[Dalian Wanda's] ‘The Great Wall’ Topples at North American Box Office

[Hamartia Antidote]

https://www.nytimes.com/2017/02/19/movies/the-great-wall-topples-at-north-american-box-office.html

LOS ANGELES — In an embarrassment for Dalian Wanda Group, the Chinese conglomerate determined to become a global film superpower, its first mega-budget production, “The Great Wall,” fizzled in North American release over the weekend.

Costing at least $150 million to make and tens of millions more to market, “The Great Wall” arrived to an estimated $18 million in ticket sales in the United States and Canada, according to comScore, which compiles box office data. Perhaps worse, given that Wang Jianlin, Wanda’s chairman, told American movie executives in an October speech that they needed to “improve the quality” of their films, “The Great Wall” received largely negative reviews; several of the positive notices called the film too bizarre to miss.

“The Great Wall” is not a worldwide failure. Starring Matt Damon as a European mercenary who becomes ensnared in a large-scale effort to protect China from razor-toothed monsters, it has collected a total of $245 million overseas.

The problem is that the film, directed by Zhang Yimou (“House of Flying Daggers”), was held up as not just escapist entertainment but also as proof that China can serve up international blockbusters — that event films can rise in the East and play in the West. Although filmed entirely in China, “The Great Wall” was engineered to appeal to audiences in North America, which remains the world’s largest box office market. In addition to the casting of Mr. Damon, the film’s dialogue is mostly in English.

Wanda seemed to see its struggles coming. Last month Thomas Tull, the film executive most tightly linked to “The Great Wall,” resigned as chief executive of Legendary Entertainment, which Wanda bought a year ago for $3.5 billion. Mr. Tull, a “Great Wall” producer, also led the charge for another Legendary misfire, “Warcraft,” which was released six months after Wanda’s acquisition.

At the time of Mr. Tull’s departure, Wanda denied that the executive shuffling was related to the performance of “The Great Wall,” which was released late last year in China, where it took about $171 million — a strong total, but $29 million less than the threshold producers had given as the minimum amount the film needed to reach to be considered a success, given its cost. “To say that it is a failure is pure imagination,” Wanda said in a statement in January. “It hasn’t even opened in North America yet.”

Legendary and Wanda declined to comment on Sunday.

For the weekend, “The Lego Batman Movie” (Warner Bros.) was again the No. 1 film, taking in roughly $34.2 million, for a two-week total of $98.8 million. Another holdover, “Fifty Shades Darker” (Universal) was second, with ticket sales of about $21 million, for a two-week total of $89.7 million. “The Great Wall” was third.

 

[lastofthepatriots]

I saw the trailer. It looked stupid.

 

[艹艹艹]

I saw the trailer. It looked stupid.

yes

 

[Śakra]

No offense but it was incredibly stupid from the trailer. Great special effects tho.

 

[oprih]

Another box office hit for a Chinese film with a total gross of 267 million dollars plus already! Amazing, expect more Chinese films to dominate the industry!

 

[patero]

Another box office hit for a Chinese film with a total gross of 267 million dollars plus already! Amazing, expect more Chinese films to dominate the industry!

I'll run some numbers to explain why this movie hasn't broken even yet, a hit movie actually turns a profit.

The studios percentage of the gross take varies, the %'s are : US 51%, China 25%, others 40%.

So if we add up the studios take of the box office gross:

US: 51% x $21.6 million = $11 million
China: 25 % x $170.4 million = $42.6 million
Other: 40 % x $75 million = $30 million

Studio take = $83.6 million.

This is an approximation, the %'s vary from week of release to subsequent weeks. But this is a reasonably reliable estimation based on industry standards.

So, approximately $84 million in net revenue for the studio, offset against a production budget of $150 million plus marketing (a conservative number for a major release would be $30 million US, with the cinema chains contributing separately to the marketing budget). So break even is $180 million in net revenue, this film is about $100 million short at the moment.

The film still has some international markets to open in, and DVD/blue rays sales plus ongoing royalty revenues will contribute. But it's looking likely now this film will not turn a profit.

You have a strange interpretation of 'dominating' an industry, this film will be a flop.

Just to put some perspective on this film, it is currently at 465th on the list of box office grosses.

http://www.boxofficemojo.com/alltime/world/?pagenum=5&p=.htm

 

[protest]

I actually liked the movie..watched it in India.

 

[jhungary]

I'll run some numbers to explain why this movie hasn't broken even yet, a hit movie actually turns a profit.

The studios percentage of the gross take varies, the %'s are : US 51%, China 25%, others 40%.

So if we add up the studios take of the box office gross:

US: 51% x $21.6 million = $11 million
China: 25 % x $170.4 million = $42.6 million
Other: 40 % x $75 million = $30 million

Studio take = $83.6 million.

This is an approximation, the %'s vary from week of release to subsequent weeks. But this is a reasonably reliable estimation based on industry standards.

So, approximately $84 million in net revenue for the studio, offset against a production budget of $150 million plus marketing (a conservative number for a major release would be $30 million US, with the cinema chains contributing separately to the marketing budget). So break even is $180 million in net revenue, this film is about $100 million short at the moment.

The film still has some international markets to open in, and DVD/blue rays sales plus ongoing royalty revenues will contribute. But it's looking likely now this film will not turn a profit.

You have a strange interpretation of 'dominating' an industry, this film will be a flop.

Just to put some perspective on this film, it is currently the 465 on the list of box office grosses.

http://www.boxofficemojo.com/alltime/world/?pagenum=5&p=.htm

It's actually going to be more, if you also take actor's right into the consideration.

Name like Matt Damon usually have a standard contract of release's right which usually comes with his production company, so in effect, he would have earn some % of that earning from box office, depending on the right negotiation it can goes up to 10% of negotiated right.

And then there may be more than just Matt Damon have this contract. This film needed to do at least $350-$400 millions in box office just to break even.

 

[patero]

It's actually going to be more, if you also take actor's right into the consideration.

Name like Matt Damon usually have a standard contract of release's right which usually comes with his production company, so in effect, he would have earn some % of that earning from box office, depending on the right negotiation it can goes up to 10% of negotiated right.

And then there may be more than just Matt Damon have this contract. This film needed to do at least $350-$400 millions in box office just to break even.

You are probably right about Damon, but it's hard to factor these deals into the equation without insider knowledge. There is an offset for these profit share clauses for the studios, which are product placement deals and corporate sponsorship's. But again, these deals are very secretive and difficult to quantify.

But I agree with your estimate on the break-even, somewhere near $400 million. It will fall short. An interesting comparison is the Warcraft film which took a global gross of $433 million, with a production budget of $160 million and was considered a flop. It's US gross was only $47 million, with a $220 million gross from China. Referring back to my previous post, the US box office is the most important for the studios because of their higher revenue share compared to foreign markets, particularly China.

No offense but it was incredibly stupid from the trailer. Great special effects tho.

Exactly the same thing was said about the last three Transformer films. Considering how much they grossed, I suppose we can't underestimate peoples appetite for stupid films with great SFX.

 

[jhungary]

You are probably right about Damon, but it's hard to factor these deals into the equation without insider knowledge. There is an offset for these profit share clauses for the studios, which are product placement deals and corporate sponsorship's. But again, these deals are very secretive and difficult to quantify.

But I agree with your estimate on the break-even, somewhere near $400 million. It will fall short. An interesting comparison is the Warcraft film which took a global gross of $433 million, with a production budget of $160 million and was considered a flop. It's US gross was only $47 million, with a $220 million gross from China. Referring back to my previous post, the US box office is the most important for the studios because of their higher revenue share compared to foreign markets, particularly China.
.

Yes, actor right is a pure wildcard for a movie, usually if you are a A-list big budget movie, they (the actor) will want to have a share of the right on top of their contracted salary. it also range from a fixed amount to a few %. Most A-lister take 2-5% of global earning off the top. Depending on how they are part or contributed to the production process. i would imagine Matt damon have a same amount of right he wanted, but them if Matt is part of the production crew (like if his produciton company are part of the production team) he would have more. Also, Willem DeFoe and Andy Lau is quite popular, and they may also have a cut of that pie too.

Also, I just realise something, we both did not count the tax payable on box office, this movie is not produced in the US, then there are no State or Federal Tax break like other hollywood production, meaning the IRS is going to take a big chunk out of the Box office in the US, also, since this production is not distributed by an American Company, there aren't going to be tax break there. And I don't think China offer tax break to its box office, so the real profit is going to be a lot less than what we imagine.

This movie may actually need to reach 500 millions to breakeven. After all the rights and tax are paid to apporiate person or authority.

 

[patero]

Yes, actor right is a pure wildcard for a movie, usually if you are a A-list big budget movie, they (the actor) will want to have a share of the right on top of their contracted salary. it also range from a fixed amount to a few %. Most A-lister take 2-5% of global earning off the top. Depending on how they are part or contributed to the production process. i would imagine Matt damon have a same amount of right he wanted, but them if Matt is part of the production crew (like if his produciton company are part of the production team) he would have more. Also, Willem DeFoe and Andy Lau is quite popular, and they may also have a cut of that pie too.

Also, I just realise something, we both did not count the tax payable on box office, this movie is not produced in the US, then there are no State or Federal Tax break like other hollywood production, meaning the IRS is going to take a big chunk out of the Box office in the US, also, since this production is not distributed by an American Company, there aren't going to be tax break there. And I don't think China offer tax break to its box office, so the real profit is going to be a lot less than what we imagine.

This movie may actually need to reach 500 millions to breakeven. After all the rights and tax are paid to apporiate person or authority.

Tax is actually my area, I'm a public practice accountant (with experience in the entertainment industry), and I don't fully understand the tax treatment for large film productions. But you have a point, the tax breaks offered by many governments including New Zealand and Australia are more like a grant, applicable even if a film doesn't turn a profit. In fact many productions are structured in such a way that costs are realized within the country the film is produced, but only enough of the associated revenue for the film to break even (via a management fee). The rest of the revenue, and therefore profit, is usually shifted to a tax haven. The studio therefore pays no tax but still receives the tax break/grant, on a $150 million film the grant could be as high as $30 million.

I believe these tax breaks/grants are administered by state governments in the US most notably California. The tax status of a joint US/China production would be problematic, and could very well be ineligible for the tax breaks. This is largely because most of the production costs will be realized in China, making them ineligible for the California tax break.

 

[livingdead]

not bad from trailor.. the chinese girl is cute

 

[jhungary]

Tax is actually my area, I'm a public practice accountant (with experience in the entertainment industry), and I don't fully understand the tax treatment for large film productions. But you have a point, the tax breaks offered by many governments including New Zealand and Australia are more like a grant, applicable even if a film doesn't turn a profit. In fact many productions are structured in such a way that costs are realized within the country the film is produced, but only enough of the associated revenue for the film to break even (via a management fee). The rest of the revenue, and therefore profit, is usually shifted to a tax haven. The studio therefore pays no tax but still receives the tax break/grant, on a $150 million film the grant could be as high as $30 million.

I believe these tax breaks/grants are administered by state governments in the US most notably California. The tax status of a joint US/China production would be problematic, and could very well be ineligible for the tax breaks. This is largely because most of the production costs will be realized in China, making them ineligible for the California tax break.

Well, my sister is a CPA lol.........anyway.

I have been working in Hollywood and Australian Movie industry for a few years, what I understand is this.

In the US, Federal governemnt and State government have both Tax offset and Deduction on local production, by local production, I mean the movie that was being made in that states. Funding in general is from private source, and Tax credit would mean a set of offset offered to the production company on the production induced profits. Off set can be as high as 30% to 10% depending on both how the production works (eg, how much is shoot in-state and how many local you hired) and how you negotiate to your local government.

There are also other incentive given by federal government and state government, trade right (where the government will give you a grant in exchange of the right to your productions) or Cash loan, tax free spending (sale tax and other stuff) or even cash or tax rebate.

In Australia, depends on is it finance thru Screen Australia (Governmental film body) or Private funding. Filming with Screen Australia would mean they have ultimate control on your production, basically, they finance your movie, and they will then be incharge of crew composition, script and other moneywise decision. If this is a screen Australia project, then they will have maximum incentive (such as tax refund, credit, grant, loan, fee-free public location) but then you will have to give the proportionate right to the government, say if the government funded 33% of your production, then you will have to give the government 33% rights of your movie.

Private Venture based upon contract negotiated with the government. The only incentive you will get is tax and GST refund on your production. Given if you are at least 51% local, or in-state. eg. If you apply for tax and cash rebate and production off-set to qualified Australian Production.

State incentive is more or less the same than Federal Incentive, but to be qualify for State incentive, you will need to qualify as per state guideline.

For a joint US-Chinese production shot entirely in China, I doubt there are any valid inventive enjoy by the production company in the US, I think the only incentive this movie qualified is from the Chinese Movie industry, and if I remember correctly, this movie is produced by Chinese State Run movie prodution, so they may have some incentive there I suppose?

 

[patero]

Well, my sister is a CPA lol.........anyway.

I have been working in Hollywood and Australian Movie industry for a few years, what I understand is this.

In the US, Federal governemnt and State government have both Tax offset and Deduction on local production, by local production, I mean the movie that was being made in that states. Funding in general is from private source, and Tax credit would mean a set of offset offered to the production company on the production induced profits. Off set can be as high as 30% to 10% depending on both how the production works (eg, how much is shoot in-state and how many local you hired) and how you negotiate to your local government.

There are also other incentive given by federal government and state government, trade right (where the government will give you a grant in exchange of the right to your productions) or Cash loan, tax free spending (sale tax and other stuff) or even cash or tax rebate.

In Australia, depends on is it finance thru Screen Australia (Governmental film body) or Private funding. Filming with Screen Australia would mean they have ultimate control on your production, basically, they finance your movie, and they will then be incharge of crew composition, script and other moneywise decision. If this is a screen Australia project, then they will have maximum incentive (such as tax refund, credit, grant, loan, fee-free public location) but then you will have to give the proportionate right to the government, say if the government funded 33% of your production, then you will have to give the government 33% rights of your movie.

Private Venture based upon contract negotiated with the government. The only incentive you will get is tax and GST refund on your production. Given if you are at least 51% local, or in-state. eg. If you apply for tax and cash rebate and production off-set to qualified Australian Production.

State incentive is more or less the same than Federal Incentive, but to be qualify for State incentive, you will need to qualify as per state guideline.

For a joint US-Chinese production shot entirely in China, I doubt there are any valid inventive enjoy by the production company in the US, I think the only incentive this movie qualified is from the Chinese Movie industry, and if I remember correctly, this movie is produced by Chinese State Run movie prodution, so they may have some incentive there I suppose?

Good stuff, always good to learn from industry insiders. I never worked directly in the film industry, I spent 15 years as a road manager for an Australian concert producer (half my time in HK, Singapore, Taiwan, Macau, two gigs in Shenzhen, a few other places). I do have clients that work in the film industry here in New Zealand, and I'm always looking to learn more about the businesses my clients operate in.

Here's an interesting thought. Dalian Wanda's substantial investment in global cinema chains, especially in China, is a vertical integration strategy in the context of their investment in the movie making industry. So when a Dalian Wanda produced film shows at a Dalian Wanda cinema, they earn both sides of the revenue split. Does this mean their film productions are more profitable? The answer I think requires an economists perspective rather than an accountants, opportunity cost and marginal benefit analysis are two concepts that come to mind.

 

[jhungary]

Good stuff, always good to learn from industry insiders. I never worked directly in the film industry, I spent 15 years as a road manager for an Australian concert producer (half my time in HK, Singapore, Taiwan, Macau, two gigs in Shenzhen, a few other places). I do have clients that work in the film industry here in New Zealand, and I'm always looking to learn more about the businesses my clients operate in.

Here's an interesting thought. Dalian Wanda's substantial investment in global cinema chains, especially in China, is a vertical integration strategy in the context of their investment in the movie making industry. So when a Dalian Wanda produced film shows at a Dalian Wanda cinema, they earn both sides of the revenue split. Does this mean their film productions are more profitable? The answer I think requires an economists perspective rather than an accountants, opportunity cost and marginal benefit analysis are two concepts that come to mind.

heh, band folks are the best, at least you know how to party....

I would think I am an entry level movie/film producer in Australia, I used to work in Hollywood first as stun coordinator then as Technical Advisor after I got off my Military Service. Then you graduately pick up stuff as you go, was going to do a filmaking course and try to work as a focus pulley (I think they are called Camera Assistant now) but then I got married and after living in a few place (Hong Kong - where my mother is from, Sweden - where my wife is from and now in Australia..)

About your thought, I don't know how Chinese cinema chain work so I cannot answer you, but in the US, it won't be more profitable, it rather less desirable to own your own cinema chain.

Production company seldom have their own cinema chain. THat because the add on cost does not offset the profits. Look at it this way, for a movie to release in the US, you will have to negotiate a release cut on the movie on top of a release fee (say 3 millions + 2 % of the boxoffice earning) This would be a chump change to a movie producer that have a budget of 100-200 millions + and expect to make 500-1 bil plus box office, but the cost for running a cinema line is quite high actually, you will need to give movie goer incentive, maintain your screen and location, pay rent, advertisment, and so on. You also need to pay a license fee and again, TAX to the Government.

Think about it like a newspaper publisher and a newstand owner, would you think it is wise to have the newspaper publisher to have their own newsagent chain? Answer usually is no. The cost of running a chain is simply not going to justify your intention to save by cutting off the middleman

The thing is, if you are a well know producer like Dreamworks, Roadshow or any big name (forgot what's the name of Buckhiemer company...), you don't need to have to run these sort of business to advertise your film, people go to see your film, not the cinema. So you would perfer to just pay for the release service. But for group like Wanda, for them to justify spending money to acquire cinema chain is another question, as they are both not well know, nor their film is generally perferrable by US cinema chain. In that case, buying a chain to screen your own movie would help you establish your name world wide, otherwise you may get 3 tier stall and screen time if you dont actually own that chain, if at all.

Actually, this is a simplified version of your answer, becuase you actually don't just own the cinema chain, but you also have to contest with release right and distribution right, but since I just woke up, I am not going to dig deep in these aspect...

not bad from trailor.. the chinese girl is cute

Can Chinese members shed some light on the Chinese girl in the movie!!

Do you mean her?

She is Tian Jing (景甜)

Been around for Chinese and Hong Kong cinema a while (about 4 years.) Mostly unknown to hollywood.

look her up on IMBD or Wikipeida

http://www.imdb.com/name/nm1320897/
https://en.wikipedia.org/wiki/Jing_Tian

She also appear in this Hong Kong movie playing a cop helping the main character, which is an undercover cop, played by Donnie Yen (which appeared on xXx)..

Not bad movie I will say, but you need to understand Chinese (Particularly Cantonese) for you to make sense...