American Studios Reeling as China Scores Big in 2021 Revenue rankings

​The Battle at Lake Changjin, a Chinese studio release, is the second biggest grossing movie in the world this year, a signal moment in the seismic disruption in the filmmaking industry.  But the significance of this event goes way beyond money.  The United States has used films since the creation of the media as promotional tools to support American exceptionalism, and China took a page from the playbook in developing their film industry.

The Battle at Lake Changjin, the Second Highest Grossing International Film in 2021

In 2020, China overtook the United States to become the top movie market globally. The country, perennially the second-largest movie market, brought in $3.1 billion at the box office in 2020, nearly $1 billion more than the United States.

The success of The Battle at Lake Changjin is no fluke as Chinese films had impressive finishes in the top-25 films by international revenue.  Hi Mom, a Chinese comedy, finished third, Detective Chinatown 3, a mystery, finished sixth, and Godzilla vs. Kong, a collaboration between Toho and Warner Bros., finished eighth. 
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The Chinese government limits screening of international movies to 34 a year.  Further, it determines release dates, how much advertising, and the number of theaters that can screen them. As a result, the Chinese built about 75,000 screens, compared to about 41,000 in the United States.
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China’s theaters have been operating at 75 percent seating capacity crowds have returned to theaters, unlike those in the United States, hastening the anticipated changes in dynamics.  Regardless, the changes were already well in process.

2017's The Great Wall Movie Poster

American film studios often attempt to develop films that will play well in China, helping ensure profits. However, one of the most prominent examples of a crossover miss was 2017’s The Great Wall.  The movie cost $150 million to make and distribute and grossed an embarrassing $45 million in the United States and $334 million globally.  The film, purporting to be an action/fantasy/adventure, starring a wooden Matt Damon, failed to gain traction and went swirling down the stool as one of the biggest film mistakes ever.
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China has an aggressive policy on government censorship of films. For example, the Chinese objected to same-sex relationships in Bohemian Rhapsody.  It also prohibited Pirates of the Caribbean: Dead Man’s Chest ostensibly because it included ghosts and cannibalism.

Ironman Movie Poster

In a significant sense, the lucrative Chinese market drove the production of films that could bridge the cultural gap between America and China.  These were not character and plot-driven thoughtful art films. Instead, American studios found that simple action films and superhero movies could span the cultural divide.  These films focused on computer-driven imagery (CGI), two-dimensional characters, cliché dialogue, and simplistic good-versus-evil plots. 
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The American film industry has developed a habit of relying on Chinese investment for producing films and sales revenue for profits. As a result, shareholder value mantras, the bane of long-term strategic development, have encouraged behaviors that raise profits.  One of those behaviors is self-censorship to make films more palatable to the Chinese. 

Fast and Furious 9 Movie Poster

Chinese revenues also tempted studios to develop ‘Nancy Drew’ franchises, like Fast and Furious, the ‘Marvel Cinematic Universe,’ and the Transformers.  This content, requiring enormous investments for production, was mere entertainment.  They crowded out actual films and reduced the market for original content, character-driven stories, and, particularly, creativity.
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The American film industry became addicted to easy Chinese money.  The gravy train is ending. In the tradition of industry leaders devoured by disruptive competition, Hollywood will likely continue to pursue access to China and tailor its content to ensure access. American movie theater attendance has been declining for decades, leaving American studios more reliant than ever on the Chinese market for revenue. But they are increasingly failing to strike a chord with Chinese audiences.

Hi Mom, a Chinese Film, was the Third Largest Grossing Film Internationally in 2021

The China Film Administration in November 2021 released its 14th five-year plan.  The plan committed to turning China into a ‘strong cultural power’ by ‘adhering to the Party's total leadership over film work.’
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The plan includes:

• Releasing at least ten movies per year ‘critically acclaimed and popular.’
• Local films account for more than 55% of the total box office per year
• Building an additional 2,500 theater screens by 2025.
• They are establishing a ‘national high-tech film research laboratory,’ meaning the ambition to develop even better CGI resources.
• ‘Promoting the overall improvement of the level of film special effects through the vigorous support of sci-fi films.’
• Releasing 50 films per year that gross at least $15.7 million.

China has improved at making films, further threatening American cinema predominance.  Additional factors in the erosion of American studio primacy are the pandemic’s effects, the movement of cinema direct to streaming, and the consolidation of studios. 

One Can't Deny the American Messaging in Captain America

A hidden part of these changes is the international effects.  American movies come along with many cultural and political messages.  One cannot miss the Americanism of the benevolent capitalist Tony Stark in the Ironman series or a red, white, and blue-clad Wonder Woman.  Superman fought for truth, justice, and the American way.  Blockbuster American films also feature dominantly white and male leading actors, with women and minorities often in subordinate and stereotyped roles.

The United States Department of Defense routinely provides access to military facilities and experts for Hollywood productions that reflect well on the domestic military, further extending the international reach of America.
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Conversely, the world’s 2021 second best-grossing film, The Battle at Lake Changjin, features courageous Chinese military forces defeating Imperialist United States marines.  A catastrophic retreat south of the 38th parallel resulted in a stalemate that ended the war.  As the Chinese cinematic industry improves, one can expect more sophisticated and crafted films, providing international competition for a tired American studio industry.  And more messaging featuring Chinese Communist Party themes.