast and cash in on quickly. Making a bad film like You Are My Sunshine has even become fashionable.

The wave may recede faster than expected. One reason, as noted above, is that the best IPs have already been developed once and many have already been filmed; few can sustain sequels the way Mojin: The Lost Legend can. The other is that audiences have wised up. Fooled once or twice, they will be warier of films built to lure fans of the original work.

With big directors faltering, big stars alone can no longer sell a film

Receding even faster than the IP boom is the market's chase, over the past several years, after big directors and big stars. The trend surfaced in 2014 and became the norm last year.

In last year's year-end review we mentioned John Woo's The Crossing. It cost 300 million yuan, gathered top stars from China, Japan and South Korea, and opened in the New Year's season, the window with the biggest box office potential, yet The Crossing (Part 1) earned only nearly 200 million yuan. The second half, released in July 2015, was renamed The Crossing 2 to make it look more like a complete story, but audiences still did not buy it, and it took in just over 50 million yuan.

Chen Kaige and Xu Zheng are as frustrated as John Woo. Monk Comes Down the Mountain and Lost in Hong Kong still did decent business, but after these two films both directors face a crisis of trust with audiences. If they do not reflect seriously, they could very well become the next The Crossing.

Over the past year, this crisis of trust spread from big directors to big stars. Top actors who used to win flowers, applause, fame and fortune just by showing their faces found that audiences had become more discerning. Hollywood Adventures, starring Huang Xiaoming, Zhao Wei and Tong Dawei, only just passed 300 million yuan in the peak summer season, and this muddled, insincere film also hurt the actors' own credibility. Plenty of people voiced their bafflement on social media, and some went from fan to anti-fan after seeing it.

A more famous case of "star failure" came a month ago, when Yang Mi's 《怦然星动》 (Fall in Love Like a Star), Wang Baoqiang's 《不可思异》 (Unbelievable) and Li Xiaolu's 《从天“儿”降》 (Dropped from the Sky) opened. Netizens mocked them as the "typo trio," since each title twists a familiar Chinese idiom, and the films were genuinely bad. In the end only Fall in Love Like a Star scraped past 100 million yuan, and some netizens joked that this was all thanks to Li Yifeng's fans.

Why big stars make bad films is easy to understand. With the market this good, big-name performers are no longer content with their fee; they want to invest in and develop film projects themselves. Many directors who take filmmaking seriously refuse projects where the same person is both the lead and the boss. "Do the actors listen to you, or do you listen to the actors? In theory everyone listens to the director, but they're also your boss, so it's often hard to handle," a director who had turned down such an offer once complained to me. So these films tend to put the actor's comfort and screen time first, rather than starting from any normal creative standpoint. No wonder they so often turn into Mary Sue or Gary Stu fantasies.

Wanda is the company of the year, and Wang Jianlin's film business is booming

Of the five domestic films that grossed more than 1 billion yuan this year, three came from Wanda. Mojin: The Lost Legend, with Wanda as lead investor, has passed 1.6 billion yuan, and Jian Bing Man and Goodbye Mr. Loser, in which it co-invested, were the year's biggest dark horses. Two other films, Go Away Mr. Tumor and Detective Chinatown, grossed more than 500 million yuan.

A more interesting figure: among these five high-grossing films, the lowest Douban rating is 6.3, for Jian Bing Man, and the highest 7.9, for Mojin: The Lost Legend. The other three all scored 7.6, and the five average 7.4, far above the average for all films released in theaters. In other words, these films earned big box office and fairly positive reviews from audiences at the same time.

But Wang Jianlin's more profitable business is still his cinemas, Wanda Cinema Line. According to the company's announcement, its box office revenue for the first 11 months of 2015 reached 5.4 billion yuan. The Weiying Data Research Institute predicts Wanda's full-year 2015 box office revenue will be 6 billion yuan, 13.64% of the national total and 2 billion yuan more than the runner-up, China Film Stellar.

Since listing on the A-share market in January, Wanda Cinema Line has been one of the year's best-performing stocks. From an offering price of 21 yuan it climbed as high as 245 yuan, and half of Wang Jianlin's fortune comes from the chain he controls, the largest cinema chain in the world.

A crop of good films and talented young people arrived together this year

This may be the luckiest thing about the past year. Compared with that 44-billion-yuan box office figure, these new images and new faces are what stand for the future.

The Coffin in the Mountain, Mr. Six, Mojin: The Lost Legend, The Dead End, Saving Mr. Wu, The Final Master, I Am Somebody, Monster Hunt, Monkey King: Hero Is Back, Go Away Mr. Tumor, Goodbye Mr. Loser, Jian Bing Man, Detective Chinatown... The past year produced noticeably more films with something to them than the years before. They are not perfect, but at least they are films with ideas and thought behind them.

Their makers came by very different routes. Monkey King: Hero Is Back took 8 years to make. Before shooting The Final Master, Xu Haofeng had been written off by some as a director without talent. Without The Dead End, Cao Baoping's name would not appear on most films' shortlists of directors. Guan Hu, Ding Sheng and Wuershan were once prime suspects for a "creative midlife crisis," and as for Shen Teng, Dapeng and Chen Sicheng, people watched them making films partly out of curiosity about the novelty.

What they share most is that these filmmakers show more respect for their audiences, and behind them stand companies willing to take filmmaking more seriously. When these young people keep getting chances, and when these companies can earn good returns from so-called "conscientious works," good things will start to happen in this market.