Hollywood movies have faced a significant decline in China’s box office this year, with ticket sales falling sharply and audiences not turning out as they once did. In contrast to the booming global box office, where films like Pixar’s Inside Out 2 and Marvel’s Deadpool & Wolverine each grossed over $1 billion, China has seen a steep drop in ticket sales from June through August, down by about half compared to last year.
The decline is attributed to several factors, including Chinese regulators limiting access to theaters for U.S. films, citing misalignment with Communist Party values. The number of approved U.S. film releases in China peaked at over 60 in 2018 but has since decreased, coinciding with rising trade and political tensions between the U.S. and China. Additionally, the quality of local-language films in China has improved, further diminishing demand for American films.
For example, while Deadpool & Wolverine opened at No. 1 in most countries in July, it only reached No. 2 in China, where the Chinese comedy Successor took the top spot. Today, over 80% of China’s box office revenue is generated by homegrown films, a stark departure from the previous decade when Hollywood movies dominated.
“Most, if not all, studios project zero revenue from China now at the green-light process,” said Chris Fenton, a producer and author of Feeding the Dragon, a book about the Chinese market. “If a film eventually makes money in China, it’s now viewed as gravy.”
This marks a significant shift from the previous decade when co-productions flourished, and U.S. studios relied heavily on the Chinese market for growth. Notably, during the Obama administration, a deal was signed with China to increase American film releases, and major investments were made, such as Beijing-based Wanda Group’s acquisition of AMC Entertainment and Walt Disney opening a resort in Shanghai.
However, the audience for U.S. blockbusters from Disney, Universal, and Warner Bros. in China is shrinking. Rance Pow, co-founder and CEO of Artisan Gateway, a firm advising Hollywood studios on the Chinese market, noted that for China to regain its historical box office growth, there would need to be greater consistency in the import of film dates and releases.
Despite the downturn, there have been some exceptions. Inside Out 2 performed better in China than its 2015 predecessor, and Guardians of the Galaxy Vol. 3 did comparably to Vol. 2. Disney’s Alien: Romulus also saw a strong opening in China, debuting at No. 1.
IMAX Corporation, heavily reliant on the Chinese box office, has adapted to the changing landscape. Recently, IMAX signed agreements with major Chinese film groups, including Wanda, Hengdian, and Bona Film Group, to expand its presence in China. IMAX CEO Rich Gelfond anticipates that future revenue will be split between Hollywood and local-language content, with local films likely outperforming.
While there may be more Hollywood films shown in China this year than last, the market dynamics have undoubtedly shifted, requiring U.S. studios to adapt to the evolving preferences of Chinese audiences.
