What Was Really Behind China's 52.3-Billion-Yuan Box Office in 2017? | 2017 Annual Report

More blockbusters thinned out how often people went to the movies, which in turn pushed the whole industry to look for new subjects and new stories.

After a final sprint through most of the New Year holiday, China's box-office revenue share for 2017 settled firmly above 52.3 billion yuan. Coming off the dashed hopes of 2016, the number seemed to say that the Chinese film market had rallied and returned to a growth track — at least, that was what the whole industry was hoping for.

From 3.3 billion yuan in 2007 to 52.3 billion in 2017, a fifteen-fold rise in annual box office over a decade gave many in the business enormous confidence, even a certain arrogance. And when the numbers stopped growing — China's 2016 revenue share of 45.4 billion yuan was less than 3 percent above 2015 — the film regulator changed how it counted, folding ticketing-software service fees into the total and turning 45.4 billion into 49.2 billion yuan.

A numbers-first mentality shaped Chinese cinema over the past decade. Across the country, people without fixed moviegoing habits still outnumbered those with them; demand far outstripped supply; and what passed for innovation showed up mostly in marketing, distribution, exhibition, and ticketing rather than in the films themselves.

Chinese cinemas went on a land grab, pushing screen counts past those of the United States; ticketing apps multiplied, sparing audiences the trip to the box-office window; the big apps poured in huge subsidies, using 9.9-yuan tickets to build the moviegoing habit; there were the so-called IP concepts and traffic-celebrity concepts, using existing fan bases to pull people into theaters; there were even operators trading on viewers' morbid curiosity, selling bad films on the hook of "just how bad is this thing, really?"

Then, in 2016, all of it fell apart. Full-year growth of just 3 percent, with box office actually falling in several months, meant the old ways of chasing growth could no longer hold. A collective explosion of audience fury at bad films — the spectacularly awful League of Gods (《封神传奇》) got the same treatment Switch (《富春山居图》) had in 2014 — finally began to cool the industry down.

So 2017's Chinese film industry suddenly felt far less frenzied. The companies that used to jostle to announce their slates all at once had gone quiet; the internet firms that had piled into filmmaking no longer talked about disrupting it; marketers, distributors, and ticketing apps all pulled back their presence.

Is a film actually good? What kinds of subjects will audiences embrace? These questions — about the films themselves — finally started to become what the industry talked about. But because filmmaking is by nature cyclical and uncertain, that thinking had not yet turned into anything audiences could see on screen.

In that sense, the 2017 market carried on the trend of 2016 and can be read as a stretch of continued audience maturation. And that shift in consumers, in turn, shaped the 52.3 billion yuan box office, forcing the people who make films to change and adapt — some kept pace, some stumbled along, and others fell behind entirely.

China's box office returned to growth — by roughly one Wolf Warrior 2

On October 28, Wolf Warrior 2 ended its theatrical run after a full three months, with its final box-office revenue share locked in at 5.31 billion yuan.

That figure not only smashed the Chinese box-office record set by The Mermaid by 2 billion yuan, it was also roughly equal to the entire gap between 2017's total box office and 2016's. You could fairly say that almost all of 2017's box-office growth came from Wolf Warrior 2 alone.

You can certainly read it as a win for the film business.

On the infrastructure side, as of June 2017 — before Wolf Warrior 2 opened — China had over 45,000 screens, passing the United States to become the country with the most cinema screens in the world. That was 50 percent more than the fewer-than-30,000 screens running when the first Wolf Warrior came out.

From the audience side, Wolf Warrior 2 turned more people into moviegoers — especially people who had not gone to the cinema before. Tier-3 and tier-4 cities played an ever-larger part. In 2015, those cities had only just crossed 25 percent of national box office; by 2017 the figure was 37.6 percent. Wolf Warrior 2's success leaned even harder on those markets, with tier-3 and tier-4 cities accounting for over 40 percent of its ticket sales — meaning the film drew outsize benefit from the ever-expanding network of theaters in those areas.

In both ideology and genre, Wolf Warrior 2 had everything it needed to reach the widest possible audience.

Action blockbusters have long been one of China's most popular genres. From The Expendables in 2010 to Mechanic: Resurrection in 2016, films of this type — tough-guy leads, save-the-world plots, wall-to-wall fighting — have repeatedly defied expectations at the box office. Two Hollywood films early in 2017, xXx: Return of Xander Cage and Resident Evil: The Final Chapter, each grossed over 1 billion yuan despite having no especially deep fan base in China.

Worth noting: action films have been held up as the signature taste of the so-called "small-town youth." The "small-town youth" aesthetic means an audience that cares little for a film's depth and mainly chases the rush — whether it comes from heroic fantasy, romantic fantasy, or a comedy that lets them unwind.

But the term is skewed; it leans too hard on geography. In fact, even "feel-good" films like xXx and Resident Evil drew box-office shares in tier-3 and tier-4 cities that were barely different from the national average. The "small-town youth" aesthetic is also the mainstream Chinese aesthetic. As an appetite, it has everything to do with the individual and very little to do with which city that individual lives in.

In the structure of Wolf Warrior 2, the part a Jason Statham or Vin Diesel plays in a Hollywood blockbuster goes to Wu Jing; the individual heroism that transcends cultural difference is pushed to the absolute extreme — as are ethnic consciousness and patriotic feeling.

"Anyone who offends China will be hunted down, however far away." A top-rated comment on Douban read: "As a Chinese person, sitting through two hours steeped in the idea that China is so strong it cannot be touched, my national pride just kept pounding away."

With such broad appeal, Wolf Warrior 2 effectively became a present-day remake of The Shaolin Temple (《少林寺》) from the early 1980s. There has always been a hard-to-verify story about that film: that in an era when tickets still cost ten fen, it grossed 100 million yuan.

And one lesson The Shaolin Temple left for those who came after is that a breakout of this kind has no necessary link to whatever prosperity the industry enjoys afterward.

How did word of mouth shape the blockbusters?

Wolf Warrior 2 included, audience emotion became the key driver of box office throughout 2017.

Dangal, released in May, was another striking case. An Indian film, and about wrestling — both worked against it. Before release the distributor put in real effort, even bringing lead actor Aamir Khan to China for a round of media interviews, yet its opening-day box office was only around 14 million yuan.

Word of mouth, though, saved the film's Chinese run. On social media, Dangal was first pulled into talk of gender and feminism, drawing an audience already engaged with those issues. Then it got tagged as a sports story, and sports-focused outlets started covering it, widening the audience further. And in the latest wave of reactions, the dominant words were basically "electrifying" and "inspirational" — a sign the film had reached the broadest popular audience.

Dangal's inspirational message was wrapped inside a gold-medal story. Audiences widely linked the film's wrestler Geeta to Liu Xiang in 2004, Sun Yang in 2012, and the Chinese women's volleyball team in 2016. Dangal ended up grossing 1.19 billion yuan in revenue share.

The films in the chart above are basically all cases of word of mouth pushing up box office after release. They show that in 2017 the relationship between Chinese audiences and films reversed. Audiences were no longer a crowd that would flock to buy tickets the moment anything opened. After a full year of bad films in 2016, they began setting their own standards.

Audiences' standards, of course, differ from critics'. Critics tend to analyze a film across many dimensions — narrative logic, the look of the cinematography, the photography, the staging, the handling of theme. But what audiences want from a film is mass entertainment: its reputation comes down to whether it's enjoyable to watch, and its fit with the prevailing social mood decides whether they can throw themselves into it. Satisfy both, and a film has the makings of a blockbuster.

As the flip side of the blockbuster: if a film fails to meet both conditions at once, it is likely to fall well short of expectations.

When Angels Wear White (《嘉年华》) opened, the RYB kindergarten child-abuse scandal had just broken. Many in the industry guessed that Angels Wear White, which deals with child sexual assault, might well catch the audience's attention and post a respectable box office. But the film's total gross came in at just over 20 million yuan.

The reason was that it failed to meet the audience's emotional needs. What Chinese society actually needed to vent during the RYB kindergarten case was a basic sense of justice — a plain desire that wrongdoers be punished severely. But Angels Wear White took a bystander's view, calmly laying out the full range of causes behind a single incident. With no emotional pull, the audience could not empathize, and the film could not become a blockbuster.

Blockbusters thinned out the average annual moviegoing rate

In 2017, films grossing over 1 billion yuan grew from ten the year before to fourteen. Mid-tier films — box office between 100 million and 500 million yuan — shrank from 67 to 52. Another data point: the top ten domestic films of 2017 accounted for 55.5 percent of all domestic box office, up from around 45 percent in earlier years. The "wealth gap" between films was widening.

Toward year-end, the data firm Fanink released figures showing that the average annual moviegoing rate among theater audiences had fallen from 7.36 times to 5.8. In other words, even as more people came to the cinema, moviegoing habits were not strengthening. Viewing driven by word of mouth does not reliably bring a viewer back when the next film opens.

The same data also showed that some of the audience members who had once gone most often were less willing to show up on opening weekends — more evidence of a wait-and-see attitude toward quality.

Seen this way, once a film fails to spread by word of mouth, it is in trouble. One mid-sized film company once told QDaily with a sigh that of the four or five films they had released in 2017, box office had been "cut in half" across the board — films they had projected to gross 400 or 500 million yuan ended up pulling in only 200 or 300 million.

After being battered by a flood of bad films throughout 2016, this was Chinese audiences taking their revenge on Chinese cinema — a debt the industry would spend many years repaying, through a large volume of films that were perhaps technically competent but unable to draw the box office they deserved, as it worked to win back audience trust.

Imported films caught fire again in 2017

Many people wanted to repeat the success of Dangal and its kind.

One set of numbers shows the heat around imported buyout films: in 2013, China imported only 25 of them. By 2017, the figure had jumped to 70. A report by Sansheng (《三声》) cited the experience of Xu Aqing, founder of Jinghe Film, who found that when she was trying to acquire a film for around US$100,000, a mainland company swooped in and paid twenty times that.

The success of buyout films goes back a long way. In 2010, the buyout title The Expendables set a huge box-office record of 215 million yuan, and the Chinese distribution rights to The Expendables 2 were priced accordingly. In that sense, the 2017 buyout-film frenzy was not all that different from what had come before.

The problems left unsolved back then remain unsolved now. The release date for a buyout film is set by the National Radio and Television Administration, and marketing can only begin once the date is fixed. In practice, many buyout films in 2017 opened and closed in complete silence, with most audiences never having heard of them. Twenty-five of them grossed less than 20 million yuan.

This is still an extremely high-risk business. To make money in it, an importer needs exceptional judgment — the ability to spot films that suit Chinese tastes — and enough luck to find a sliver of breathing room amid the constraints of date assignment and the marketing-and-distribution quagmire. From a commercial standpoint, the current buyout-film frenzy looks more like a bubble.

As for Hollywood's overall showing in China last year, it can almost be called underwhelming. Transformers: The Last Knight grossed 400 million yuan less than the fourth installment had in 2014. So-called big-IP titles like Thor: Ragnarok, Logan, and Spider-Man: Homecoming mostly settled around 700 million yuan in cumulative box office. By those numbers, Hollywood's major studios seem to have hit a ceiling in China, with audience fatigue increasingly clear.

IP films won little recognition in 2017

The IP concept exploded from 2014 on and was once seen as a near-guarantee of box office. But in 2017 that began to change.

Among IP films over the past year, the highest-grossing was Wu Kong (《悟空传》), adapted from a novel of the same name that author Jin Hezai had posted online in 2001. Despite a reported investment of 150 million yuan, and despite Jin Hezai's vigorous promotion of the film on Weibo, its final box office came to only 650 million yuan — a limited return.

Once Upon a Time (《三生三世十里桃花》), on top of the original novel's existing popularity, brought in traffic celebrities Yang Yang and Liu Yifei. Even after fans introduced the public to the idea of "screen-locking", the box office landed at 501 million yuan — not impressive against the 150 million yuan the production claimed to have invested.

As for Sky Hunter (《空天猎》), which tried to copy Wolf Warrior 2 as a patriotic big-budget film, it caught the National Day holiday window and starred Li Chen and Fan Bingbing — yet this reportedly 200-million-yuan-plus production ended up with only a little over 300 million yuan.

In 2017, despite the breakout of Wolf Warrior 2, the domestic share of total box office fell from 58 percent the year before to 53 percent.

A large batch of newly founded film companies began to retreat. Entertainment Capital (《娱乐资本论》) reported that at the 2016 Shanghai International Film Festival, new companies announced over 200 projects — but a year later, fewer than a third had any word of going into production.

On the other hand, propaganda departments under the Ministry of Public Security, the Navy, the Air Force, and the Procuratorate were taking part more and more in financing and producing films. These films wore the shell of commercial blockbusters while also carrying out the propaganda duties of the agencies behind them.

Dante Lam, director of Operation Mekong (《湄公河行动》), once said that while discussing the script with the Ministry of Public Security, he ran into a great deal of opposition. "They were very extreme — saying this won't work, that won't work either. It was awkward to sit there and listen. ... If I can't shoot the content I want, then forget it."

Film still has its political, propaganda dimension. After a promotional reel for My Chinese Dream (《我的中国梦》) ran in the summer of 2017, the National Radio and Television Administration is set to finish production, filming, and release of a new promotional series, Our New Era (《我们的新时代》), before the 2018 Spring Festival. "This short-film series will compete for screen time alongside major theatrical releases in pre-show slots, and will broadcast simultaneously across nine national film-channel alliance members including CCTV-6 Film Channel, Changying Channel, and Shanghai Film Channel."

There is no shortage of good news, of course. Some companies have begun looking for new subjects and content — some turning to social-realist material, others choosing more niche, art-house fare. Toward the end of 2017, a large batch of such films opened. Beyond Angels Wear White, already mentioned, there was The Looming Storm (《暴雪将至》), which reflects on the wave of state-enterprise layoffs in the 1990s, and Mr. No Problem (《不成问题的问题》), adapted from a Lao She novel.

We will explore in a separate article how the diversity of films shifted in 2017 as more audiences poured into the market.

The messy boom brought capital and talent flooding into the film business, and differentiated work may yet emerge as a beneficiary.

Charts: Feng Xiuxia

Cover image: Wolf Warrior (《战狼》), Youth (《芳华》)