Why The Hobbit Isn't So Precious in China

In a February 24th, 2013 post to his invaluable chinafilmbiz blog, Rob Crain reports the shocking under-performance of The Hobbit: An Unexpected Journey in mainland China: "With its $5.6 million opening day and roughly $18 million 3-day weekend gross in China, The Hobbit: An Unexpected Journey has become the third major Hollywood film in a row—after Skyfall and Jack Reacher — to fall short of expectations in its mainland theatrical release."

The Hobbit? A disappointment in China?

Yes. At this rate, the Hobbit will struggle to top $40 million at the Chinese box office.

What went wrong?

In almost every other territory in the world, The Hobbit opened late last year and it opened large. To date, the film has grossed almost $1 bilion worldwide ($979,947,000).

And all the world's other big revenue territories loved The Hobbit: In fact, the film has earned over two-thirds of its revenue ($679,000,000) outside the US. For example, over the holiday weekend (Dec. 28th-30th, 2012) The Hobbit was number one in Germany (up 16 percent to $16.7 million), the U.K. (up 12 percent to $10.9 million) and France (up 23 percent to $8.6 million).

So what happened in China?

When SARFT finally saw fit to release The Hobbit in mainland China, Warners, New Line, MGM and producer Saul Zaentz clearly had reason to hope their film would connect with Chinese audiences. After all, The Hobbit is a big-budget 3D fantasy film from an established franchise. That recipe has worked before. As Robert Cain has observed, Harry Potter and the Deathly Hallows: Part II topped $63 million "two years ago, when China's market was barely half the size that it is now." And, back in 2010, Avatar grossed $209 million in China - amidst reports that "many in the north of China braved freezing temperatures at the weekend to pay around 80 yuan [$13] for tickets, though in some cases touts were reportedly selling them for up to 300 yuan [$50]". So the potential for Peter Jackson's new film seemed huge.

So what happened?

In all other foreign territories, The Hobbit opened in December 2012 to very strong numbers. In most big territories, the film was available in theaters on Dec. 12th, 13th or 14th 2012 - riding a wave of global marketing and in time to earn sector-leading numbers over the end-of-year holidays.

But The Hobbit wasn't released in China until February 22nd, 2013 - fully two months after the rest of the world had seen it on big screens. The Hobbit arrived too late to even take advantage of the Chinese New Year box office bump - a seven-day stretch in mid-February (Feb. 10th-16th, 2013) when a Chinese-made 3d fantasy/comedy, Journey to the West: Conquering the Demons, dominated the Chinese box office, earning $102 million in just seven days.

The delay in the Chinese theatrical release of The Hobbit may have cooled the hype and allowed some to watch the film on ("pirated") DVDs or unpermissioned downloads.

Apparently, the Chinese authorities at SARFT are prepared to schedule the release of potential Hollywood-made blockbusters to protect the market for locally-produced films: In 2012 the market share for Chinese language movies decreased - and the February 2013 release of The Hobbit may have been part of an attempt to correct that trend.

But there also may be a more fundamental kind of cultural bias at work. As Robert Cain observes the taste in China may be tilting toward homegrown films with Chinese stars: "China will account for 10 percent of the global box office this year, and given that only those select few Hollywood films with the best perceived commercial prospects are allowed to release there, such releases ought to earn around 12 percent or more of their worldwide grosses in China. But Skyfall earned barely 5 percent of its worldwide gross there, and Jack Reacher and The Hobbit will probably wind up at around 4 percent. If the next three U.S. releases—Les Miserables, A Good Day to Die Hard, and Oz: The Great and Powerful—turn in sub-par performances, then it may be time for the studios to heed the advice I've been freely offering for a long time: do the work of focusing on what Chinese audiences want, and give it to them. Otherwise, the world's fastest growing and soon to be biggest movie market will get along just fine without them."

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