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The Rise of China's Box Office Market and Its Implications for Hollywood

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Hollywood's looking to exploit the growing Chinese market, but some worry about the undue influence China will have on American movies.

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The Hollywood Colonization of China

In so far as there is a winner in the Hollywood-Getting-A-Foothold-In-China versus China-Becoming-Increasingly-Influential-In-Hollywood narrative, it might be, at this point at least, Hollywood. US-made blockbusters now dominate the Chinese box office.

As of May 30, when Men in Black 3 topped the chart, Hollywood films had been No. 1 for 19 weeks in a row, as Robert Cain at The Wrap points out. From February to May, Hollywood's share of the Chinese box office was an overwhelming 77%, powered in large part by blockbusters like Fox (NWS) and Paramount Pictures' (VIA) production Titanic 3D and Warner Bros.' (TWX) Wrath of the Titans. With the annual foreign film quota recently upped from 20 to 34, this Hollywood domination, notes Cain, is likely to continue and even increase.

Consider also the influence of American blockbusters. Even though they are getting de-Americanized and are including more of China and Chinese characters, the subtext of Hollywood big budget extravaganzas is still the championing of American values. Hainan University professor Bi Yantao writes in the state-owned China Daily, "Hollywood movies seek to build a national image characterized by freedom, equality, prosperity, and other positive aspects. Concepts such as 'freedom' and 'equality' are reinforced through the story lines."

He points out the examples of Avatar, Harry Potter and the Deathly Hallows: Part 2, and The Lord of the Rings: The Return of the King, saying:

All three of which are well-crafted examples of one of Hollywood's favorite tropes: The leader who embodies American values and his allies confronting and overcoming the "forces of evil" in pursuit of the principles of the Declaration of Independence that "all men are created equal" with "certain unalienable rights" among them "life, liberty, and the pursuit of happiness."

Ostensibly, it can be argued that instead of Americans getting a whitewashed view of the Chinese, it is the latter who will be affected by the soft power influence of American films and be encouraged to, as Stephen M. Walt, author of Taming American Power, says, "embrace [the US'] particular vision of a liberal-capitalist world order."

China and Movie Piracy

Where there is an uncontested win-win situation for both Hollywood and China is surely in the realm of intellectual property rights. Hollywood is known to be uptight about movie piracy, what with its steadfast support of the Stop Online Piracy Act, so you might think that it would be a bit squeamish about increasing Chinese access to its products. However, though China is infamous for its piracy issues, it has actually cleaned up its act by quite a bit, says Namer, who says that there's been a noticeable improvement in the movie piracy issue in China in the last two years.

"I wouldn't say the problem is solved, but clearly we see that many of the big online portals like Sina (SINA) and Sohu (SOHU) have gone public, so they do many more legal licensing deals and are now paying to stream videos. As such, they too have a vested interest in improving piracy because it affects their business," Namer observes. "So I think it's the beginning of a process, but change has been very dramatic and noticeable."

It's All About the Money

Ultimately, Namer says that perhaps too much has been made about the possible effects China might have on the movie-making business, and that when it came down to it, Hollywood is just all about the numbers game.

"I think movies get made in Hollywood based on what people think will sell tickets. People get too much credit for thinking deeper than they actually do. In the movie business, they just think: What movies will get people to place their butts in seats? What movies can I sell tickets and popcorn to? I don't think the industry moves as much in the political sphere as people might think."

Twitter: @sterlingwong
No positions in stocks mentioned.
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