Hollywood's Shaky Film Grosses: The China Factor

In considering the underperformance of recent Hollywood titles my emphasis has tended to be on the domestic market, but I have also noted again and again the fact that with films such as Ant-Man 3 and The Little Mermaid the overseas underperformance has been markedly worse. This was the reason why Ant-Man 3 failed to break a half billion dollars; why it seems to me likely at the time of writing that The Little Mermaid will not make much more than $600 million.

Of course, assessing the global market is a more complex matter than considering just one market. Still, it is the case that some markets are more important than others, with China of special consequence--and identifiable as a growing problem area for Hollywood. The increasingly deep relationship between the U.S. film industry and its Chinese counterpart evident in the 2010s has, far from continuing to progress, degenerated--right along with relations between their respective governments, and the broader disruption of their economic connections.

A glance at the performance of the two aforementioned films makes it clear that while trouble in China is not the whole story, it is a big part of it.

Ant-Man 3, to merely match its predecessor in real, inflation-adjusted terms, needed to make $740 million or so globally, with some $480 million of that expected to come in from overseas. Instead it made about $260 million overseas--a $200 million+ shortfall of about 45 percent. As it happens, the shortfall in China, which was disproportionate, accounts for a very big chunk of this. Where Ant-Man 2, in line with Marvel's popularity in China, took in $121 million in that market in 2018, which is equal to $145 million in February 2023 dollars, Ant-Man 3 made a mere $39 million in China--a 73 percent drop, that accounts for almost half ($105 million) the drop in overseas box office revenue relative to the predecessor by itself.

So does it also go with The Little Mermaid in a China long receptive not only to Marvel but to live-action adaptations of Disney's animated classics as well. In 2016 The Jungle Book was an especially strong performer, taking in $150 million there (which is more like $190 million today), while The Lion King also took in $120 million in 2019. Not in the same class, Beauty and the Beast took in $85 million, and even the disappointing Aladdin still picked up $53 million in 2019 (equal to more like $63 million).

By contrast The Little Mermaid has grossed under $4 million in ten days of release, making its even breaking into the double-digits a long shot.

For all that, some Hollywood movies, Disney films included, still do fairly well in China. Marvel's Guardians of the Galaxy 3's $84 million gross in China at present, if down from what Guardians of the Galaxy 2 made in that country ($100 million in 2017), is a 32 percent real-terms drop--not much different from what Guardians seems likely to end up with at home, frankly (its likely $340 million final gross itself almost a third down from the $480 million+ that its 2017 domestic gross would be in today's dollars). Still, the trend can only be worrisome for Disney--and one should not forget, all the other Hollywood studios that have so come to count on China.

It should also worry even those who (understandably) have no interest in the economics of filmmaking whatsoever--because of what it says about the deterioration of international relations and the functioning of the global economy in an increasingly conflict-ridden, and dangerous, world.