Stop the cameras

According to the State Committee for Film and Broadcast Video (SCFBV), Chinese film studios made more movies and lost more money in the first half of 2010 than ever before. The net average profit for the 288 movies that hit screens in H1 was -70%. It’s not for lack of demand: Mainland filmgoers spent US$821 million between January and June, compared to US$913 million in 2009 as a whole. Unfortunately for the domestic film studios, US$400 million of those receipts were generated by imported pictures.

It’s not that no good movies were made, but of the 288 films, 10 netted nearly 60% of the proceeds. Titles like Ip Man 2 and Big Little Soldier did well, as did blockbuster Aftershock (which was released in H2). But the other 278 movies either barely broke even or lost big. Given the poor quality of the films, and the relative shortage of screens on which to show them, some movies flickered in and out of theaters at the speed of subliminal messages. Lotus Flower Rising to the Surface, for example, spent two days in cinemas before sinking back below said surface.

On the market side, there was a lot of stupid money in play. Seeking to move cash into countercyclical industries during the downturn, some naive investors decided to park their money in movies. The glut of cash drove up costs as studios competed for talent and material. Movies are like restaurants: Lots of people think they can make a good one, but few of them are right.

Policy-wise, it’s tough to make money on movies in China for several reasons. For one, shares of ticket receipts are not set by negotiations between cinema chains and studios, they are set by the SCFBV. Theaters take 50% of sales, 5% goes to a state fim industry development fund, 3.3% to the tax man and the rest to the filmmaker. This is hard, especially on smaller studios making riskier films. This means that most of the people writing scripts in China are not individuals, but corporate subcommittees responsible to holding companies. Artistic vision is not a priority, to put it mildly.

Another policy problem is indirect: Thanks to tolerance of piracy, Chinese movie makers earn nothing once the movie leaves theaters. In the US, only a third of a movie’s income usually comes from direct ticket sales; the rest is from DVD sales/rentals and merchandising. Hence there is no Chinese analog of the Western cult hit that makes little at the box office but then pays off steadily for years at the video rental shacks. Chinese film makers need to do better at merchandising, but even if they do, it’s just as hard to prevent people from pirating stuffed animals as it is DVDs.

But solving all of these problems still will not address the fundamental issue: Many of these movies are unwatchable, and Chinese film fans are simply refusing to watch them. Beijing wants to keep control of the messages the film industry sends, so it prefers to deal with large firms it can easily keep an eye on, not a swarm of fly-by-night production houses. This naturally encourages a corporate approach to movies, and also encourages producers to play it safe: Spend a lot on special effects, but keep the script simple. Thus without overt censorship, Beijing has created an industry that restricts itself to four themes: Kung fu, crime thrillers, historical pieces dramatizing the Party’s leadership during [insert crisis], and Luuuv. There’s nothing wrong with any of those themes per se, but if you do the math, the average Chinese filmgoer only needs to watch four movies a year to get their dose. And of course when you consider that those same themes are available for free consumption on TV every day, you begin to understand why foreign films remain so popular. Avatar, for example, was a crap script . But Chinese filmgoers couldn’t get enough of it, simply because the theme was different from any Chinese movie produced that year.

If there is a principle that holds true for all command economies, it is that they produce bad art, and China is no exception. The recent liberalization has been positive, but the most liberalized forms of expression – namely the fine visual arts – are liberalized precisely because their social criticism is exported to galleries in New York, not consumed at home. The irony is that for all the Chinese pride in their culture, the bulk of modern works of popular art produced today – namely movies and music – are lukewarm artistic bathwater. As long as Beijing needs to keep movies on message, there will be only one message. And nobody’s going to pay to see it.