IRON MAN 3 Ends Chinese Drought for Hollywood

IRON MAN 3 Ends Chinese Drought for Hollywood

Ben Kayser, Associate Editor, and Tom Snyder, Editor

IRON MAN 3 apparently has ended a brief drought in box office sales for Hollywood in China.

High budgeted Hollywood blockbusters rely heavily on box office sales in overseas countries like China. In 2012, THE AVENGERS and MISSION IMPOSSIBLE: GHOST PROTOCOL alone brought in nearly $200 million and they held the box office lead for 23 weeks straight.

This year, however, Chinese box office sales for American movies have fallen 62 percent, while domestic movies made in China have increased 128 percent. Movies like OZ THE GREAT AND POWERFUL, THE HOBBIT, and JACK THE GIANT SLAYER have been slaughtered by low budget local Chinese movies.

So far, that isn’t true of IRON MAN 3, which Wednesday broke Marvel’s record opening day take of $18 million for THE AVENGERS in 2012 with $21.5 million.

Part of the problem with China is due to the restrictions that the Chinese government puts on American and other foreign movies, including Chinese government officials imposing a two month blackout of American movies and promising to pay theater owners if domestic movies make less money than American movies.

More than that, however, the Chinese people may be growing tired of the stories Hollywood produces.

Michael Andreen, a consultant to the Chinese media, said, “The change is that Chinese audiences want more from Hollywood movies – not just spectacle, but stories that engage them.”

To end the drought, Marvel and Disney bent over backwards to win over the Chinese audience for IRON MAN 3. First, they built up the hype for their new superhero action flick with costly marketing campaigns and a highly publicized event that was attended by the stars of IRON MAN 3. Secondly, the movie was partially shot in China and even has scenes tailored to appease the Chinese audience.

Though some bloggers expressed consternation over several product placement shots containing Chinese products, Chinese audiences seem to be embracing the movie warmly otherwise, especially considering the record-setting box office on the first day.

There’s only one fly in the ointment.

The Chinese government recently asked Hollywood filmmakers to start paying a new value added tax on their gross profits.

Earlier, China had agreed to let foreign studios get back 25 percent of Chinese box office revenue, an increase from the previous 13 to 17 percent split. Hollywood studios are now contending that the attempt to impose the tax on those profits violate the new 25 percent agreement.

According to the Hollywood Reporter on Wednesday, “If there’s no resolution, the Office of the U.S. Trade Representative could appeal to the World Trade Organization.”

Meanwhile, because of the new proposed tax, Fox declined to accept its $23 million from box office receipts for THE LIFE OF PI minus $2 million in taxes because taking the money would indicate acceptance of the tax.

“It’s unclear whether Marvel will hurry to cash any of its checks” from China for IRON MAN 3, the Hollywood Reporter noted.

Sources:  The New York Times, 04/21/13, and The Hollywood Reporter, 05/01/13.


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