While Arthouse Films Struggle in America, in China They Thrive

The Cannes Film Festival is often regarded as a bubble where world-class cinema launches to great fanfare before retreating to its niche. The 2018 Jury Prize winner “Capernaum,” a crowdpleaser from Lebanese director Nadine Labaki, went on to gross $1.6 million in the United States and garner an Oscar nomination for Best Foreign Language Film — solid prestige business, but not the greatest triumph for a $4 million movie released in the same month that saw “Aquaman” make nearly $68 million in its opening weekend.

However, a year after “Capernaum” premiered at Cannes, the drama about an imprisoned 12-year-old boy who sues his parents for neglect grossed $12 million in China on its first weekend. It came in second behind “Avengers: Endgame,” a result that’s unfathomable in the United States. However, these success stories are becoming more familiar in China, where many Cannes breakouts now stand the best shot at finding audiences beyond the insular festival circuit.

“The world has changed in the last two or three years,” said Wild Bunch sales head Vincent Maraval, whose company sold “Capernaum” at Cannes, during an interview at his office in Paris last week. “For foreign-language films, the U.S. has always been a very minor market. Today, China is more of a priority.”

In 2018, Wild Bunch also handled sales for the festival’s Palme d’Or winner, Japanese auteur Hirokazu Kore-eda’s “Shoplifters,” which pulled in $14 million at the Chinese box office last summer, making it the highest-grossing live-action Japanese film in China’s history. By comparison, “Shoplifters” made $3.3 million in the United States after 23 weeks in release.

As the international film industry descends on Cannes, American buyers and sellers continue to wade through the existential crisis facing the future of theatrical releases. While the documentary market has grown and diversified, the number of theatrically released fiction features continues to drop in tandem with a diminished theatrical presence in major U.S. cities. Netflix and other streaming platforms make it harder for traditional distributors to compete. But the developments in China, at least on the surface, provide a striking contrast to doom-and-gloom prognostication, and hint at the potential for cinema to survive in a global context.

“The only massive chance we’ve seen in terms of territories in the past five years is China,” said Jerome Paillard, executive director of the resilient Cannes market Marché du Film, which celebrates its 60th anniversary this year. Among the 110 countries accredited for the market, Paillard said that around 700 representatives from the Chinese film industry would attend this year, putting it in the top five countries at the market. (The U.S. presence is still the largest.) “The diversity in general is very big,” Paillard said. “Africa is getting bigger but it’s still fairly small. In terms of big growth, it’s China.”

As the East Asian nation intensifies its quest to become the next global superpower, China’s 1.386 billion people have a lot of moviegoing options. The nation outpaced the number of American theaters two years ago, and current reports estimate the number of Chinese screens at around 63,000. China’s box office ballooned to $9 billion in 2018, just $2 billion behind the United States. Not all of China’s homegrown product succeeds — last year’s $113 million fantasy epic “Asura” grossed a mere $7.1 million — but blockbusters hit harder than ever. Most recently, the $50 million sci-fi saga “The Wandering Earth” pulled in $700.8 million ahead of its Netflix release in other territories.

But the tentpoles hits only tell one part of the story. China’s audiences continue to fill its theaters and develop more complicated sensibilities despite the Communist country’s government regulations and censorship. Distributors have even taken some risky bets. Last year, a major Cannes discovery — 28-year-old director Bi Gan’s dreamlike “Long Day’s Journey Into Night,” which includes a 50-minute 3D long take in its second half — was released on New Year’s Eve in China along with a misleading marketing campaign that made the film look like a romance. It grossed $37.9 million on its first day before the backlash from baffled viewers settled in.

Kino Lorber

Beyond those stunts, China has shown considerable efforts to support the release of arthouse titles. That includes last year’s The A.R.T. Project fund, which aims to invest $16 million in 15 independently produced Chinese films from Chinese filmmakers over five years. The three-year-old National Alliance of Arthouse Cinemas reported earlier this year that China had 3,795 screens dedicated to arthouse films, around 6% of the total.

Of course, China’s arthouse prospects come with a caveat: All releases require a “Dragon Seal” of approval from the country’s censorship board, which is notorious for restricting new releases and suppressing its own talent. At this year’s Berlin Film Festival, Zhang Yimou’s “One Second” was pulled from the lineup shortly before its scheduled premiere, with reports suggesting that its plot — set during the Cultural Revolution — held it up with censors.

If a Chinese film screens out of the country without approval, the filmmaker can be banned or even arrested for violating expectations. This year’s Cannes selection includes five Chinese films. Previous selections such as Jia Zhangke’s acclaimed 2013 entry “A Touch of Sin” and 1993 Palme d’Or winner “Farewell My Concubine” have faced problems upon their national releases, but festival representatives said there are no indications that any of the Chinese films in the current lineup will face problems in advance of their premieres.

“It’s really hard to know exactly what can be made, what you can make, and what you can’t make,” Jia told IndieWire in an interview earlier this year. “The ambiguity is such that sometimes your films can get banned and you don’t know why. The standards are constantly shifting and changing.”

At the same time, nobody can argue that China’s exploding moviegoing culture has created new opportunities for movies that might face harder prospects elsewhere. Maraval said that while he never expected a boundary-pushing genre effort like Gaspar Noé’s 2018 Cannes premiere “Climax” to make its way to China, the success of “Capernaum,” “Shoplifters,” and other titles speak to a capacity to attract audiences that have remained elusive elsewhere — that fickle 18-25 year-old set to whom studios only market blockbusters.

“It’s not that young people don’t want to go to cinema anymore because in China, they’re driving the business,” Maraval said, noting that the challenge facing U.S. theaters extends to Europe as well. “Mainly, exhibitors were not interested in cinema anymore. They were interested in serving candies and popcorn,” he said. “So the audiences ran away.”

However, the future of cinema in China faces some real hurdles in the immediate future. Only two government-controlled distributors handle foreign films in the country, and Chinese regulators have recently decreased the number of independently produced movies exported to the country from elsewhere, according to a recent report in the Wall Street Journal. Meanwhile, VOD and broadcast rights may lead the charge for revenue on U.S. films, but some sellers have noticed a slowdown in the past six months.

Last year, U.S.-based sales company Visit Films, which only handles digital/VOD and TV rights, found much success with Chinese distributors on a package of U.S. films that included the 2018 Sundance hit “Madeline’s Madeline.” But at the American Film Market last fall, Chinese buyers raised concerns about tightening censorship issues.

“It does appear that so far in 2019, the market is not as aggressive, and distributors are being more cautious,” said Lydia Rodman, Visit’s director of sales. She cited the recent trade war between the Trump Administration and China as having a direct impact on business as well.

“There is a particular hesitation to acquire U.S.-produced films, due to the current U.S.-China tariff battle and the ongoing hostilities in trade policy between the two countries,” she said. “Recently, some companies with which we had been doing reliable business have put a hold on acquisitions or in one case even closed down altogether.”

The 2019 Cannes market was an open question. “It’s unclear whether or not things will pick up in Cannes,” Rodman said. “It seems like the government has a heavier hand in new acquisitions and the focus on library acquisition for digital platforms has also slowed.”

But for Paillard, China’s aggressive new presence is an indication of its future ambitions, speed bumps and all. “I think the Chinese are really in that stage where they’re trying to explore how they will work international clients and partners,” he said. “It’s still quite volatile. Last year, we had a lot of small new VOD acquisition companies who bought a lot of films, and many of them disappeared. The regulation is still very unstable. But I think they are very eager to get more connections with the international community.”

Maraval singled out a curious title in Wild Bunch’s Cannes slate this year: Gaspar Noé’s 50-minute Lux Aeterna, which will premiere in the 2,400-seat Lumiere Theater as a midnight selection. He said he saw the potential for the medium-length feature to find a unique distribution plan. “There have never been so many people producing moving images,” he said. “It’s like our market has grown up, tremendously. Now, we have to monetize all those things. But we can’t complain about people spending more time watching images, and those images reaching more people.”