An ongoing fight bewteen distributors and theaters

The latest salvo from the distribution/production arm of the nation's film industry reflects an ongoing fight among forces craving for a bigger piece of the growing pie that is China's box-office bonanza.

Five of China's most powerful film distribution/production companies have collectively asked to raise their share of the box-office revenue from the current 43 percent to 45 percent. This came right before the busiest season of the year for the business - the year-end season, which may span up to three months, from sometime in November to Valentine's Day, depending on which date the Chinese New Year falls on.

China Film, Huayi Brothers, Bona, Stellar and Enlight have recently notified movie theaters that they demand a slightly higher cut from the intake. It is reported that 10 cinema chains have rejected it. Wu Hehu of Shanghai United Circuit, one of the largest in the country, said he cannot accept this kind of "rudeness". He felt the best way is to find a compromise through negotiations, not by issuing a statement, and not before several big movies are to debut.

The main reason cited for a bump-up in revenue division for distributors/production is the increased cost of filmmaking, especially for movies with expensive special effects and more expensive A-list stars.

Ironically, there are many players who dip their toes simultaneously in all facets of the film business, from production to distribution to exhibition (exhibition is the industry term for showing movies in cinemas), just as it is the case with the US before the government forced film companies out of the exhibition business to prevent a monopoly. However, most of these Chinese firms are not equally invested in every arm of the industry. Some, like Wanda, started with their fully owned theaters and are now branching into production, while others, like Bona and Huayi, are latecomers as exhibitors - after they are fully established on the distribution or production side.

In China, big-name movie directors are the most valuable asset in the film industry. Because they are rare and have a proven track record, they have a sizable built-in audience that no amount of promotion can equal. Hollywood movies are in a different league. Their cut of the box office was a paltry 13 percent until it was raised to 25 percent early this year. That is why they will jump through hoops to be classified as co-productions. As co-productions enjoy the full benefit as domestic ones, Hollywood's share will not be limited to 25 percent. That is, however, arm-wrestling between production and distribution because most imports are locally distributed by China Film or Huaxia, who are the biggest beneficiaries. Without getting into technical details, I'll say Hollywood movies are good for China's exhibitors and whoever gets the right to distribute them, but they are feared and loathed by producers and directors.