Coronavirus outbreak means China won’t become No. 1 film market in 2020, with cinemas closed and major releases in doubt

Pundits had predicted the film business would earn more money in China than the United States this year, put the coronavirus outbreak has put paid to that
While Hollywood is assured of supremacy for another year, it won’t escape unscathed from the crisis that has shut cinemas, with its revenue set to take a hit

Chinese language cinema

Bloomberg

Published: 9:00pm, 7 Feb 2020

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China is no longer on track to dethrone the United States as the world’s No. 1 movie market this year.

The coronavirus has clobbered the burgeoning Hollywood rival, virtually wiping out ticket sales during the recent seven-day Lunar New Year holiday – a week that’s been historically the busiest for box-office collections. Cinemas across the country have remained shut since January 24, while the fear of infection has prompted people to avoid crowded places.

Losses from the collapse of ticket sales mounted to US$1 billion during the festive period, according to estimates by Rance Pow, chief executive officer of cinema industry consulting firm Artisan Gateway. That number is about 10 per cent of the anticipated revenue in 2020, and is set to rise as uncertainty over the outbreak persists.

The deadly virus that’s killed more than 600 people and roiled the Chinese movie market is also threatening to hurt Hollywood, which is increasingly relying on Chinese audiences for growth as domestic ticket sales decline. The Walt Disney Company said this week that the epidemic is a headwind for its studio.

Cinemas across the country have remained shut since January 24. Photo: EPA

“The loss will do significant financial damage to both cinemas and production companies in China, and if cinemas remain closed for several more weeks, the financial harm will expand,” said Lindsay Conner, partner and leader of the entertainment consultancy of Los Angeles-based Manatt, Phelps & Phillips. “With Chinese cinemas closed due to the outbreak, Hollywood’s plans for distributing new films in China are also uncertain.”

Shares of Wanda Film Holding, a cinema operator controlled by billionaire Wang Jianlin, have plunged 26 per cent since January 17. Imax China Holding, which operates giant screens, has tumbled 22 per cent, while Beijing Enlight Media, one of China’s largest studios, slid 16 per cent.

Exhibitors have said they have set no date for reopening cinemas. That means potential delays in China for big-ticket films from Hollywood such as Disney’s Mulan.

China has already overtaken the US in terms of numbers of cinema screens following a building boom that helped box-office sales climb sixfold since 2010. Analysts were predicting the market to surpass the US in terms of revenue this year.

Movie ticket sales in the country, excluding booking fees, rose 4.1 per cent last year to 58.9 billion yuan (US$8.5 billion), compared with 9.7 billion yuan in 2010. Imported films accounted for about 36 per cent of box office sales last year in China, the largest overseas market for US films.

Exhibitors have said they have set no date for reopening cinemas. That means potential delays in China for big-ticket films from Hollywood such as Disney’s Mulan and Pixar’s Onward, which are set for March debuts in the US, according to Pow.

Gong Li and Huang Bo in a still from Leap, a film originally set to open during the Lunar New Year period in China.

For companies such as Disney, the hit is not just on the movie business. Its theme park in Shanghai has closed as well, along with Disneyland in Hong Kong, which had already been hit by the city’s political unrest. Executives at the Burbank, California-based entertainment giant said on Tuesday the theme park shutdowns would pare about US$175 million off revenue in the current quarter.

Chinese-language films whose Lunar New Year holiday openings were cancelled included Detective Chinatown 3, the third instalment of one of China’s most commercially successful comedies, Leap, based on the true story of the Chinese women’s volleyball team, and Jiang Ziya: Legend of Deification.

“Even if the virus ended today, the backlog of films to release – all Chinese – is pretty large,” said Chris Fenton, a film producer and US-Asia Institute trustee. A delay in the China release of Mulan would also raise the question of whether Disney would postpone the US release, he said.

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