How Chinese New Year Films Cancellation Could Mean A $1B+ Loss For Global Box Office In 2020 & What’s The Impact On Hollywood

Movies

Today’s news that all local film releases scheduled for the highly lucrative Chinese New Year period have been kiboshed has wide-ranging implications. Beyond being a prudent move by authorities and producers to stave off apotential spread of the coronavirus, this is expected to mean a $1B+ blow to global box office for 2020.

Says a finance source, “Moviegoing is so concentrated during this period, even with later releases, it will be impossible to overcome the massive loss.” Says another source, “We can’t recover from this year now even if China redates these films.”

Last year’s full New Year holiday brought in about RMB 5.8B ($836M at today’s rates) with the month of February achieving a benchmark RMB 11.1B ($1.6B) boosted by the New Year pics.

As we have previously reported, this year is not primed to hit the highs of 2019 given the lack of giant tentpoles, but a massive blow in China, the globe’s second biggest market, will mean a massive blow worldwide. There had been predictions that China’s box office would overtake North America in 2020, while some in the industry remained skeptical. Through force majeure, the skepticism now hews closer to reality.

We hear locally in the Middle Kingdom that there is a risk movie theaters remain shut through the next month. It is clearly difficult to predict what is happening with the coronavirus, but the backlog of product in China likely portends a stand-off for screens once things, hopefully, settle.

We also hear that some Hollywood releases could be shifted while future grants could be shorter in coming so that homegrown titles continue to excel.

After the Lunar New Year period, the Chinese would normally return to work on January 31. Without the benefit of having people off their usual obligations, this further impacts moviegoing. What’s more, should the epidemic continue, it would impact February where such Hollywood titles as Doolittle, Marriage Story and Little Women have previously been set. Mulan, a potential big draw in China, is eyed for March.

Says a source, “U.S. product will be impacted. The backlog of big titles will result is less studio titles being released over the next few months as well as dates slipping so Chinese viewers will see the pics first via piracy.”

Overall, and maybe this is an unfortunate way to learn a lesson, there’s a belief that packing the biggest potential winners into a small window does not seem to make the most business sense. And though no one could have predicted the current epidemic there is credence to the argument of spreading solid pics out across the year. A possible result of the current situation is that we may see more head-to-head competition when the cinemas come back online. Hollywood learned a long time ago that dating is delicate, but it has pretty much zero power in the PRC.

Seven potential big bucks movies were pulled today, just ahead of the beginning of the lucrative Chinese New Year period. There have been reports that this was a decision taken by studios/producers/distributors, but we are hearing that there may have been some government intervention. Big cities like Wuhan and Huanggang were placed on lock down and cinemas were closed. Whether this extends to the rest of China, and how long a shut-down may last, are still in play.

Already, all overseas releases of the CNY movies that include Detective Chinatown 3, The Rescue and others have been halted. Outside festivals, Chinese movies are prone to go out in the home country prior to (or day and date with) the local release. Piracy remains a major concern.

Meanwhile today, companies released notes about their shifted situations:

IMAX said, “The safety of Chinese audiences is our top priority. IMAX supports the decision to postpone the release of the Chinese New Year film slate and believes it to be the best course of action in an unfortunate situation. We remain excited about these films, given the strong box office projections and pre-sale figures heading into this weekend. We have every expectation that these films will be released in 2020 and that audience demand for these releases will remain high. Our thoughts are with the Chinese people, for whom we wish a swift resolution to this issue and a safe and healthy Chinese New Year.”

CMC Pictures said, “Due to the current public health situation in China, CMC Pictures has made the decision to postpone the theatrical release of The Rescue — both in China and internationally — until further notice. The health and safety of the public is of the utmost importance to us and we want to do our part in reducing any potential exposure during such a critical period.”

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