Behind Local Productions’ 8:0 Winning Streak: Chinese comedy blockbusters emerge as profit bonanzas

China box office ended on a high note with 44 billion yuan ($6.8 billion) worth of cinema tickets last year, and what is the world’s second-largest cinema market maintained momentum into 2016 as February recorded a monthly 6.9 billion yuan ($1.05 billion), approximately 25% over US and Canada combined.

In the process, local productions remain dominant as Chinese Spring Festival holiday saw three domestic blockbusters soaring past the coveted 1 billion yuan milestone, with Stephen Chow’s long-awaited fantasy The Mermaid beating Furious 7 as the new all-time champion.

It strengthens the trend of Hollywood losing its market share after a poor 33.3% in 2015. So what happened?

Let’s have a little recap here. Back in 2010, Avatar became the first movie to gross over 1 billion yuan in China box office receipts, almost tripling the former record set by disaster movie 2012. As of June 2015, 10 blockbusters have reached the benchmark, with local and imported movies splitting at 4:6.

Since then, however, not a Hollywood heavyweight scored a touchdown, including numerous high-profile sequels (Mission: Impossible — Rogue Nation, Star Wars: The Force Awakens, and Kung Fu Panda 3 among others). In contrast, up to 8 local productions reached the same benchmark, interestingly enough, 5 of which are comedies. The comedy genre certainly played a key role in retaking domestic market shares since last July.

Also benefiting from their moderate production costs, most of the comedies earned an excellent return-on-investment. For example, Goodbye Mr. Loser, the No.5 top-grosser in 2015(1.44 billion yuan/$227m), cost only 21 million yuan to produce and another 30 million yuan to market. With a combined cost of 51 million, its ROI rate for box office to cost stands at 28:1, one of the best cases last year.

The leggy theatrical run of Goodbye, Mr. Loser can be contributed to several factors: Its word-of-mouth topped among local productions, especially low-cost comedies; It enjoyed a dramatic boost entering the National Day holiday, with no major imported picture competing in the same marketplace; most importantly, it is adapted from a well-told story that has already won audience acclaims.

Happy Mahua Company, established in 2003, has produced 23 stage plays and 3 musicals touring in major theaters across China. Their popular play Goodbye Mr. Loser premiered in 2012, and was finally adapted into a big-screen version last year. In fact, the movies’ box office receipts is times more than the accumulative gross generated from the original plays, which is a clear indicator of the sizzling Chinese market.

Jian Bing Man, ranking No.8 (1.16 billion yuan/$182m), is a totally different case. It originated from the top-tier Internet sitcom Diors Man, which posted over 2 billion total views across 4 seasons. First shot in 2012, Diors Man has become an industry sensation in terms of online viewership and Internet buzz. Riding on an unprecedented pre-release anticipation, Jian Bing Man opened higher than any other comedy adapted from an Internet property, though its mixed review has held back the long-term run for a certain extent.

Also worth noting that Jian Bing Man has a reported cost of 50 million yuan, production and marketing evenly split, quoted by the movie’s producer. In addition to the extensive but free references in the sitcom, Jian Bing Man also conducted a series of road shows to 35 major cities, raising extremely wide awareness among its target audiences. With a box office to cost ROI rate of 23:1, Jian Bing Man endorsed the trend to adapt a recognized IP (Intellectual Property) into a full-length movie.

Of course, not all best-selling comedies came from a freshman filmmaker. Lost in Hong Kong, sequel to former domestic champion Lost in Thailand is a new installment in the Jiong franchise. Returning as director, scriptwriter and leading actor, Zheng XU has every confidence to make another phenomenal crowd-pleaser, and he did a decent job: Lost in Hong Kong grossed a stunned 1.61 billion yuan/$254m, placing itself as No.3 on the yearly chart.

Building on a stable audience base, Lost in Hong Kong also teamed with the leading online ticketing platform Maoyan Movie (subsidiary of Online-to-Offline giant Meituan) as co-distributors, which secured a massive 22,512 screens (a history record) in 5,360 venues on its opening day. It has stirred waves of controversy (extramarital affairs plot, piracy accusation towards competitor), helping push its buzz to a higher level.

Lost in Hong Kong also eked out $1.30m in North America box office, the best stateside performance last year for a Chinese-produced movie by end of 2015. What’s more, two co-productions IP Man 3 and The Mermaid have crossed $2 million respectively as of Feb 28, showing a rising interest for Chinese pictures elsewhere.

There are a lot more reasons to explain the Hollywood collapse in the past 8 months, but local productions’ growing appeal to the audience should be credited front and center, as hundreds of cineplexes are being built in the under-developed areas to attract new movie attenders, who have a natural proximity to those local pictures. Also Chinese film companies are getting more capable in drumming up interest with online promotion. And, finally, around the world as territories grow their box office, local producers generate more money to fund better movies.

Constrained by a limited yearly quota and strict release window for imported movies, Hollywood certainly won’t stop trying new strategies. Kung Fu Panda 3, for instance, is the first foreign flick to extend an extra month of release since 2012’s Titanic 3D, benefited by the co-producing studio Oriental DreamWorks behind it. With a running tally of 980 million yuan ($150 million), it has the best shot at claiming a billion yuan milestone after Jurassic World did it last June.

In fact, Kung Fu Panda 3 is the first registered ‘China-US co-production’ on SAPPRFT’s website, which means DreamWorks Pictures can enjoy a 43% profit-sharing ratio as any other Chinese studio co-producing this movie, instead of a normal 25% percentage. What’s more, regarded as a ‘non-imported’ movie, Kung Fu Panda 3 has a rare chance to compete in the Spring Festival holiday, where it took No.4, and is now running in its second month frame. Besides, the strong Panda-brand awareness and a huge potential of merchandising should be enough to secure a next installment in the franchise.
 
Oriental Dreamworks, lead-invested by DreamWorks Pictures and China Media Capital, is the first China-US hybrid studio, followed by a series of co-operations: Warner Brothers and China Media Capital co-founded Flagship Entertainment Group, a new studio headquartered in Hong Kong, which is aiming to produce and distribute Chinese/English movies in a global background; Wanda acquired Legendary Pictures at a $3.5 billion price , introducing a long list of co-productions targeting at both markets. This is a huge step ahead, compared to simply co-financing individual projects in the previous years.

Nevertheless, Batman v Superman: Dawn of Justice opens in China day and date, which bodes well for cracking 1 billion yuan on a faster pace, unless something goes wrong.

In the next chapter, we’ll have a close look at the fierce competition among online-ticketing platforms, which also drives the incomparable growth of Chinese movie market.