China is weaning off Hollywood

Future. The (complicated) love affair between Hollywood and China may be coming to a close, leaving major studios hundreds of millions of dollars short in both investment and revenue. Meanwhile, Beijing has learned a lot from its brief Hollywood partnerships and is now releasing hit after hit at home. With studios soon no longer needing to tow the line for China, expect Hollywood to either search for its next cash-cow theatrical market or simply focus on the global reach of streamers to launch its biggest titles.

Homegrown hits
China doesn’t feel like it needs Hollywood anymore.

• Despite COVID delays, film regulators in Beijing have expanded its “summer blackout” of foreign films in reverence to the 100-year-anniversary of the Chinese Community Party.
• But discounting the blackout, only 13 U.S. films have been released in China this year — down from 22 by the same time last year and 26 in 2019.
• U.S. films have also only earned $700 million at the Chinese box office, down over 60% from the past few years.

Contributing further to the decline of U.S. titles, China has adopted a zero-tolerance policy for both creators and films that have even a whiff of anti-Chinese sentiment or ideas that don’t align with CCP doctrine. That included a blackout of Chinese native Chloé Zhao’s Oscar-winning Nomadland after it was discovered that Zhao disparaged the country’s government in an almost decade-old interview.

And the hand-slapping now works both ways. When Disney thanked government agencies in Xinjiang that are currently involved in the detainment of Uyghur muslims in the credits for Mulan, criticism from the U.S. public was swift.

Losing the cash cow
That’s not to say that all hope is lost for Hollywood. Despite the government pushback, VFX-heavy titles like Godzilla vs. Kong and F9 did relatively well at the box office before the summer blackout. The same may not hold true for titles that have released simultaneously on streaming services (like Disney+ and HBO Max) — piracy of movies like Jungle Cruise and The Suicide Squad are at all-time high.

While there are still several Hollywood blockbusters awaiting release (if and when they ever get scheduled), homegrown Chinese films have reached new pinnacles of success — this year’s Hi, Mom and Detective Chinatown 3 have already entered the top five highest-grossing films ever released in the country.

As several top Chinese investors in Hollywood have pulled back their cash (Wanda, Tencent, Fosun, etc.), Hollywood studios have lost not only a valuable financing pool for its biggest tentpoles, but also one of its more reliable markets for recouping the costs of those films.