China's film market shows great potential for growth

The country's movie box office receipts is expected to reach $5.5 billion by 2017, and overtake the United States,with the Internet playing a big role.

In two years' time, China's domestic film box office will surpass that of the United States, and become the largest in the world. That forecast has encouraged many investors hoping to ride the wave and make money.

The anticipation is expected to bring revolutionary changes not only to China's entertainment industry, but to the rest of the world.

The growth of China's film market will impact the whole world, according to Richard Gelfond, CEO of IMAX Corporation. The company, with presence in 65 countries all over the world, now has more than 170 screens in China.

As China's middle class continues to grow, the country's film market still has great potential, said Gelfond, as only 11 of these IMAX screens in China are located in first-tier cities. The challenge will be how much to penetrate that market, he said during the 18th Shanghai International Film Festival (SIFF).

The fast evolution in digital technology will also give China a chance to become the industry leader of film and entertainment, Gelfond said. While Hollywood still has the advantage of its talent pool, mature infrastructure and so on, China will be able to create studios of the future, with cutting edge technologies and digital evolution.

With its great market prosperity, China has the potential to leverage its enormous domestic box office to influence the global outlook of the industry, he said. As the box office revenue grows rapidly, qualities of films will consequently rise, because cost of productions will grow, and China's filmmakers will not only be competitive within the domestic market, but also with Hollywood, he said.

To appeal to specific groups of audiences, it often doesn't work to hire actors of a particular country, said Marc Shmuger, a film and entertainment industry executive for more than 30 years. Schmuger has long held senior positions at Columbia Pictures and Universal Pictures and he was in Shanghai for the SIFF.

"But there is good opportunity that great collaboration will take place, where Hollywood storytelling comes together with Chinese subjects to create good films," he said.

Kungfu Panda III could be an example in that direction. The franchise has gained great success in the global market. The first two installments grossed a total of $1.3 billion at the box office worldwide, with a production budget of $280 million.

The third episode was produced by Oriental Dreamworks, a joint venture between Dreamworks Animation of the US and Chinese investors. This will be the first feature film production from the new studio, which is located in Shanghai, located on the west bank of the Huangpu River.

Kungfu Panda III is scheduled for global release on Jan 29, 2016. The Chinese edition has adopted a new lip-sync technology, allowing the characters to utter dialogues in Chinese more naturally.

China's film box office amounted to $4.8 billion in 2014, and the number has been growing by 30 to 35 percent annually in the past few years, according to statistics from SIFF. By 2017, China's domestic film box office is expected to grow to $5.5 billion, and the Internet is expected to be a major driving force in the development of China's film industry, industry watchers at the SIFF forums held June 14 to 18, agree.

Yu Yang, president of Analysys Think Tank, has coined a new phrase, which has gone viral in business talks: Internet Plus. Internet joining hands with any industry will bring radical changes in the field, and Internet Plus Film has been the hottest topic at this year's SIFF.

The Internet will overturn the existing business model, Yu said. In 20 years' time, people will no longer talk about which enterprise is an "Internet corporation" because every one of them will be Internet-rooted, he said.

At a summit meeting of Internet and film companies on June 17, Yu illustrated how the Internet will impact the process of filmmaking.

Big data accumulated from Internet users will enable producers to outline their target audiences even before the film is made, Yu said. This will help filmmakers create works closer to what audiences would like to see. People are more likely to identify themselves by their consumption behavior in the future, he said.

"If you understand the need of a particular group of people, you can literally sell them everything."

Last year, more than 350 million people shopped on Alibaba's retail platform, taobao.com.

"We know these users' address, marital status, and life habits. The enormous data base can provide insightful information for our partners, and bring great value," said Zhang Yong, CEO of the e-commerce company, which announced its latest movement to invest in the film industry.

In 2014, Alibaba launched Yulebao, the world's first platform for individuals to invest in movie making. Users were so enthusiastic that every time a project became available on Yulebao, the shares were sold out within one minute, Zhang said. More than 60 million people have made the attempt to invest through the platform. Even though most of them didn't become shareholders of the film, they were among the first to learn about the film, and show interest in it.

Last year, Yulebao accumulated 330 million yuan ($54 million) for 12 films, and this year it plans to quadruple the amount, and hopes to acquire revenue of 5 billion yuan in box office, according to Liu Chunning, vice president of the Alibaba Group.

A few weeks prior to the festival, SIFF announced its new partnership with Alibaba Group. Besides selling film tickets on the company's consumer-end online platform, the e-commerce company will help to "promote new talents, interact with audiences and explore the future of the film industry", according to Ding Li, vice general manager of SIFF Co Ltd.

According to Zhang, the company's CEO, Alibaba's core interest is not in film shooting itself, but in injecting the "blood of Internet" into the film industry, to generate revolutionary changes.

According to Wang Zhonglei, president of Huayi Brothers Media Corp, one of the top players in China's film industry, the greatest change he expects to come along with the involvement of the Internet, is filmmaking becomes "transparent": the public becomes aware and finds ways to be involved, even when a film is at the preparation stage.

Filmmakers find they are casting according to actors' popularity on the Internet, and original content from the Internet have provided subjects for film adaptation. The Internet has also pushed films to shorten the "window period", to allow online projection within 30 days after cinema release.

However, filmmakers should not exaggerate the role the Internet and big data plays in the creative process, warned Wang Changtian, president of Enlight Media. After all, it's the quality of the film that determines its success, and competitive advantage against blockbuster films from Hollywood.

Through a formal agreement with the World Trade Organization, China is expected to give more access to Hollywood movies by 2017. At present Hollywood movies account for about one-third of China's box office every year.

zhangkun@chinadaily.com.cn