Even ‘Super Mario Bros.’ Can’t Score at China’s Box Office for Hollywood | Analysis
Illumination and Universal’s “The Super Mario Bros. Movie” has passed $500 million at the worldwide box office in just over a week, becoming the biggest-grossing video game movie ever. It pulled off that massive take with just $13.3 million in China. After years of pandemic lockdowns and a shaky reopening, ticket sales for Hollywood movies in China have veered between a statistically irrelevant asterisk to just plain underwhelming.
With plenty of domestic films to watch, a growing sense of nationalism amid tensions with the West and audiences whose affections for Hollywood superhero movies seem to be fading. China has been downgraded from “most favored nation” to “just another marketplace.” Hollywood can no longer rely upon China to goose the global grosses of a big-budget Tinseltown tentpole. And that may be just as well, since their streaming apps are shut out of the market.
A lingering ailment
The pandemic changed the picture for Hollywood. Since 2020, the number of American films China allowed in plummeted from a record high of 73 in 2018 to around 30 in 2022. The tentpoles that did play in China, like “The Batman” ($20 million in 2022) and “Minions: The Rise of Gru” ($38 million in 2022) underwhelmed compared to pre-COVID expectations: Look at the $298 million gross in 2018 for “Aquaman” or the $153 million in 2017 for “Despicable Me 3.”
How Hollywood Can Help Right the US-China Relationship | PRO Insight
Last December, Walt Disney and 20th Century Studios’ “Avatar: The Way of Water” was seen as the last chance to show that Chinese moviegoers would pack auditoriums for Hollywood films.
“China did everything they could to boost China’s ‘Avatar: The Way of Water’ grosses and keep it in theaters longer,” said Chris Fenton, author of “Feeding the Dragon: Inside the Trillion Dollar Dilemma Facing Hollywood, the NBA, & American Business.” Prior to COVID, Fenton said, “The only Hollywood brand bigger than Marvel in China was James Cameron.”
The 3-D sequel broke COVID-era records for a Hollywood flick in China, but it also earned as much as two-thirds less than previously hoped in a territory that spent $391 million on “Fate of the Furious” in 2017 and $620 million on “Avengers: Endgame” in 2019. Moreover, its good-but-not-superlative performance was clearly the exception to the rule.
Not even the return of Marvel — soft-banned in China since “Spider-Man: Far from Home” earned $199 million out of $1.13 billion worldwide in the summer of 2019 — changed that narrative. “Ant-Man and the Wasp: Quantumania” earned $39 million compared to $125 million for “Ant-Man and the Wasp” in 2018. Few are expecting miracles from “Guardians of the Galaxy Vol. 3” or “The Marvels.”
The combined #China box-office total to date of #M3GAN #SuperMarioMovie #Shazam2 #DungeonsAndDragonsMovie #ANTMAN is less than what #IronMan3 made in three days…
Back in 2013!
Beijing has turned consumer sentiment in the PRC strongly against #Hollywood content.
— Chris Fenton (@TheDragonFeeder) April 10, 2023
Marvel thus finds itself in a pickle: While most MCU movies like “Thor: Ragnarok,” “Captain America: Civil War” and “Iron Man 3” didn’t “need” China to become commercial successes, the extra $95 million-$125 million a superhero movie typically garned helped bolster the narrative that Marvel was a world-conquering brand.
“Hollywood is already in its new relationship with China,” noted one high-level industry insider. “They are treating it like another territory, and few in Hollywood will take Chinese money at this point.”
Members of Congress Meet With Bob Iger and Other Hollywood Executives to Discuss Chinese Censorship of US Films
A rising domestic industry
Meanwhile, China’s own product has been doing relatively well. Jackie Chan’s comeback vehicle “Ride On,” a melodramatic comedy about a stuntman reflecting on his life in pictures, topped the box office last weekend in China with $12 million in a three-day opening. The New Year’s week saw “Wandering Earth 2” top $600 million and “Full River Red” reach $674 million.
It’s not just Chinese tentpoles that are doing well in China. The Japanese sensation “Suzume,” opening this weekend in North America, has earned $104 million in China, becoming the biggest anime and the sixth-biggest non-Chinese animated film ever in China. The upcoming “The Last Slam Dunk,” which already earned $221 million worldwide while becoming South Korea’s biggest-grossing anime, is expected to rock China’s theaters soon.
Chinese theaters would gladly take revenue from North American blockbusters. Without them, they’re more likely to miss state forecasts of $8 billion in annual box office for 2023. But Hollywood films are now going to have to get by with little to no help from China.
Fenton sees that as a point of leverage in ongoing discussions between Washington and Beijing. The less Hollywood depends on China to boost its box office, the less power the country has to dictate stronger pro-China censorship or a higher percentage (25% is now standard) of money earned from ticket sales.
“There is now even less incentive to patronize and pander to China,” said Fenton. “The government can flick a switch and instantly make the populace more or less pro-American.”
Which raises the question: Given all the demands on Hollywood’s time, money and capital, why spend it in a risky geopolitical climate like China?
Neither side can walk away
Fenton doesn’t think the marketplace is entirely dead, both because sentiments can change and it’s in China’s interest to allow enough Hollywood cinema to feign cooperation and assure the Chinese populace that the system is working in their favor.
And some Hollywood companies are tied up in long-term joint ventures with state-backed companies. Shanghai Disneyland is 57% owned by the government-run Shanghai Shendi Group and 70% of Universal Studios Beijing is owned by the state-owned Beijing Shouhuan Cultural Tourism Investment Co. That means Disney and Comcast can’t walk away from the market — and their partners have the incentive to see them succeed. The Chinese government knows that a failure to promote the brands and shows associated with the theme park attractions will cost them money in declining admissions. You can’t get a citizenry excited about a Marvel ride at Shanghai Disney if Marvel movies are banned.
The most challenging factor for the Hollywood-China relationship may be the effective ban on streaming services. Since studios increasingly see the box office as a leading indicator for streaming success — the marketing push associated with a wide release appears to drive interest among subscribers for movies — it’s a strategic problem for media companies. China has favored its domestic streaming market, which includes giants like Iqiyi, Youku and Tencent Video. Netflix, which rarely licenses its shows, acceded to this reality in 2017, licensing some of its originals to Iqiyi.
Most of the big American films that broke out in China in the 2010s — Marvel movies, “Jurassic World” flicks and “Fast Saga” actioners — also broke out worldwide, suggesting a global convergence of tastes. With Chinese audiences favoring fare from local producers and neighboring markets like Japan and South Korea, those tastes now seem to be drifting farther from Hollywood’s sweet spot. The interests of the American entertainment industry and China’s ruling Communist Party may likewise be diverging. That may mean big, expensive actioners like the upcoming “Fast Saga,” “Indiana Jones” and “Mission: Impossible” sequels may have to earn back their budgets without help from China. The world’s biggest market, at least as far as Hollywood is concerned, is growing smaller every weekend.
Imax’s New China CEO Is Confident the Premium Theater Experience Will Weather the Global Storm