Looking to gain insight into Hollywood, Chinese companies have been investing in the American film industry.
The Wanda Group, owners of the AMC theater chain, funded the production of the new boxing movie, "Southpaw." The film, starring Jake Gyllenhaal, grossed $16 million on its opening weekend, doing better than anticipated. Adam Sandler's new movie, "Pixels," was also funded by a Chinese company, which also opened this weekend.
Ben Fritz, film reporter for The Wall Street Journal, spoke with John Horn about China's involvement with Hollywood, how the country is building its movie industry, and what Hollywood is getting out of it.
We've talked in the past about China as the fastest growing movie market in the world. Just in terms of box office receipts last year, China's box office was up 36% to $4.82 billion. But this is a different story — this is more about companies investing in American films, right?
Correct. They want to grow their own film business. China sees entertainment and film as a source of soft power around the world. The reality is China has yet to produce a film that is successful outside of China. That is something Hollywood does all the time. Their strategy is to use money to invest in and partner with American companies — see how they work and learn what they do — and eventually gain knowledge that they hope can boost the Chinese movie business.
I was looking earlier at the number two grossing Chinese-made film of all time — a film called "Lost in Thailand." It grossed the equivalent of $185 million in China in 2013. When the movie played theatrically here in the United States, it took in $57,000. So I guess this is a workaround for Chinese producers to learn how American studios go about creating global blockbusters?
Yeah, that is a big part of it. You're working with people like Jeff Robinov who used to run Warner Brothers, Dick Cook who used to run Disney, Adam Fogelson who used to run Universal. You invest in their companies and then you are part of the process. Some of the investments also involve partnerships — like Dick Cook, for instance. He is also as part of the deal forming a joint venture with this Chinese company, Citic Guoan. He is going to work with them to make several movies in China that are specifically designed to appeal to Chinese audiences and to western audiences.
I know not all of these movies [with Chinese investments] are guaranteed to be successes. China Film Group invested in the Adam Sandler bomb, "Pixels." But "Southpaw" looks like a very interesting story. The movie is off to a good start in the United States. Can you tell us a little bit about the investment from China in this film?
The Weinsteins were talking to Chinese companies about partnering — like a lot of Hollywood studios are — and they ended up making a deal with Wanda Group, which also owns AMC theaters. They essentially allowed Wanda to fully finance "Southpaw," which the Weinsteins were going to make anyway. So Wanda paid for the budget, about $30 million, and the Weinsteins produced it and marketed it. It has done very well. It open at $16.5 million, which is good for a pretty cheap indie drama.
I think what is great about this from the Weinsteins' perspective is that they've now helped Wanda Group to make a movie that makes money. So they don't just look like they're taking money from China and then throwing it down the drain. I think the Weinsteins now hope that this will give them a lot of credibility to make more partnerships in China. In the process the Wanda Group was very involved in making this film. They saw how the Weinsteins did it — production and marketing. As we discussed before, that is the kind of knowledge that these Chinese companies are hoping to gain.
From the American producers' perspective, one advantage is they get some money to make movies, but I assume part of the play too is to have a foot in the door in terms of the Chinese market. China censors only let in 34 non-Chinese movies every year — most of them are American. Is there any tactical or strategic advantage to having a Chinese investor in these films? Does that mean they might have a better shot of getting into the Chinese market?
Absolutely. I think for Americans this is a win-win for Hollywood because there is a lot of money and China is looking for a place to park. Hollywood is always looking for more money to invest in the movie business — not traditionally a great way to make money. They're also desperate to get into China. If there are only 34 import slots per year, and if you work with a Chinese partner that has influence with the Chinese government, you have a much better shot of getting in.
I think "Southpaw" is looking to get into China. It has a good shot. It's not the type of movie that would ever have a guaranteed slot. You mention that "Pixels" was partially financed by the China Film Group — that [movie] has a guaranteed opening there in September, which probably would have been tougher without the partnership of the China Film Group. For these American studios it is a no brainer.