Though Offices, Stores and Schools Have Partially Reopened After the Extended Chinese New Year Long Holiday. Nearly All Film, Television, Animation, and Streaming Productions Are Still Halted Across China.
Not to Mention That Nearly All of China’s 70,000 Cinema Screens Are Still Essentially Closed As Well, Even if Some Are Technically Open.
By Ryan Carroll, Managing Editor
The clarity of when the coronavirus outbreak and the 60 million people quarantine across the expansive cities that surround Wuhan, the capital city of Hubei, will return to normal. Even after the death toll that essentially hit 100 in a single day, on the very day people started going back to work across some of the country. Uncertainty for the China Box-Office and the other entertainment industries are probably the least concerning thing for most people in the Middle Kingdom.
But, it is our business, and it is a business that will help use a common intercultural language, to better understand some finite repercussions of what is going on in the bigger picture that is China and how lasting the effects of this tragedy might be.
With seven major Spring Festival film releases canceled or “postponed” at the end of January for the ten-day long Lunar New Year / Chun jie holiday, it was estimated that the China Box-Office lost at-least $1BnUSD over the holiday period.
Which Fortune Magazine proclaimed that:
China is no longer on track to dethrone the U.S. as the world’s No. 1 movie market this year.Fortune
A claim that Fortune should have checked and ran the numbers, when consulting with their “experts”, as in 2019 the China Box-Office only saw 5.4% YoY growth for $9.2BnUSD box-office gross. While North America had $11.4BnUSD, a down-year compared to 2018’s $11.8BnUSD.
China’s 2018 Year-on-Year growth was 9% so even if we saw the same 5.4% that would give a rounded-up box-office of $9.7BnUSD in China, a deficit of $1.7BnUSD if we go off of the 2019 North American Box-Office.
Even if the China Box-Office saw the same YoY growth of 9% as it did in 2018 that would only equate to 10.12BnUSD, or $1.3BnUSD less than what the North American box-office made in 2019. Either way, China was never on track to over-take North America in 2020, even without the coronavirus COVID-19 outbreak closure.
China is looking to lose an additional $1.86BnUSD here in February on top of the $1Bn it lost over the Spring Festival. For comparison in the 20 days since the Spring Festival, box-office ticket receipts have only measured up to $3.9MMUSD compared to $1.52Bn last year over the same timeframe – according to The Hollywood Reporter.
Of the seven major Spring Festival releases one of them went directly to streaming services, and another February theatrical release also moved to streaming. The ladder was an obvious move by a streaming service as a part of the China Streaming Wars, while the former was a decision made by its distributor. Both were to take advantage of the situation of families being cooped up in their homes with not much to do.
The first was the more controversial of the two, Lost in Russia from Huanxi Media and the third film from the popular comedy Lost in series. Which was viewed more than 600M times in just 3 days, after TikTok owner ByteDance paid $90MMUSD to have it stream for free on all of its short-format video platforms. It even played on ByteDance’s popular news aggregation site Jirin Toutiao.
The other was Donnie Yen’s Enter the Fat Dragon which was not supposed to be released until February 16th but even on January 30th, when the news was announced, the COVID-19 / coronavirus’ effects on the China Box-Office through February, and possibly beyond, were clear to insiders.
Enter the Fat Dragon dropped on Tencent Video and iQiyi simultaneously on February 1st, but it is only available to their paid subscriber tiers which is 95M paid subscribers for Tencent Video and 100M for iQiyi.
To take into consideration how important the Spring Festival-Chun jie China Box-Office is, it accounts for about 8% of the total year’s worth of revenue generated for cinemas according to the China Film Association.
Not only will we have the releases of six major Spring Festival films, and a dozens others (the Qingming or Tomb Sweeping holiday is coming up), that will need to find new release windows later this year – or possibly even next. All film studios, which would include all film, television, and streaming series productions, have been shuttered since January 23rd.
This will result in what some are estimating in 25% of productions across the board being delayed, which could result in many of them not going into production at all because of financial issues due to these delays.
Due to this Hengdian World Studios, the world’s largest outdoor film studio, waved rental fees for halted productions, and exempted room charges to film crews. On top of that they provided a stipend to background actors (extras in Hollywood) for living and room expenses until productions resume.
Hengdian World Studios and neighboring Xiangshan Global Studios on February 13th were to begin the ‘first phase‘ to resume work for all film and television productions, and crews would be allowed to resume work after review and approval (some form of health screen or temperature check).
UPDATE: The film crews who were allowed to return to work, were those who undertook a 14 day quarantine. From what it sounds like at the studio itself.
This does not mean all productions at both studios are to resume, as this will be on some form of “rolling-basis” and it is unclear as of yet when things will go back to full capacity. As Hengdian and Xiangshan Global are just two studios out of many, spanning across the nation which are still reportedly fully closed for operation, that are partially reopening.
This reported 25% delay in productions across the board could have serious implications going into 2021. As not all of these films would have had release dates set for 2020 to begin with. Now with production delays this will inadvertently result in further products being pushed out further – or even canceled – later into this year.
Potentially furthering the issue, as 2019 had already seen a decline by 27% in TV dramas being filmed in China. Part of this may be contributed to the rise of content spend for streaming series by the big three streaming services Tencent Video, iQiyi, and Youku, along with other major players who are making headwinds such as MangoTV. Though analysis on this specific factor will need further data to come down the line in the next year or so, maybe longer due to this strenuous factor of production facilities closed across China through most if not all of Q1.
TV drama productions is not the only space to see a decline, as The Hollywood Reporter states:
China’s cinema building boom recently has been fueled by a parallel surge in speculative commercial development in increasingly rural regions of the country. Well before the coronavirus epidemic, analysts had begun sounding the alarm that smaller theater circuits in less developed parts of the country were over expanding and coming under financial strain.The Hollywood Reporter
This is something that this author has been discussing since 2014 as the building of cinemas and screens in 3rd, and especially 4th and 5th, tiered cities has been at a pace and growth which is beyond the demand of audiences in those regions. Especially now, as streaming services push into the market with free-to-view options.
With cinemas essentially closed and Chinese across the entire country confide to their homes for an extended Spring Festival holiday, for approximately 25 days before work and schools began to resume in limited capacity. One would assume that the big three streaming services would have come out as major winners due to these circumstances.
This does not appear to be the case and there is possibly a few factors at play to explain this.
- Tencent Video, iQiyi, and Youku were not prepare content wise for an event such as this.
- MAU – monthly active users – is at a saturation point, and a major push to acquire more paid subscribers would have appeared insensitive to the epidemic facing the nation, the hundreds of lives lost, and the heroes who are struggling to contain the outbreak.
- Both the Film Bureau and the State informed BAT – Baidu, Alibaba, and Tencent – along with other major studios and distributors that they will face repercussions if they release any more major theatrical films onto streaming platforms before placing them into cinemas.
The big three streaming platforms released 18 online movies during the main Spring Festival period, as had been planned, but none of them became must see hits. Most likely due to the surprise release of Lost in Russia on all of ByteDance’s platforms, and all the other external factors going on in the country.
Of the major streaming platforms there was one winner to emerge and it is Bilibili, the ACG Culture – Anime, Comic, Games – Gen Z Powerhouse, and becoming the YouTube-of-China. Taking over that mantle from Youku, not because Youku no longer has user-generated content (UGC) on its platform and it is solely a scripted content platform. It is because, Bilibili is host to a large group of paid subscribers who have passed a rigorous 100 question anime test to become subscribers, and are allowed to post content on its platform. Providing an incentive for higher quality creation and user work.
Bilibili launched its annual Strawberry Music Festival as a special “Stay at Home” Strawberry concert series from 4 PM to 10PM five days a week around the theme Hi, I’m Home Too.
NOTE. I am going to have to correct my old friend from Hong Kong Patrick Frater at Variety in the link above, that Bilibili is not a short-video app. It is a streaming video app along the lines of Tencent Video, iQiyi, Youku, and MangoTV. Bilibili is the 4th biggest streaming service in China and has the largest user retention rate and time spent in-app among all the streaming video platforms. It also has more Gen Z users than any of the others.
To make users feel connected with one-another Bilibili pushed the use of their popular ‘bullet-chat’ aka danmu feature, where users comment in real time and the comments fly across the screen. To create a shared sense of community.
These events kicked off February 3rd on Bilibili and have hosted 70 different music acts. Of the five top streaming video platforms, only Bilibili is likely to see an organic bump in MAU users and possibly paid subscribers. As their Questionnaire to become a subscriber-user has dropped from 100 questions to 50. You cannot just sign up and start paying, and the crazy thing is, that Bilibili has been listed on the NYSE for over a year now, and saw it shares go up on Nasdaq over this time.
The real “winners” appear to be short-format video apps, especially those from ByteDance, as its Xigua Video (which I had talked about last month as winning the Spring Festival China Streaming Wars) ranked 4th rising from 36th place the previous month, according to App Annie, for non-game downloads. While Jirin Toutiao came in second and Douyin was fourth, but even with Lost in Russia, ByteDance lost out to rival Tencent-backed Kuaishou as it ranked 1st in downloads.
The reason why I put quotation marks around “winners” is because ByteDance’s moves to get its video apps, games, and other apps to the top rankings and downloads during this tragic times may have given it an edge, but in the end it may not have sit well with Beijing and Regulators. As there have been rumblings from within that the major platforms and players not to make moves to take away from things like, 40M Chinese watching the live-streaming of the construction of the hospital being built in Wuhan.
Hopefully the COVID-19 virus will be to handled soon, and things will begin to resume back to normal for the people of China and lives will no longer be lost. If that is the case, we will be looking at April 1st before a normalcy to return to the entertainment sector, but the effects that have already taken place, in cinemas, distribution, animation production, TV, film, streaming, etc. will be felt into 2021.
Stay Tuned China Watchers!
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About the Author
Born and raised in the Missouri-Ozarks Ryan studied Film Production, and East Asian Culture, at the University of Kansas where he was a UGRA recipient that led him on a seven-year long, Journey From the West, to China. Where he worked with Warner Brothers, the China Film Group Corp. and the National Bureau of Statistics of China. Before returning to the States, where he specializes in Chinese Anime & Comics, China’s Box-Office, and Chinese entertainment-tech industries. He has a dog in China, Abigail, and a dog in the Arkansas-Ozarks, King Blue, who help ease his anxiety of suffering from the “Two-Dimensional Complex” that is trying to understand the Culture Industry landscapes of the Middle Kingdom.