Success you can bet on

By Raymond Zhou ( China Daily ) Updated: 2016-08-11 08:46:56

Success you can bet on

Stephen Chow (second right) promotes The Mermaid in Beijing earlier this year.[Photo by Jiang Dong/ China Daily]

The fast growth of China's film industry has spawned many things, among which is the minimum guarantee from the distributor. Raymond Zhou reports.

Some players in China's film industry are making big bets that big movies will be bigger than forecast. They often lose their shorts when the tide goes out. But the temptation is just too much.

A distributor, or distribution company, takes a slice of revenue by providing the service of-well-distributing films to movie theaters across the nation.

For newcomers who want a piece of action from the glitter of movie making, this has turned into a surprise entry point. It requires little in terms of industry expertise but a great deal of money and a gambler's bravado-just the right mix for many cash-flush aspirants.

What they offer is a minimum guarantee that usually covers the movie's production cost and a very comfortable profit margin, sometimes as high as several times the production cost, thus totally removing the risk factor from the production side of the business.

For example, if a movie is made for 200 million yuan ($30 million), a minimum guarantee of 800 million yuan is good business for the production company and all the investors.

But if the movie ends up with 1.5 billion yuan in box-office takings, the distributor with the guarantee would hit the jackpot.

It does not mean he would get everything above the guaranteed amount-that would be the same as paying a flat fee. But he would get a share much larger than the usual distribution fee. But if the movie ends up with box-office receipts lower than 800 million yuan, he'll need to make up for the shortfall or, rather, the production side's share of it.

The Mermaid is the biggest case of this kind.

Before its opening, five distribution companies put up a sum that guaranteed 2 billion yuan in grosses.

Luckily for them, the Stephen Chow comedy with an environmental message turned into the biggest Chinese blockbuster of all time, surpassing the 2 billion yuan milestone in as few as eight days and eventually registering 3.4 billion in total receipts.

The Crossing, by contrast, became a cautionary tale.

The John Woo two-parter got a total of 800 million yuan in minimum guarantee from Le Vision Pictures, but the lavish historical epic, a cross between Titanic and Gone With the Wind, raked in only 250 million yuan combined.

Likewise, Gone With the Bullets, the highly anticipated Jiang Wen follow-up to his runaway hit Let the Bullets Fly, was reported to have been promised 1 billion yuan in box-office receipts from Wanda Pictures, but made only half the amount. When Wang Sicong, son of the parent company's big boss, railed against the film, it was seen by some as venting his frustration at its poor performance.

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