China’s growing film, TV, & gaming sector is creating opportunities for Australia’s film industry.
Some snapshots of my 30 page research report (which will be released at my Aus China Film Investment Conference, 4 September, Doltone House, Sydney) includes:
- China’s box office rose ten-fold from $0.72 billion in 2008 to $7.6 billion in 2016, and is expected to exceed the US box office market within a few years.
- China’s gaming industry earned $27.4 billion in sales in 2016, nearly 4 times China’s box office.
- These statistics explain why now is the time for Australia’s creative industry to explore new opportunities from the China market.
- The Aus-China co-production treaty introduced in 2007 saw just 5 films made over the past 10 years. However there are a dozen + being now filmed or planned. While many are Chinese financed & Chinese scripted but filmed in Australia, there are a growing number of Australian films being created for the Chinese market.
- Nearly 700 Chinese feature-length movies were produced in 2016 with fantasy, action and comedy the main genres. About half of the 1 billion+ yuan ($186m) hits were directorial debuts, indicating a new breed of film makers with fresh ideas are on the rise.
- However, just 200 of the 680 films made in 2015 were screened in theatres. The rest were unscreened small budget indie-movies.
- While the Chinese government favours local creatives, it recognises that its film industry needs more expertise. Its film technology may be good but its story-telling skills needs improvement. (A Chinese-Hollywood film teaching school was recently established.)
- The typical movie goer in China is aged 21 and is internet and social media savvy. They are also far more willing to accept product placement. Many Chinese in their 50s have not been to a cinema for 30 years
- China’s film regulators and censors are the gate-keepers for the nation’s entertainment consumption. Developments in recent weeks have included the closure of online sites whose content has been deemed unsuitable in promoting ‘core socialist values’. (Unsuitable content such as sex, extreme violence, drug addiction, lewd celebrity gossip etc).
- Financial regulators have also had impact, the latest being a curtailment of offshore mega investment deals in the entertainment industry. However, analysts say this will ease after the 19th National Congress meeting later this year when President Xi is expected to enhance his power over China’s governance.
(Sources and more insights to be detailed in my report on the Aus-China film investment sector)
Investment deals
- Private sector investment in China’s film industry represented 60%+ of total investments.
- Deals in 2016 and 2017 include:
- A US$50 million film fund by a US and Chinese joint venture (JV) to finance about 15 Mandarin-language tent pole films over three years with contributions of between $3 million and $7 million per film
- A UK/Chinese JV in a $200m deal to co-produce and co-finance a slate of films
- A major film-focussed private equity firm in China raised US$600m for a US dollar denominated fund to invest in entertainment and internet assets
- A Chinese film company and Hollywood agency for a $150m fund to invest in firm projects
Other insights in my report includes
- A list of deals covering Chinese purchases of Western film industry businesses as well as more investment deals to the four above.
- Profile of Chinese and international film/TV ‘hits and misses’ which will assist creatives in analysing what may succeed and what may not for Chinese audiences (there are some surprises here including a key ‘soul searching’ theme.)
- Why Australia’s Significant Investor Visa program can help develop a venture capital fund model for high-net-worth investors to invest in a film fund that in turn invests in a slate of projects and/or film businesses
- Why ‘risky’ film investment can appeal in today’s environment where investors are seeking non-correlated returns to shares, bonds, VC/PE technology and property which many believe are over-priced, as well as benefit from the China market ‘tailwind’
- Analysis of new film/TV investor sources such as Australian corporations and government agencies (tourism, education, food, premium brands) who are entering the Chinese market and are seeking visibility in the mass-consumer market
I will be soon announcing the initial batch of speakers and sponsors of my Aus-China film investment conference. In the meantime, please save the date 4 Sept Sydney, and don’t hesitate to contact me for further details.