Conflict movies lift China’s second-half box office as studios find more yuan in every bang

With Wolf Warrior 2 crossing the 5 billion yuan (US$749 million) mark at the mainland Chinese box office on Sunday, analysts see the trend of patriotic military and action films continuing, not only boosting sluggish Chinese movie ticket sales in the second half but also lifting the fortunes of companies that invested in the smash hit.

One of the hottest topics for discussion on the mainland this summer, Wolf Warrior 2 tells the story of the rescue of Chinese nationals caught up in a fictional African revolution. It has created China’s own super hero, Leng Feng (played by director Wu Jing), in the mould of western fictional characters such as James Bond and John Rambo, who are deeply patriotic for their country. Patriotic themes are now seen as essential to winning a bigger share of the mainland movie market that saw 1.3 billion tickets sold in 2016, according to analysts.

Since opening on July 27, the film has brought in around 5.06 billion yuan in ticket sales in China, according to data compiled by Chinese box office monitoring site Mao Yan. It is now the country’s highest-grossing film in history, surpassing the 3.39 billion yuan Hong Kong fantasy romance film The Mermaid which topped the mainland box office last year.

“A large number of the movie goers to this film are young and patriotic Chinese born in the 1980s who are now in their early 30s and have spending power,” said Qiao Mu, a former journalism professor at Beijing Foreign Studies University.

“With limited entertainment choices [as a result of government censorship of foreign content] it seems natural for them to crave patriotic-themed films,” he said. The central government has ordered the removal of a number of foreign and animated films from the country’s popular video streaming sites, which had been major entertainment sources for the country’s youth.

With the final ticket sales tally for Wolf Warrior 2 expected to be 5.5 billion yuan, the net return on investment ratio could be 782.6 per cent or 1.8 billion yuan for the film’s production companies, while movie distributors could pocket 343 million yuan from the box office, according to Citic Securities.

“One of the major reasons for Wolf Warrior’s huge success is that domestic military themed films are in [a golden era] whereas other film genres face the problem of being highly homogenised,” wrote Citic analysts covering the media sector.

Action films that include elements of romance would lure a much larger audience if they include patriotism, said the brokerage.

“Adding patriotic elements into action films would evoke people’s resonance more easily as it can achieve the goal of combining ‘small love’ with ‘great love’, and can thus become a ‘national’ movie,” the analysts said.

Five Jingxi executives plan to profit-take after shares rally off the back of blockbuster Wolf Warriors II

In China, the term“small love” is often used to refer to people’s affection toward family and friends, while “great love” means one’s passionate love for their country. In a nation that has put so much emphasis on collectivism, “great love” almost always ranks ahead when it comes to emotions.

As proof of the huge financial potential of patriotic films, stocks of the companies that invested in Wolf Warrior 2 have soared. One of the major investors, Beijing Jingxi Tourism Development Co, saw its shares soar by more than 66 per cent at one point, adding more than 6 billion yuan to its market capitalisation.

The reason for Wolf Warrior 2’s runaway success in China is what’s keeping Western viewers away

As such, the bubble created by the inflows of capital that invested heavily in romance and celebrity-heavy movies will burst, according to Citic. However, thanks to the new breed of action films, China’s box office is expected to recover from its sluggish performance in 2016 by adding 15 to 20 per cent growth in 2018-2019, said Citic analysts.

“With the low base of China’s ticketing sales in 2016 due to excessive ticket subsidies, the film sector is looking good and should have a high growth rate in the second half,” said Zhang Heng, an analyst from Guosen Securities.

Box office figures in 2015 were inflated by the practice of ticket subsidies where film producers and distributors paid money to online platforms to sell tickets at discounts.

“With more high quality domestic films expected to be shown in the second half, the audiences long lost passion for domestic films could be reignited and thus boost the box office in the second half,” said Zhang.