Monday, May 11, 2009

Linkage: Why Chinese Pirates will Save Cinema

I read in this New York Times article, that Hollywood studios are turning their backs on China. The dream of one billion viewers having been crushed by censorship and rampant piracy. Well all I can say to Hollywood is, if you want to leave, that’s fine: its your funeral. Chinese film piracy is going to save cinema. Censorship is a nuisance but it is not the end of the world. And those who are turning their back on China in favor of other “easier” markets are shooting themselves in the foot. One billion people are ready and waiting.

Kurosawa on the Corner:

Before I explain what I mean when I say that Chinese piracy will save the film industry, I need to first describe the Chinese DVD store. Because it is these stores which are the key to understanding how to crack the Chinese market:

Firstly, these are not hidden speakeasy style stores. Yes, these shops are selling “illegal” goods. But these are not stalls with scouts on the corners, ready to pack up at a moments notice. These are stores with neon signs. Their wares are not shoved into back rooms and hidden by curtains; step right in the door and browse freely.

Inside, you can of course get your copy of Watchmen the day of its release. Sometimes the quality is excellent, sometimes, the shop girls will openly tell you, the quality is not so great. With new releases, it’s sometimes hard to find HD quality fakes (I recently watched a certain Renee Zelleweger romcom which switched into Russian midway). But what is truly amazing is the non-new releases. Want the beautifully designed Jean Renoir box set? Want to watch every movie ever made by Kurosawa for 200 RMB (around 25 US)? How about Gomorrah, or Man on Wire over dinner tonight? Or my personal favorite, a box set that includes every single film ever to win a best picture Oscar. These small Beijing DVD stores are better stocked full of international and indie fare than any typical US DVD store. Imagine, all you Kim’s videos and Facets fans, if there was a Kim’s and Facets on every other street corner. Now imagine if every DVD was a dollar. Think how many more movies you would pick up on a whim. Think of how great a film education that would be.

The Smartest Pirates in the World (and why we should heart them):

The effect of this piracy is ironically that the Chinese consumer is being exposed to a vast array of films. Even more ironically, this piracy stems in part from the strict censorship laws. Censorship has inadvertently led to more exposure.

Instead of a country of brainwashed drones, only allowed to watch the twenty government approved foreign films a year in addition to local fare, the Chinese movie watching public is taking in French films, indie films, anything they can get ahold of. Since everything is subtitled, the original language is actually irrelevant. Foreign filmmakers of the world take note, forget the US market, where subtitles are seen as a dealbreaker, focus your efforts on China.

Consider this: In China, only 20 foreign films are let in a year (these films are vetted and censored by the government). Television is strictly controlled, as are the local films that are allowed to show in movie theaters.

Now Consider this: In the US, a movie ticket costs an average of $10. That’s about the price of lunch. In Beijing, my lunch costs on average RMB10. To go to a movie is at least RMB50 (that’s almost a weeks worth of lunch!). Imagine if a movie in the states cost $50, would you go? The prices of movies are prohibitively expensive (not to mention foreign imported DVDs, if you can find them).

It is no wonder, given these factors that the pirated DVD store is the chosen vehicle for film access in China. What is a wonder is that instead of turning its back on foreign films completely, the Chinese appetite for film has flourished. These homegrown DVD stores are nurturing an entire generation of film buffs. A few weeks ago, a DVD seller came to our office (I work in an all Chinese office) to sell DVDs. The entire office stopped working for an hour, sifting through hundreds of DVDs. I suggested to a co-worker who had already grabbed the Kiera Knightly film The Duchess, that he should also try one of my favorites Let the Right One In. Each DVD was 6RMB. Everyone bought around ten.

Hollywood should rejoice that in a country with such strict censorship, the awareness of their products is so high. They should think of piracy as free advertising.

Stop Blaming Piracy and Censorship, Just Get Smarter:

So one billion people have been watching your films. They like your films. Now how do you make money off of it? How does one crack China?

For now I would say, forget about movie theaters, they are still much too expensive for the majority of Chinese to afford. Also, censorship is still a problem and movie theaters are the area in which the government has the most control.

As for DVDs, unless you are planning on lowering the cost of your DVDs to at most 5 dollars, then you are probably not going to make any money. Also, so far, other than the Internet there is no way to get “real” DVDs in China. There is no Virgin Mega Store. Yet.

All I can say is get smart. Earlier this month, I wrote on the rise of web to TV movie streaming options. How about creating a web to TV (or web based) service for China (the NYT article says that Warner was planning on it but has yet to do it!). Yes there is the great fire wall, but people get around it. If it were merely the content of the films that was questionable then the little DVD shops would be shut down. Clearly there are ways to avoid film/ web censorship (oh hello Chinese government, pls don’t shut down my blog…). I spoke to someone closely involved with Web entrepreneurship in China, and he said that web content within China is not as regulated as you would think. He told me that the government is smart enough not to prematurely stifle the growth of new web industries. This lack of regulation especially applies to local media companies. Well Hollywood, time to get yourself a local partner!

And for goodness sakes make your web content free! Many Chinese still don’t have credit cards or means by which to pay for online content. Focus on getting one billion eyes on your site. Give them HD quality!

If you create a free, user friendly platform, in Chinese, full of movies, tv shows etc. I guarantee that you will have an audience. Thanks to the pirated DVD trade, the Chinese audience is prepped and ready. And hey, one billion eyes makes for some pretty juicy advertising prospects. Cha- ching.

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