In 2013 film studio Huayi Brothers and comedian-director Stephen Chow bickered over the distribution of profits for Chow’s Journey to the West: Conquering the Demons. The studio argued that it was an investor in the movie rather than solely a distributor, and thus entitled to a considerably higher cut. The two took the dispute to court and Huayi Brothers won.
The two parties now seem to have buried the hatchet. Last week Huayi Brothers announced one of its upcoming releases as Chow’s newest film The Mermaid 2, a sequel to the 2016 original instalment of the comedy sci-fi. The movie stars actor Ai Lun and starlet Lin Yun.
Riding on the success of the military epic The Eight Hundred, which has collected more than Rmb2.9 billion ($428 million) at China’s box office since its release in late July – massively outperforming Disney’s Mulan (see WiC511) – Beijing-based Huayi has risen from the almost dead.
The embattled firm had been in such financial distress that chairman Wang Zhongjun was forced to sell his art collection to keep the studio afloat (see WiC501) as well as some trophy properties in Hong Kong. But the worst of the crisis now seems to be over, as Huayi unveiled a total of 18 new film projects last week for release between now and next year.
In addition to Chow’s film, others on the roster include movies from respected directors like Feng Xiaogang, Jia Zhangke and Roland Emmerich.
News of the schedule of new releases impressed commentators, at a time when China’s movie industry is still battling to emerge from a long period of coronavirus shutdown. “The list of new projects has caught the attention of the industry. Other film studios are busy destocking to survive the ‘winter’ in the market, and releasing new projects is the last thing on their minds. Huayi Brothers is the only one that is soldiering ahead. In some ways, it has given the industry some much-needed boost,” applauded Entertainment Unicorn, a showbiz blog.
Of course, one of the reasons that The Eight Hundred has done so well commercially is the caution of other studios about releasing new films into what is still a fragile-looking market. That – and the moribund outlook for seat sales in most of the world’s other major markets – has given Huayi’s gamble an even bigger payoff, with The Eight Hundred taking pole position as the world’s top-earning film last weekend.
The success of the release has also boosted investor confidence in the studio. When news about the strong takings began to spread, Huayi’s share price started to rise, settling at about Rmb5.5 a share, or a company valuation of around Rmb15.3 billion. That’s a big jump from the Rmb3.2 it plunged to back in April.
Better box office performance has also helped the highly leveraged studio negotiate lower payments on its debt. “At the very least, The Eight Hundred has saved the company [which had lost money for two consecutive years] from the risk of a delisting from the stockmarket,” Entertainment Unicorn also commented.
China’s film industry is starting to show signs of a fuller recovery from the worst of the Covid-19 outbreak. Last week the authorities announced that cinema seat sales could be increased from 50% to 75% of capacity ahead of the week-long break around the National Day holiday on October 1, which is typically one of the peak times for movie watching.
Major releases that were held back earlier this year are being queued for debut on the big screen, including Gong Li’s Leap, a biopic that spans 40-years telling the story of the Chinese national women’s volleyball team. Leap was one of seven major films set for release around Chinese New Year in January, but which were postponed due to the pandemic (see WiC480).
The debate now turns to whether the return of audiences in greater numbers could see Chinese cinemas overtake American ones in total sales this year – a milestone that has been much-discussed for the last two years.
The consultancy PwC doesn’t think so, despite predicting previously that box office take would overtake the US, primarily because of a surge in openings of new screens across the country.
It now takes the view that the pandemic has punctured the more optimistic forecasts for the sector, and that film studios and cinema chains will have less capital to fund their growth plans.
“I think what we’ve seen playing out in the market is the priority for all companies, particularly entertainment companies and definitely cinema organisations, is to try and protect as much as [possible] their current businesses,” CJ Bangah, an analysts at PwC, told the Nikkei Asian Review. That also means that the US should keep its crown as the largest cinema market for at least the next five years, PwC predicts, with total ticket sales reaching $10 billion in 2024, compared to $8.1 billion in China.
Meanwhile Huayi’s chairman will hope The Eight Hundred marks a turning point in his studio’s creative fortunes. “There’s no one in the film industry that has a better instinct than Wang when it comes to finding good stories,” a movie industry insider told Sina.
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