Success of Warcraft in China helps US open door to audience of 1.4 billion

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But the huge potential rewards are also attracting Chinese investment in Hollywood businesses

Red and blue banners decked out the cinema in Beijings Sanlitun district as eager World of Warcraft video game disciples bustled inside for the film premiere.

It was after midnight on 8 June and fans of the blockbuster game had queued for ages to see the big-screen version. But the late hour did nothing to dampen the carnival atmosphere: fans had come armed with game props, and were in costume, or at least wearing T-shirts with official logos.

Cinemas across China were decked in the colours of the hit video games opposing camps the blue Alliance flag and the red Horde banner. Seats were also split between red and blue. He Shuai, a 27-year-old World of Warcraft devotee, told newspaper Shanghai Daily: It was like a festival.

By the end of its first week, the popularity and huge commercial success of the film was threatening to turn Chinas relationship with Hollywood on its head.

The $160m film Warcraft was a critical and financial flop in the US, making just $24.4m in its opening weekend. The story in China was completely different: the film racked up a whopping $156m in its first five days more than Star Wars: The Force Awakens did in its entire theatrical run ($124m).

The success of Warcraft the film was partly down to the huge and fanatical following the gaming franchise has in China, where about half of its 5 million players live.

Travis Fimmel and Paula Patton in a scene from the film Warcraft. Photograph: AP

Chinas influence on Hollywood has been growing for some time, but many in Tinseltown believe the industry has reached a watershed moment. They predict that US studios may soon start making films just for a Chinese audience.

Dalian Wanda the Chinese conglomerate that owns Atletico Madrid football club, AMC Entertainment (the second-largest cinema chain in the US), as well as Wanda Cinema Line, the biggest chain in China snapped up US film studio Legendary Entertainment for $3.5bn at the beginning of the year.

Wanda is controlled by Chinas richest man, Wang Jianlin, who has an estimated fortune of $27bn. It is the first Chinese group to own a major Hollywood studio.

Wanda Cinema already has made tremendous development in China, but it isnt enough, said Wang. Movies are global, and our company certainly wants to add its voice to the world film market.

Legendary has produced several big-budget blockbusters, including the Dark Knight trilogy, Jurassic World and the Hangover franchise. Crucially, it was also behind Warcraft.

The marriage of Legendarys film-making experience with Wandas giant network of cinemas brings the prospect of Hollywood blockbusters being made specifically for China a lot nearer.

Jeff Bock, of research firm Exhibitor Relations, summed up the thoughts of many pundits: Warcraft is a juggernaut in China, but was a non-event in North America. What if they didnt even attempt a domestic [US] release with the sequel?

The power of the Chinese market to make or break a film is now so great that Hollywood has already started to tailor its films to that audience.

Iron Man 3 altered its storyline so as not to offend Chinese audiences. Photograph: Sportsphoto/Allstar

Superhero film Dr Strange, out later this year, had to change a key character from Tibetan to European in order to avoid causing offence. In 2013, Iron Man 3, the story of what was once a Chinese-born villain was also altered; and Dwayne The Rock Johnson has just signed to star in Skyscraper, a version of Die Hard set in China.

The message for Hollywoods money men is clear if you play nicely, you will be handed the keys to a market of 1.4billion potential cinemagoers, who are forecast to spend $15bn by 2020.

Such huge potential rewards have attracted investors like A-listers to a red carpet. After the Wanda deal, Tang Media Partners, created by businessman Donald Tang and backed by Chinese internet firm Tencent, bought IM Global, a Hollywood film financier and sales agency. The deal also involved China Media Capital (CMC), owned by media mogul Li Ruigang, and film production company Huayi Brothers.

CMCs Li has also done deals with Warner Bros, and state-controlled operator Hunan TV & Broadcast has invested in Lionsgate, the studio behind The Hunger Games and TV smash Mad Men.

Tang believes that rising demand for Chinese-themed content will result in two of the six major US studios being Chinese-owned within 10 years.

Investors from the Peoples Republic have stepped up moves to cash in on the increased spending power of a burgeoning middle class, whose per capita income has risen 20-fold in a generation. Evidence from box office receipts suggests the appetite for cinema has defied the slowing economy, and some see the Chinese movie market as having significant growth potential.

At present, the Chinese market is worth almost $8bn, and growing. It is set to overtake the US next year as the worlds biggest box office, according to the Hollywood Reporter.

That may not seem too surprising for a large country with increasing levels of wealth. But it has achieved this at a time when Chinas State Administration of Press, Publication, Film and Television allows only 34 foreign-made films to open in the country each year.

This strict quota, along with the threat of censorship, means that not all American blockbusters are given a crack at this giant market and it also means that studios have to choose which films they want to place there.

A cinema audience in Wuhan, in Chinas Hubei Province. Photograph: ChinaFotoPress/Getty Images

Under Wandas ownership, Legendary should have a better chance of its films being screened in China not least because it owns Wanda Cinema Line. Owning both a production studio and cinema chain is a vertical business model that was outlawed in the US on competition grounds in a landmark 1948 case against Paramount Pictures which led to the demise of the classic Hollywood studio system.

But this integrated content and distribution model was a boon for Warcraft. The film appearing on 67% of Chinas 39,000 cinema screens, with screenings scheduled through the night to satisfy demand.

Zeng Maojun, president of Wanda Cinema Line, says China is adding 15 screens a day and reckons the number in the country could double to as many as 80,000.

With booming box office receipts and increased control of both the production and the distribution of Hollywood films, it is difficult to see how anything can halt the momentum of Chinas movie juggernaut.

Jackie Chan, the high-kicking martial arts film star, summed up the shift at last months Shanghai film festival. Warcraft made 600m yuan (64m) in two days, he said. This has scared the Americans. If we can make a film that earns 10bn yuan (1bn), then people from all over the world who want to study film will learn Chinese, instead of us having to learn English.


Yuan, billions

FURIOUS 7 2.426

Source: China Boxoffice

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