Entertainment

The hunt for red October

Subsidy ban on Tencent and Alibaba ticket sites ahead of public holiday

Cinema-w

Film night: soon to cost more?

It was over a decade ago that Huawei’s founder Ren Zhengfei claimed that a ‘wolf spirit’ – that is, perseverance, teamwork and ruthlessness – was critical for an enterprise to succeed. Since then, the debate about wolf pack culture has flourished in China.

In 2012, Robin Li, the founder and chairman of Baidu, wrote an internal memo that complained that his company was in crisis because it had lost its “wolf spirit” and had become too complacent.

Apparel tycoon Zhou Shaoxiong had earlier named his menswear label Septwolves because he believed the animal epitomised his personality and his desire to “succeed in a hostile world”.

Guo Guangchang is another fan of the wolf spirit. Not only does the chairman of conglomerate Fosun call himself a “Wall Street Wolf”, he even bought the English football club Wolverhampton Wanderers – better known as Wolves – two years ago (the team’s badge will appeal to Guo too – a wolf’s head on an orange hexagon). Fosun’s takeover brought a new manager and better players to the club, and Wolves made it back to the Premier League this season after a six-year absence.

So perhaps it should come as little surprise that the latest film Fosun is backing is about – you guessed it – wolves. Alpha – with Guo as an executive producer – offers clues to why so many Chinese entrepreneurs seem obsessed with the biggest member of the canine family. In one scene, the father tells his son, “In every wolf pack there is an alpha. It is not easy to become the alpha. Even if you become one, you must always be vigilant and never relax. Otherwise, you will soon be replaced by a new alpha, and your status will not be guaranteed.”

The film, set in the last Ice Age, tells the story of a boy domesticating a wolf cub. For authenticity, it is subtitled in an unidentifiable pre-civilisation language (though critics admit that the film mostly features “running, jumping and spearing wild game”, reckons Rolling Stone).

It is only the second feature film to be completed by Studio 8, which is majority-owned by Fosun, following 2016’s Billy Lynn’s Long Halftime Walk, directed by Ang Lee. Its third, White Boy Rick, is set for release later this year. Studio 8 also counts Sony Pictures Entertainment as a partner and minority investor.

“The cinematography is shockingly beautiful. I feel like I was brought back to the environment 20,000 years ago. I’m very satisfied with the experience,” one audience member gushed of Alpha.

“In the film, the story is of people living in harmony with nature and people who overcome difficulties and obstacles to survive. It is very heartwarming. It is definitely a great film for children to watch,” another raved.

Despite the strong word of mouth, Alpha only took Rmb100 million ($14.62 million) at the box office in its first week (Mission Impossible 6, which came out around the same time, took Rmb1.1 billion).

Still, Guo should be relieved that the film was released before the film authorities announced a new ban on ticket subsidies. These are typically offered through online ticketing platforms, but Sina Movie, a portal, is reporting they will no longer be permitted from the start of next month.

The news, which has yet to be confirmed by the authorities, has stirred up heated discussion online. Though ticket subsidies are set to be prohibited through the online platforms, cinema chains may still be allowed to offer discounts at their own box offices or through their own ticketing apps.

The new rules will bolster the cinema operators. In the past, online ticketing platforms like Tencent’s Maoyan and Alibaba’s Taopiaopiao have secured enormous clout by accounting for almost 80% of all movie tickets sold. As a result, they have amassed enormous bargaining power over the cinemas, often pressuring them to cut prices. In the face of higher operating costs and rising rents, operators complain that their margins have been squeezed too far by the two platforms.

Now, minus the same level of pressure from Maoyan and Taopiaopiao, cinema bosses hope to get some of their power back. They may even be able to lure audiences back to their own apps, regaining a closer relationship with their customers, and collecting useful data about viewer preferences.

Still, ticket subsidies have been hugely important for China’s movie industry. Lu Xiao, a studio manager, told Sina Entertainment that some of the slowdown in ticket sales this year has been due to cuts in subsidies, especially in fourth- and fifth-tier cities, where price is a more important factor.

Between 2014 and 2017, the market share of the online ticketing platforms went up 16-fold. The number of tickets sold skyrocketed, reaching 1.6 billion. People who may not have had a habit of going to the cinema were persuaded to try it, as the price of admission fell to Rmb10 and sometimes even less.

Gao Jun, an experienced filmmaker, reckons that lower-tier cities will be hardest hit after the new regulations go into force. “We will experience what subsidy-dependence means. The cancellation of the ticket subsidies will impact the whole market. It is not a matter of how much, it is a question of how long,” Gao told Tencent Entertainment, predicting that demand will slump after the October 1 holiday week, and fail to recover until the Lunar New Year holiday next February.

But not everyone is so pessimistic. Some believe that the habit of going to see the latest film is going to be hard to break. “I don’t think moviegoers only go to the cinema for the cheap tickets. Just like Didi [the online taxi hailing app], a lot of people are so accustomed to using the apps that they won’t be able to break the habit even after the subsidies are over,” a more hopeful cinema operator opined.

Li Jie, president of Alibaba’s Taopiaopiao, is also confident that the ticketing platform will survive without subsidies. “Taopiaopiao is no longer just providing film tickets online – our online ratings and comments have also become an important source and reference guide for moviegoers,” he told Tencent Entertainment.

It isn’t clear if the new regulations will be in place by October 1 – the start of National Day holiday period, which is typically one of the busiest moviegoing periods of the year. But anxious studios are already releasing tickets early for pre-sale to circumvent the ban. Competition is going to be cut-throat: between September 30 and October 1, there are at least 10 new films scheduled to hit the big screen.

What to watch out for in the stampede of new releases? Shadow, starring Deng Chao, Sun Li and Guang Xiaoting – and helmed by China’s most famed director Zhang Yimou – will go head-to-head with comedy troupe Mahua Funage’s Hello, Mr Money. Meanwhile Hong Kong stars Chow Yun-fat and Aaron Kwok also have an action flick called Project Gutenberg coming out during the same period.


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.