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Seismic Changes to Mainland Film Market Prove Focus for FILMART 2017

With a dramatic slowdown in its once astonishing box-office growth rate and changes looming to the official policy on imported movies, it was the state of the mainland film market that preoccupied many attendees at this year's FILMART.

Photo: Journey to the West: The Demons Strike Back – an early 2017 mainland box office smash.
Journey to the West: The Demons Strike Back – an early 2017 mainland box office smash.
Photo: Journey to the West: The Demons Strike Back – an early 2017 mainland box office smash.
Journey to the West: The Demons Strike Back – an early 2017 mainland box office smash.

This year's Hong Kong International Film and TV Market (FILMART) took place amid a series of seismic changes set to transform the mainland film industry. Arguably the biggest, of course, is the recent slowdown in the growth of China's box-office takings.

For 2016, it was announced that this growth had slowed to just 3.7%, a far cry from the years when 30% was the norm. Despite a few early hits in the run-up to Chinese New Year – notably Kung Fu Yoga and Journey to the West: The Demons Strike Back – the 2017 box office to date has remained equally flat.

Apart from these disappointing growth figures, many at this year's FILMART were also keen to learn more about the impending changes to China's regulations regarding imported films, with a major overhaul scheduled for later this year. There was also the issue of the recent clampdown on overseas investments, a development that has seen several US film companies facing the collapse of high-profile financing deals.

On the first morning of the event, it was the box-office slowdown that took centre stage, with a special seminar – What's Next For The Chinese Market? – convened to address this very issue. Overall, a number of theories have been put forward to explain the sudden decline, including the end of online ticketing subsidies and official attempts to crack down on box-office fraud. At FILMART, though, the focus was on whether it was the low quality of mainland movies that had emptied the multiplexes. A number of speakers also assessed the impact of online platforms on cinema attendance.

For Qin Hong, Chairman of Beijing-based JQ Pictures, the industry is going through a period of "positive adjustment", with producers needing to pay more attention to the quality of content and scripts. Highlighting this, he said: "The audience has raised its standards and become more sophisticated in its tastes. As a result, it's time for film companies to improve the quality of their films. For a long time, we have been more focussed on quantity than quality, but the audience is much more choosy now."

Stanley Tong, the director of Kung Fu Yoga, believes one of the big challenges is to persuade those under 18 to watch films in cinemas rather than on their mobile phones. He also notes that some 70% of the mainland box office now comes from tier-two and tier-three cities, where the audiences are predominantly made up of women and couples. Addressing this final point, he said: "In light of this, it's important that films cater to the tastes of female movie-goers."

Tong's analysis actually goes some way towards explaining the glut of romantic comedies and dramas produced on the mainland in recent years. While some – such as Xue Xiaolu's Book of Love and Derek Tsang's Soul Mate – have been highly successful, of late there have been clear signs of audience fatigue.

Overall, while big-budget martial-arts and action films continue to perform well – and drive the overseas sales of Chinese movies –mainland audiences are now seen as having become much more discerning with regard to quality. Indeed, if a film has below par visual effects and production values, it's now almost certain to flop.

More encouraging, however, was the wider variety of genres – particularly psychological thrillers and sci-fi movies – among the large volume of films launched at FILMART. This suggests that local producers are now more willing to experiment in an attempt to lure audiences back into cinemas.

Among the most notable projects on show was Wanda Pictures impending release of Leste Chen's Battle of Memories, the story of a novelist who opts to have a decade of his memories wiped, but then wakes up in the mind of a serial killer. Among the other sci-fi projects on offer were One Cool Pictures' post-apocalyptic thriller Warriors of the Future, and Distribution Workshop's The Thousand Faces of Dunjia.

Directed by Yuen Woo-ping, Dunjia tells the tale of a band of martial-arts warriors tasked with secretly protecting the human race from evil aliens. Nansun Shi, who is producing the film alongside Tsui Hark, describes it as a "completely fresh approach to telling a story, which combines traditional martial arts with science and aliens".

This interest in high-concept/futuristic films ably reflects the changing tastes of mainland audiences, with similar Hollywood films, such as Arrival, Inception and Cloud Atlas, having all performed well in China. It is also a clear sign that Chinese visual effects (VFX) companies are now more confident when it comes to tackling such projects.

Photo: Battle of Memories: Leading the mainland sci-fi wave.
Battle of Memories: Leading the mainland sci-fi wave.
Photo: Battle of Memories: Leading the mainland sci-fi wave.
Battle of Memories: Leading the mainland sci-fi wave.
Photo: Have a Nice Day: A widely acclaimed Chinese animation.
Have a Nice Day: A widely acclaimed Chinese animation.
Photo: Have a Nice Day: A widely acclaimed Chinese animation.
Have a Nice Day: A widely acclaimed Chinese animation.

Speaking at FILMART's Digital Entertainment Summit, Felix Xu, Chief Executive of Beijing-based VFX house Illumina, said that Chinese VFX companies now had the skills and resources to compete at a global level, although the pressure to produce films quickly and on low budgets was still having an adverse effect on quality. Expanding on this, he said: "While many Hollywood and international companies are now paying attention to us, there are still particular problems in China. Frequently, we only have a limited amount of time to produce films, leading us to not paying enough attention to content."

Another trend highlighted at this year's FILMART was the escalating production of high-end, Chinese-language TV miniseries. On the second day of the event, Fox Networks Group Asia (FNGA) launched its first two entries to the genre – The Trading Floor (produced by Andy Lau's Focus Television) and Stained (written and directed by Patrick Kong). Set against the backdrop of Hong Kong's financial industry, The Trading Floor is to be directed by KK Wong, whose credits include The Election, a popular Hong Kong TV show. Stained, meanwhile, is a crime thriller and stars Kara Hui, Kwan-ho Tse and Anthony Wong.

According to Cora Yim, FNGA's Head of both Chinese entertainment and the Hong Kong territory, such miniseries have emerged in response to the revival of high-end TV production in the US, with some of Hollywood's leading actors and directors now working in television. Yim said: "These particular shows underline our commitment to partnering with the very best talent in order to create the very best shows for our viewers."

At present, HBO Asia, Netflix and Amazon are also increasing their investment in Asian-language TV drama. As a result, many see this space as offering huge opportunities for Asian talent and content producers in the coming years.

This year's FILMART also had a distinct focus on animated films and TV series. As part of this, a panel discussion valiantly set out to answer one particular question – Is Mainland Animation Ready to Hit the International Market? This session discussed the rise of Chinese animated movies, such as Monster Hunt, a live action/CGI hybrid and Liu Jian's dark comedy Have a Nice Day, which premiered at this year's Berlin Film Festival to widespread acclaim.

For their part, a number of Asian sales agents observed that animation produced in any language is one of the easiest formats to sell internationally and much in demand in mainland China. Outlining the potential for such productions, Pearl Chan, the Distribution Manager for Good Move Media, a Hong Kong-based sales company, said: "Chinese buyers are always interested in animation as it's easy to either dub or remake in Chinese for the domestic market. There's also a huge focus on IP development in China at the moment and animation is often based on highly recognisable IP."

In general, Asian sales agents reported brisk sales to many Asian territories, including Hong Kong, Taiwan, Korea and Southeast Asia, while also confirming that many of China's Video On Demand (VOD) platforms remain active buyers. At the same time, they confirmed that sales to North America and Europe remain difficult, partly because of the tough market conditions in those regions.

Acknowledging the problem, Grace Chan, Young Live Entertainment's Distribution Manager, said: "We're seeing fewer European buyers at FILMART and less pre-buying. It used to be the case that, if you had a strong cast, buyers would pre-buy after watching the trailer. Now, though, they want to see the completed film."

She also noted that North American sales were largely down to a small number of specialised buyers. These include Well Go USA and China Lion, as well as several of the VOD platforms that target overseas Chinese viewers.

Several other panel discussions also considered whether the revenue that content producers can make from online platforms is replacing lost DVD and pay-TV sales. It was largely felt that, although Chinese streaming platforms are spending heavily on content, very few are profitable. This has seen many looking to move to an increasingly subscription-based business and away from the current advertising-driven model.

Speaking on the New Opportunities in the Explosive Growth of Online Entertainment panel, Yang Xianghua, the Senior Vice-president of iQiyi, a Beijing-based online video platform, said Chinese media streaming companies had ended their user-acquisition phase and were, instead, focussing on increasing revenues. Summarising the reasons behind this shift, he said: "Young Chinese viewers are relatively affluent, so they're willing to pay for higher-quality content. Unlike my generation, they don't like to waste time finding pirated content and watching ads. For our part, we charge a monthly subscription of RMB20 – about half the price of a coffee in Starbucks."

Photo: Kung Fu Yoga: The ever-popular Jackie Chan’s 2017 action-adventure crowd-pleaser.
Kung Fu Yoga: The ever-popular Jackie Chan's 2017 action-adventure crowd-pleaser.
Photo: Kung Fu Yoga: The ever-popular Jackie Chan’s 2017 action-adventure crowd-pleaser.
Kung Fu Yoga: The ever-popular Jackie Chan's 2017 action-adventure crowd-pleaser.

At present, iQiyi has about 20 million paying subscribers, while Tencent recently reported that more than 20 million people paid for video content on its websites during 2016. The big question facing the industry, though, is whether subscriptions will grow fast enough to sustain the Chinese platforms' buying habits or if – sooner or later – they will be obliged to dramatically draw their horns in.

Liz Shackleton, Special Correspondent, Hong Kong

Content provided by Picture: HKTDC Research
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