Like modern-day Marco Polos with cellular phones, Hollywood executives are venturing to China seeking the same kind of profits they reaped exporting fantasy to the rest of the world.
But despite China's promise of 1.3 billion potential customers, a burgeoning middle class enamored of entertainment, a flourishing creative community and a growing, less shackled economy, the largest untapped market for American movies and TV shows remains maddeningly out of reach.
The industry that successfully exported Sly, Arnold and Spielberg to Kuala Lumpur and Amsterdam can barely crack a Chinese entertainment market strictly controlled by the government and overseen by officials wary of the violence, sex and politics in Hollywood films. Potential profits are also lost to piracy so rampant that buying an illegal videodisc of the new "Star Wars" film in Shanghai is as easy as buying a Ricky Martin compact disc at a Wal-Mart in the U.S.
Despite its size, China generated just $18 million in revenue for major Hollywood studios last year, equal to the business studios did in Peru, according to the Motion Picture Assn. of America. Even when the appetite is strong for a U.S. film, the results may be negligible.
The most successful American film ever in China, "Titanic," last year took in $40 million at the box office there. For China, where theater tickets cost about one-fifth of U.S. charges, that was a major hit, grossing 10 times what the typical Chinese film does.
But by U.S. standards, $40 million for a major film is peanuts. Once China took its cut of the box office and levied fees and taxes, distributor 20th Century Fox was left with only about $5 million of the take.
"The biggest mistake is to go, 'Wow! It's 1.3 billion people--we can make a killing there,' " said MTV Networks Chief Executive Tom Freston, whose company offers an MTV channel in China. "By any means it's large, but there's a lot of money being lost chasing those macro numbers. You can't really make a short-term hit in China."
China is likely to remain out of reach as a mass market for years for several reasons. Its layers of rules and regulations, often imposed on a moment's notice, are designed in part to make sure Hollywood isn't too successful. "Titanic's" box-office performance prompted China to enact four blackout periods when foreign films can't be shown in Chinese theaters, including the lucrative vacation weeks when people have time to go to the movies, to protect its home-grown films.
