News Analysis: Does "Avengers: Endgame" change Hollywood's global distribution game?

Source: Xinhua| 2019-04-28 13:19:49|Editor: ZX
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by Julia Pierrepont III

LOS ANGELES, April 27 (Xinhua) -- Until recently, every major studio picture would be widely released in the United States first, before rolling out to Europe, and then on to Asia, often weeks later. These "territorial release windows" were sequenced in that order because foreign sales of Hollywood movies were significantly influenced by how well the film sold in America first.

Those days are over.

Breaking with tradition, Disney's mega-blockbuster, "Avengers: Endgame," the 22nd installment of the Marvel Universe franchise and purported to be the last with this star line up, opened last week in China two days before it did in the United States.

Furthermore, fueled by its performance in the China market, the film is heading for a record-shattering opening weekend in both North America and overseas markets.

Many business insiders agreed that such global release windows are shifting due to the Chinese market, which used to be a small, virtually overlooked market, but has rocketed over the past five years to become the second largest market in the world, eclipsing Japan in 2013, and projected by Ampere Analysis to surpass the U.S. market by 2022.

"The importance of China as a movie market cannot be overstated," asserted Comscore's senior media analyst Paul Dergarabedian, noting China's meteoric rise over the past decade, reported as 8.9 billion U.S. dollars in 2018 according to Comscore, a U.S. media measurement and analytics company.

"That changes things. Dramatically," indie producer Jeff Most told Xinhua Friday. "Now China can deliver very large, engaged audiences and that makes a difference in how studios craft their marketing strategies."

"There are multiple factors they must have taken into consideration," Xian Li, vice president at SKGlobal told Xinhua. "Avengers is an event movie in both the United States and China. And the film's great success in China is certainly going to build more hype for the film and help the film's openings elsewhere around the world."

As in the States, buzz in China for the Russo brother-helmed final installment of Marvel Universe's Avengers Saga is off the charts, with 107 Million U.S. dollars in pre-sold tickets fueling speculation that it could be the first film to top 300 million U.S. dollars in its opening week, including the fan-favorite midnight screenings.

The early China release strategy paid off big time.

The action film has already smashed through "Monster Hunt 2's" previous opening record of 85 million U.S. dollars, which had the inside track of opening during the Chinese New Year.

Some industry insiders are estimating a Marvel five-day opening of 270 million to 320 million U.S. dollars. Moreover, it is on the track to set a new box office record for a Hollywood movie in China Market.

So far, the top three earners of Hollywood products in China are Universal's "The Fate of the Furious" (392.8 million U.S. dollars in 2017), "Furious 7" (390.9 million U.S. dollars in 2015) and last year's "Avengers: Infinity War" (359.5 million U.S. dollars).

"Endgame, is certain to crush them all," Hollywood Reporter said Friday, "The only question is by how much. (Online movie ticketing website) Maoyan now forecasts Endgame to earn at least 521 million U.S. dollars in China over the course of its full run, which would give Disney credit for Hollywood's first half-a-billion-dollar showing in a single market outside of North America."

Chinese social media is fanning the flames, running feverishly high in support of the film, with a 9.3 aggregated score on Maoyan and an 9.1 on Douban, beating out previous high scorers, "Guardians of the Galaxy" and "Captain America," which both clocked in with scores of 9.2.

"China will be the earliest place in the world to know the ending. It feels so good: I'll be able to go on foreign websites and spoil the plot for others," kidded Ling Quan, a 35-year-old IT worker.

"Most analysts originally expected Endgame to bring in around 270 million U.S. dollars during its five-day opening frame in China. But rave word of mouth among Chinese filmgoers is fueling the film to even greater heights," Hollywood Reporter said in another story Friday.

Another factor that may have influenced the China-first premiere is China's home-grown film resurgence.

While North America's 2018 box office returns soared to a record-breaking total of 11.9 billion U.S. dollars worldwide, Hollywood's market-share in China slipped from 2017's 46.2 percent to 37.8 percent in 2018.

A juggernaut of Chinese-made films, spearheaded by "Operation Red Sea" (530 Million U.S. dollars), "Detective Chinatown 2" (496 Million U.S. dollars), and "Dying to Survive" (453 Million U.S. dollars), ran roughshod over such Hollywood blockbusters as "Black Panther" (105 Million U.S. dollars), "Pacific Rim" (100 Million U.S. dollars) and most recently "Ready Player One" (219 Million U.S. dollars).

Based on those sobering numbers, Hollywood needed a big opener in China to shore up its market share and draw attention and Chinese fans back into the fold. "Avengers: Endgame," helmed by A-listers Anthony and Joe Russo, was just what the doctor ordered.

Big budget tentpoles like "Avengers: Endgame" need massive global returns to cover their large production costs and astronomical marketing budgets, which are often equal to or double production costs.

Both the Wall Street Journal and Fortune estimated that the movie racked up at 400 million U.S. dollars in production and marketing costs, while Deadline, a leading online entertainment media, pegged it at closer to 475 million U.S. dollars.

However, A-list producer Arthur Sarkissian told Xinhua Friday that a third key factor behind the decision to open in China first was a strategic effort to curtail unauthorized pirating of the big budget film.

Piracy has a massive negative impact on the global box office. A report by Digital TV Research estimates losses to the U.S. entertainment industry in 2016 total roughly 9 billion U.S. dollars, while China's revenue losses are estimated at 4.5 billion U.S. dollars, with India, Brazil and Mexico running closely behind.

"It's the number one reason to open first in China. Market size is secondary," Sarkissian said.