The current trade conflict between the US and China may have a pretty major impact on one of the US’s major money-making industries– film. The film industry generates multiple billions of dollars a year, and roughly half of that money– in some cases more– comes from foreign markets, and the biggest of them is China, which is second only to the US in ticket sales of American movies. But it looks as though the Middle Kingdom is about to buy a lot fewer. (Mitigating that, China keeps 75% of the money these tickets generate, but the studios can still say their movies “made” that amount of money, even if they don’t get to keep it.)
Every summer, China blacks out the month of July to foreign movies. This has always been seen as an opportunity for Chinese films to flourish. American film studios have danced around that. Just recently, Disney and Sony decided to open ‘Spider-Man: Far From Home’ a few days earlier in China than in the US and the rest of the world, to get it in under the wire, before the embargo. Other major films will roll out there after the end of the blackout. But suddenly, word has emerged that China may extend its film blackout until October.
This blackout is not an official policy, and can be tweaked. In 2017, China extended the blackout into late August, when its domestic hit ‘Wolf Warrior 2’ was doing gangbusters. Last year, with no huge domestic hit, the runs of several US movies were extended into July.
What does that mean for ‘The Lion King’, ‘Once Upon a Time in Hollywood’, ‘Hobbs & Shaw’, and the rest of the major summer flicks that will not have opened yet? It’s not as though the studios can just dump them all at once in China when the embargo lifts. Just like in the US and everywhere else, the studios have to give each other’s movies room to breathe. If too many of them open too closely together, none of them will make money, as the audience will be too splintered. Losing one month is manageable. Losing three is another matter. And keep in mind, there are more movies to come in the fall. Studios could opt not to open a few movies, but that’s more money lost.
On China’s side, because that country keeps 75% of the movie American movies make there, the country is also losing out on a lot of money. That makes some view this expanded blackout as an aggressive political move on the part of Xi Jinping against Donald Trump who has increased tariffs on Chinese-made products entering the US. (Not sure if you read this, but apparently, the Dollar Tree is thinking of changing its name because it will no longer be able to sell its merchandise for just $1.)
Last month, the finale of ‘Game of Thrones’ did not air in China simultaneously with the rest of the world, with China’s Tencent Video blaming the problem on “transmission problems,” but with HBO stating that the true issue was the trade dispute.
However, word has now emerged that Disney’s ‘The Lion King’ will possibly open in China on July 12. That’s a week before it will open in the US, but also dead center of the blackout. This release is not confirmed, however, it comes after the highly anticipated Chinese film, ‘The Eight Hundred’ was pulled from its opening slot of the Shanghai Film Festival. ‘The Eight Hundred’ was expected to be another ‘Wolf Warrior 2’-sized hit, but there are rumors that it may go against the nation’s “core socialist values.” It was expected to make so much money, that should it have been yanked for good, China needs another monster hit to replace it, and that could be ‘The Lion King’.
It remains to be seen how the Chinese blackout will impact Hollywood, but considering how many movies depend on that audience to salvage the bottom line of movies that underperform in the States, it could potentially be catastrophic.
Stay tuned to see how things work out.