How Important Is China To Hollywood’s Bottom Line?

Data shows that net box office revenue from China is a drop in the bucket compared to that from North America and overseas territories, indicating Hollywood’s headlong push into China is still about gaining access to the market’s potential growth.

In the recent CFI story, Why Hollywood Should Worry About the U.S.-China Summit, Steven Schwankert suggested that should the upcoming meeting between China and the Trump administration go sour, the Chinese government could easily tear up the import quota and ban all Hollywood entertainment from entering the country.

Though the symbiotic relationship of the two nations may make that notion seem farfetched, it does pose the question of how much the Hollywood studios actually collect from the Chinese market compared to what they make in rest of the world. And the answer, it turns out, is surprisingly little.

The chart above depicts the global net box office revenue of the thirty-two revenue-sharing imports released by Hollywood’s Big Six studios in 2016. (”Net revenue” reflects a streamlined calculation, omitting unquantifiable P&A costs, pre-booking purchases, and ancillary income from TV and streaming to focus on net box office returns, using a widely-accepted shorthand that assigns studios roughly 50% of a film’s North American box office gross, an average of 40% from overseas territories excluding China, and 25% from China.)

The results from this model show that China accounted for $500 million or just 7.7 percent of the $6.5 billion worldwide net revenue from these thirty-two films.  The two films that relied on China the most last year were Universal’s Warcraft (38%) and Paramount’s Teenage Mutant Ninja Turtles 2 (15%), but by and large, Hollywood films made less than 5% of their worldwide revenue from the Chinese market, indicating that for all the effort producers currently expend to integrate Chinese talent and story elements, and to bend their own material in ways to please Chinese censors, Hollywood’s headlong push into China remains primarily about getting early access to a market that still exists in the realm of possibility.

(Box Office data courtesy Box Office Mojo)