5 Ways China Is Giving Hollywood Studios a Run for Their Money

The Mainland’s mind-boggling growth, homegrown box-office hits, animation inroads and — gasp! — superheroes are changing the game

The movie industry in China is growing at such a blistering pace that it’s difficult to comprehend, much less keep up with. But Hollywood and American moviegoers should try, because China won’t be the world’s second-largest movie market for long.

Revenue from the Chinese box office hit $3.3 billion in the first half of 2015, up a staggering 50 percent over the same period last year. It could go as high as $7 billion by year’s end, or roughly two-thirds of what the U.S. film industry generated last year.

It doesn’t take a math genius, or an abacus, to figure out that those numbers and that growth rate signal that China is on the verge of overtaking the U.S. as the top movie market in the world. Nearly 30 new theaters are opening in China every day, the nation’s State Administration of Press, Publication, Radio, Film and Television recently announced.

It’s easy to be seduced by headlines trumpeting the success of American films like “Minions” and Tom Cruise‘s “Mission: Impossible – Rogue Nation” in China. But don’t forget the studios’ cut of those grosses is about half of what they get in the U.S.

And this summer has seen significant developments behind the Great Wall that deserve at least as much attention, including:

monster hunt
“Monster Hunt”

1. China Seized the Summer Without Hollywood Hits
In the past, movie attendance typically plunged when the Beijing government instituted its roughly two-month-long summer ban on foreign films to boost local productions.

But this year, homegrown hits like the blockbuster “Monster Hunt,” “The Monkey King: Hero Is Back” and “Pancake Man” propelled the Chinese box office to its biggest weekend, week and July ever at nearly $900 million. All without American-made blockbusters as competition.

2. The Stars Are Realigning
Bruce Willis recently signed on for the big-budget Chinese-language World War II epic “The Bombing.” Matt Damon just wrapped “Great Wall,” a $150 million monster movie from Universal, Legendary Pictures, China Film and Le Vision, the largest U.S.-Chinese co-production ever.

Whether it’s yuan or dollars, money talks and Hollywood studios should brace for increased competition and higher costs for top-tier talent.

“Monkey King: Hero Is Back”

3. China Is Tooning Up
Disney, Pixar, DreamWorks Animation and Fox have enabled the U.S. to dominate that kiddie market with cartoons for decades. But this summer, China’s “The Monkey King: Hero Is Back” passed DWA’s “Kung Fu Panda 2” to become the country’s highest-grossing animated film ever, and the CGI/live-action film “Monster Hunt” topped “Furious 7” as its top-grossing movie ever.

With Sony and DWA vets Sandra Rabins and Penney Finkelman Cox leading the way, China’s Original Force Animation has moved into Hollywood to make feature films. American domination of animation won’t end tomorrow, but U.S. companies no longer have the field to themselves.

pancake man.monster
“Pancake Man”

4. Audiences Are Flipping Over Native Superheroes
Animation is one thing, but nobody does superheroes like Marvel and DC, which have generated tens of billions of dollars for Disney, Warner Bros., Sony and Fox. But again, that’s without any real competition.

But this summer, China not only made a superhero movie in “Pancake Man” but recast it as a silly comedy that poked fun at the U.S.-dominated genre — and cast Jean-Claude Van Damme as a villain. The film was a smash, generating more than $140 million. Is nothing sacred?

3d imax china5. Beijing Financial Woes Could Panic U.S. Investors
Both countries’ economic experts agree that China’s film biz is largely insulated from the country’s current fiscal woes, but U.S. firms that are heavily invested there have taken a hit — IMAX stock has dropped roughly 26 percent since China’s crisis began.

MKM Partners sounded mystified when it dropped its share-price target for the giant-screen goliath “despite clear evidence … the market is robust and has strengthened.” If fear trumps reason and more wary American investors react the same way, it will be trouble for China’s partners, which include every major studio.