China has long been a major moneymaker for the movie industry — but as the country increases its censorship rules, could Hollywood's complicated China relationship be coming to an end?
"China was the golden goose that Hollywood looked to [in order] to really recoup some big investment dollars, and the huge capital it takes to make these big franchises," Chris Fenton, movie producer and author of the book "Feeding the Dragon," told Yahoo Finance Live in an interview last week (video above).
Fenton explained the Hollywood-China relationship peaked between 2012-2016, but the Chinese market began to turn its back on the U.S. right around 2018. At that time, regulation of the country's film management was assigned to the Communist Party's propaganda department.
Since then, the relationship has further deteriorated, pressurized by tense U.S.-China diplomatic relations and shifting audience tastes
Censorships and restrictions have reached a fever pitch as a result with major titles including Disney's "Black Widow," "Eternals," and "Shang-Chi and the Legend of the Ten Rings," along with Warner Bros. "Space Jam: A New Legacy" all denied China releases.
Reasons for denial can include anything the government deems inappropriate, such as depictions of homosexuality or content that violates the country's socialistic and nationalistic values.
"Spider-Man: No Way Home" was denied after producers refused to remove the Statue of Liberty from the film, while Chinese regulators quickly rejected "Top Gun: Maverick" due to the presence of the Taiwanese flag on the back of Cruise's Capt. Pete "Maverick" Mitchell's combat jacket. Beijing notoriously does not recognize Taiwan as an independent country.
"Maverick" also ran into problems early on its production after Chinese production company Tencent Pictures (TCEHY), which signed on to co-finance the film in 2019, eventually dropped out due to the blockbuster's pro-U.S. messaging.
Tencent reportedly thought the pro-American story would anger Communist Party officials.
"Today, [China's censorship] is probably the worst I've ever seen in my career," Fenton revealed, adding the Chinese market is now projected as a zero for most Hollywood films — a stark contrast compared to a decade ago.
According to data from consultancy Artisan Gateway cited by The Hollywood Reporter, American-made films accounted for more than 48% of China's box office revenue in 2012 before plummeting to 36% in 2016 and 12.3% in 2021.
A Hollywood... without China?
Hollywood has slowly begun to accept a box office without China.
"The fact that China now is not as important to Hollywood is a fantastic thing for the creative expression of these filmmakers," Fenton said, citing the box office successes of both "Spider-Man" and "Maverick" which went on to secure global receipts of $1.9 billion and $1.4 billion, respectively.
"We can still make movies without integrating China propaganda or narrative into them, and if they're relevant, if they're universal in tone, there will be consumer markets [in China] for future movies."
"But right now, we don't have to placate Beijing with every single movie that we make," Fenton added.
Hollywood has long been accused of kowtowing to China in order to maintain its lucrative box office opportunity. The country boats a population of 1.4 billion with more than 600 million people classifying themselves as middle class.
"That is a lot of dollars that could be chasing this type of content," Fenton admitted.
Last year, "Fast & Furious" star John Cena came under intense scrutiny after apologizing to China — in Mandarin — for calling Taiwan a country, underscoring Hollywood’s profit pursuit.
But with China closing its doors, and political tensions continuing to rise, Fenton argued its time for producers and filmmakers to start looking elsewhere.
Fenton cited India as a lucrative opportunity, in addition to markets in Latin America and Africa.
"If we can crack [those markets] we really are going to start moving forward in a very strong momentum towards developing the monetization of this great content that Hollywood generates."
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at firstname.lastname@example.org