04 Jan 2021 4:50 PM

Hollywood has held a near monopoly over global box office cinema revenues for almost the entire history of cinema.  Well, that is until now!  And, as the wise ‘prophet’ Bob Dylan forecast: ‘The times they are a-changing’.

There have been two major changes to box office revenues.  From a dominant domestic US market until around the turn of the century, world box office receipts have since caught up and subsequently overtaken the American share. And the second change is happening now: The Chinese Box Office Phenomenon.

Until around the start of the 1990s, US ticket sales dominated global cinema ticket revenues; the huge markets of China and India were either closed or in their infancy. The UK, and the rest of Europe, were making great, critically acclaimed films throughout the twentieth century, ‘Battleship Potemkin’; ‘Brief Encounter’; ‘La Dolce Vita’; ‘Les Enfants du Paradis’; ‘Belle de Jour’; ‘The Rules of the Game’; ‘The Red Shoes’;  ‘Le Mépris’; the list is endless, but these films did not break the bank at the US box office. There were exceptions of course – notably the Bond franchise – but it’s fair to say that until the 1970s/1980s, the domestic US box office was where Hollywood looked to recoup its costs.

The shift towards the importance of the international market can be readily seen with the Star Wars numbers.   The first Star Wars film, released in 1977, earned the same revenue, $307k, outside the US as it did domestically.  The second Star Wars movie released in 1990, earned more in revenue outside the US, and this trend has continued. By 2000, the year of ‘Mission:Impossible 2,’ the US box office accounted for only 39% of this movie’s receipts.

And now a new challenge or economic dynamic has entered the discussion, in the shape of China. In the past 15 years, the box office revenue in China has increased 35 fold. In 2019, the Chinese box office amounted to $9.7bn, not far behind the USA box office of $11.1bn. In 2020, the Chinese box office finally overtook the USA.

This is due, in no small measure, to the Covid fallout.  China’s effective containment of Covid has enabled it to reopen its film market much quicker; their box office revenues up to November 2020 were $1.988bn compared to £1.938bn in the USA. The world’s greatest hit in 2020 was ‘The Eight Hundred’ which took $461k; not heard of it?  Well, it’s a Chinese movie with only limited foreign distribution.

In 2005 China had 4000 theatre screens, only slightly more than the UK. By last year there were 70,000 which is equal to the combined number of theatre screens in whole of Europe and the USA. During the last 10 or 20 years, local Chinese filmmakers have learnt and enhanced their craft by working on Hollywood films shot partly in China. Today, Chinese producers are making films such as ‘The Eight Hundred’, a war movie, and sci-fi productions such as ‘The Wandering Earth’ which took $700m last year.  These films are popular with Chinese audiences, particularly those outside Beijing, Shanghai and other big cities.

Ultimately the decline of the US box office in this new world is perhaps not all bad news. Film takings at the theatre are often eclipsed by the income generated by television rights, merchandising, video game licensing and so on. It could be considered a sound business strategy for Hollywood to make films that go straight to streaming, for instance Disney with Mulan.  For Disney, a film is the driver for a far bigger economic dynamic. Whereas in China the box office tills keep ringing and receipt revenues keep growing.