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Noctis

Should China be counted separately from the rest of the OS markets?

Should China's grosses be separated from Overseas' gross?  

45 members have voted

  1. 1. Should China's grosses be separated from Overseas' gross?

    • Yes, China should be separate from Overseas Grosses, starting as soon as possible
      15
    • Yes, China should be separate from Overseas Grosses, but after ___ amount of time
      3
    • Yes, China should be separate from Overseas Grosses, but after a movie grosses ___ amount of money
      1
    • No, China should not be separate from Overseas Grosses
      17


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If Pacific Rim 2 does 500m WW with 475m coming from OS and 450 of that coming from china, wouldn't it be weird to say Pacific rim is more popular OS than Star Trek?

It was popular in China, and yes I know we can do this for each market blah blah blah .

But the reason is its always been DOM and OS because the markets have always been kinda equal. OS ticket sales and grosses for the year were in line with Domestic for the most part.

We are heading to a point where that is no longer the case. 30% of movies aren't going to do better OS then DOM anymore. 80% of movies are going to do better OS. Times change. Discussing China being counted separately is only logical.

Plus since only a handful of films get released there at the moment I think its safe to say it could be counted differently.

What about smaller dramas that do good numbers in Europe but get no release in Asia. That could be misleading in thinking they were successful worldwide when actually a huge part of the market had no interest or wasnt aware of them. A huge chunk of their results are coming from one region but it's not separated when it comes to box office results.

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No, you're not. DH2 was a perfect example to use that shows how much China's exploded in the past few years. 

 

I don't need to "bump Potter's tires." Potter is, and has always been, the OS king. 

 

No it's not, James Cameron is and has always been OS, WW and Domestic BO king. 

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When China's market equals the North American(U.S. and Canada) market then it should be counted as separate. China has to make the $400 mil to $600 mil range before it should be counted separately from os markets. However, Furious 7 is out grossing the North American market in China, so it's up for debate on whether it should be counted now as a separate market. With a market this huge, separating China from the markets would make accounting for box office revenues much easier as studios can thoroughly analyze all the revenue gained from the market.

Edited by movieboner
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When China's market equals the North American(U.S. and Canada) market then it should be counted as separate. China has to make the $400 mil to $600 mil range before it should be counted separately from os markets. However, Furious 7 is out grossing the North American market in China, so it's up for debate on whether it should be counted now as a separate market. With a market this huge, separating China from the markets would make accounting for box office revenues much easier as studios can thoroughly analyze all the revenue gained from the market.

Studios are already aware of how much revenue they are getting from each country.

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People talk about China separately anyway, so it doesn't really matter. The real question is how much longer North American box office will be deemed important enough to be talked of as equal to the rest of the world.

This is an interesting avenue. Maybe in the future it should be counted as China and Worldwide including NA.

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Maybe that structure doesn't work anymore, why keep something that doesn't work?

Why doesn't calling something what it is work? The stupidity in this thread is pretty hilarious. Overseas means Europe & Asia mainly, it's not that hard geographically or logically to understand why this has and will continue to be the case durrrrrrrrrrrrrrrrrrr.

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Then, given Frozen grossed $250M in Japan, it should be viewed separately as well.

Completely different situations, Japan never experienced this phenomenon China is experiencing, it has always been a stable market, Titanic made 201m almost 20 years ago for fuck's sake.

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USA, China and rest of the world is the way it should be, at least in BO dedicated websites. 

You know something is wrong when you have to take China's gross out of the equation every time you want to analyze an OS performance.

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USA, China and rest of the world is the way it should be, at least in BO dedicated websites.

You know something is wrong when you have to take China's gross out of the equation every time you want to analyze an OS performance.

Why should it be taken out, China is part of a movies overseas performance,

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Why should it be taken out, China is part of a movies overseas performance,

I will make this easy for you

 

I agree with Noctis here, China exploding so fast makes it really hard to compare total OS numbers. A prime example is Transformers, AOE's 845m make us believe that the franchise is still on the rise, when that's not actually true. It's like comparing adjusted numbers, except that it won't take 15-20 years to make a comparison invalid, just around 2 years or so.
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HP3 made 2.5m, DH2 made 60m

The first Spider-Man made 5m, TASM2 made 94m

Pirates 1 made 2.9m, Pirates 4 made 70m

the first Lord of the Rings made 6.9m, the third Hobbit made 117m

TF made 37m, TF4 made 320m

FF6 made 60m, F7 will make around 400m

and the biggest example, Titanic made 40m in 1997, the freaking release made almost 150m.

not seeing that something is wrong is beyond me

Edited by Goffe
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Why should China be separated from the other international markets when it's an international market? Domestic is called domestic because Hollywood is an American industry. Simple as that.

You don't need to agree with anything, but posts explaining your question are here.

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I think Firedeep meant to post this in this thread

 

 

Some really interesting topics are going on here so I would also like to cut in a few words. Correct me of I am wrong.

First of all, the RULE is, HW accounting is one of the greatest mysteries in the world’s history so it is almost impossible for us outsiders to know exactly how many profits a certain movie ends up making or where those profits comes from.

That said, it is believed that HW studios generally pull back about 50% of their movies box office from North America theaters. This is probably very close to the truth. I have heard many people mentioning that HW could get as much as 40~45% (I am not sure if this is the real case) out of the total box office their movies produce in many overseas countries, except China, where the revenue-sharing rate currently is only 25%.

One thing I am certain about is that out of the same amount of 100 dollars box office, HW studios make less profits in any overseas country than in the domestic market (aka, North America). This is very understandable, as in the case of transnational corporations, every country will naturally try to keep money stay at home as much as possible. Obviously, there is a big difference between doing business domestically and doing business in a foreign nation. If you are an Italian, you would agree that, the less money flows back to Starbucks American headquarters from your country, the better, even though you Italians hardly drink Starbucks.

North America (US/Canada) is the biggest film market, all things considered. HW studios make most of their profits there. No doubt. However, people often forget about P&A and other costs. Easily, the marketing cost and distributing cost in North America is also the most expensive in the world. Maybe HW studios indeed get some 40~45% from most developed international markets but remember that 40~45% is before tariffs. Also, HW studios’ operating costs in developed markets trend to be substantially higher than in developing markets like China and India. To HW studios, 40% (just an example) in France is different to 40% in Italy, let alone to 40% in India, even if a certain studio movie makes the same amount of box office in these countries. Similarly, to HW studios, 25% in China doesn’t necessarily mean less pure profits than 40% in France, even if a certain studio movie makes the same amount of box office in the two territories.

To make it short, comparing the ratios HW studios get in different markets is totally meaningless without knowing/factoring in the tariffs, operating costs, exchange costs, etc. However, people constantly bring up that 40~45% vs 25% comparison, sounding like they are sure that HW studios earn significantly less in China than in any of the rest overseas countries, when their movies make the same amount of box office in the two palaces. Let’s not even look at the fact that box office gross of China for most HW big movies is soon completely overshadowing that of any other overseas market.

There was an article (http://www.edwardjayepstein.com/foreigndemyst.htm), courtesy of dezorz, in which Disney only claimed a net profit of $18m out of the $130m overseas box office Gone in 60 Seconds made back in 2000. Not sure if that article revealed the truth but the numbers it provided should not be too off. In other words, HW studios could be getting only 14% (18/130) from overseas box office in early 2000s. Perhaps the ratio has improved today but we don’t know exactly. And keep in mind, that 14% mentioned above still included studios’ operating costs on that individual film during its release (in different countries) so the real pure profits the films’ overseas box office had generated for Disney must be even less than $18m.

The film industry might be very small, compared to cars, food and real estates. But it is still a very costly one and the profit rate is not as great as some of us imagine. In fact, the majority of films lose money to varying degrees for producers across the world, Korean or HW, with only a small group of them making decent profits. The point is, don’t look at the millions of dollars HW big movies gross at the worldwide box office and say a few bucks in China doesn’t matter at all. Just the opposite, without the $25m~$100m from China, many of these movies could be in losing money status. At the very least, every penny counts.

In this post, I will not talk about what a $20 billion China film market means to HW, either on cash flow, financiering or content producing.

In 2017, when China and HW negotiate for another time, I believe the quota—currently 34 revenue sharing based foreign titles per year—will expand substantially but don’t expect the revenue sharing ratio—currently tax-free 25 percent of the box office—go significantly higher as there might not be enough room for it to go up.

There is a reason why the ratio was settled down at 25%. Firstly, I believe, that 25% is actually fairly close to what HW studios get in most other markets excluding taxes and some PA costs. I.E., 25% is already very much. Secondly, it is an equilibrium point that China and HW has reached under current situation. In other words, 25% is almost the upper limit the current Chinese distributing system can offer HW. (Apparently, China has the market while HW has the product so I would say both sides basically have the equal number of bargaining chips.)

FYI, generally speaking, the local producers only end up get 33% of a Chinese homegrown film’s total China box office. So there is a 8% gap between 33% and 25%. And where does that 8% go ? —CFGC, the official distributor of every revenue sharing based foreign title. Simply, HW studios, unwilling or not, pay CFGC 8% of the box office so the latter will distribute their movies in China. For comparison, for a local film, a Chinese local producer usually claims a distributing fee equaling 2~6% of the total box office. Bear in mind that, CFGC is the biggest and most powerful stated owned film company in China so it is inevitably that they will ask for some high distributing fees.

As such, unless its duty of distributing foreign (revenue-sharing) films is cancelled by SARFT, which is unlikely to happen any time soon IMO, CFGC is not going to easily give up the opportunity of making some great profits by handling HW big movies. That said, theoretically, even under CFGC’s hand of distribution, the ratio for HW studios could still rise, if SARFT somehow decides to cancel the 5% Special Fund or the 3.3% Theater Operating Tax or both. Side note: every release in China, Chinese homegrown or foreign or coproduction, must pay the 5% and 3.3%, the former mostly for China’s theater building while the latter for …tax.

Simply stated, the prime duty of SARFT, now called SAPPRFT, is to manipulate people’s minds. CMP is very unconfident. As long as they feel the needs to manipulate people’s minds to keep their ruling stable, SARFT will exist and so will the rigid censorship on film, TV, Press and Internet. And as long as the rigid censorship exists, Chinese films will remain poor quality with weak competitive power. As long as Chinese films have weak competitive power, there will be all kinds of restrictions on foreign films in China to keep the (box office) market balanced.

And sadly, comparing with many other industries, the film industry is still such a small one. For comparison, Volkswagen, the company alone generated a net profit of 5.2 billion EUR from China in 2014.

On the bright side, maybe when it grows big enough, the market itself could have more saying power. At the rate it’s going, by 2023, China could have a $20 billion box office market and a $30 billion-plus film market overall—believe me, China’s economy might be slowing down to 5~7% YOY but its box office hasn’t reach it’s a mid-point.

For most industries, I believe in free markets. Hopefully China will become more and more open.

Things can only happen step by step.

PS. Feels like I have forgotten to cover one or two more points here. Remind me.

 
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