Posters from the film “Despicable Me 4”, the film “Stand by Me” and the film “A Legend” are exhibited at the entrance to a cinema on July 16, 2024 in Shanghai, China.
VCG | Visual China Group | Getty images
Hollywood is trained in President Donald Trump’s trade war.
After Trump has intensified prices on imports from Chinse earlier this week, the Chinese government retaliated, in particular by restricting the number of Hollywood films that it would allow to be presented in his cinemas.
Disney And Discovery Warner Bros. were one of the companies that saw their actions drop this week during volatile negotiations in response to tariff changes. The two actions were negotiated early Friday.
The Chinese box office was once a coveted space for American manufacturing films, so much so that the studios produced films that would directly appeal to an international audience. However, while China has expanded its local cinematographic production, its audience has gravity towards the country’s interior prices, and Hollywood films have experienced a significant drop in sales of the region.
“The Chinese market has become very difficult for American studios,” said Ann Sarnoff, former CEO and president of Warner Bros. “The 25% rental rates were already considerably lower than other markets, and in recent years it has become more and more difficult to bring your film into the Chinese market.”
The public prioritizes local Chinese films, she added.
“It really affects the economy of studios based in the United States,” she said. “They could count on the Chinese market to help strengthen the benefits of a film. Now, when the studios make financial estimates for a given film, they put much less, or in some cases, zero, in the projections of the Chinese box office.”
The expiration in 2017 of the American Cinematographic Agreement, which guaranteed that 34 American films would be published for a year in China, did not help, said Aynne Kokas, professor at the University of Virginia and author of “Hollywood made in China”.
“During the First Trump Administration Trade War with China, the emphasis was on trade negotiations in many other sectors, and the films were not in good place. And during this time, the China box office began to grow quickly,” said Kokas.
The Chinese cinema market has increased with the increase in more sophisticated technology, which produced market blockbusters, she added.
In 2019, nine Hollywood titles generated more than $ 100 million at the Chinese box office, with Disney and “Avengers: Endgame” by Marvel Studio collecting more than $ 600 million in the region. Over the past five years, only eight American films have generated more than $ 100 million and only one dollars exceeded $ 200 million, according to Mojo box office data.
Meanwhile, the Chinese interior films market is booming. This year, the Chinese film “Ne Zha 2” has become the only film in history to generate a billion dollars at the box office in a single market and is now the only non-Hollywood film to cross $ 2 billion at the world box office.
Although the decrease in versions of Hollywood films will have a slight impact on the global box office for certain successful features, sources of industry told CNBC that the real economic problem for Hollywood is the weakening of money.
Box-office yields arrive at a higher rate internationally when the dollar value is lower. Of course, the compromise is that the cost of business increases, they noted. Given the volatility of the stock market and the flow of pricing decisions, Hollywood leaders are not sure of the ultimate impact of this trade war on industry.