US-China trade relations impact on movie making

Investment in movies can be categorised into two - independent financing or studio-based investment, where independent financing requires gathering everything from start and studios offer theatrical commitment and well established investment mechanism.  Movie industry suffered loss in the last few years because the entertainment business is not diversifying. The North American market generated $40 billion in 2017 but this did not include the earnings from other platforms, music merchandising, sound tracks, endorsements, personal appearance etc. In 2017, the total revenue generated by China from movies was $9 billion which is 20 per cent of the total global earning, and the second highest earner was North America. The scope of movies and distribution is increasing through satellite, DVDs, cable and internet based streaming.

Minimum investment

To start investors in U.S. need to invest as little as $250,000 into movies to be able to produce a film, and a foreign investor needs work visa, an executive producer and an opportunity to learn in the American environment to be able to produce a movie.

Apple’s venture in entertainment industry

Apple acquired rights to feature films – first ‘The Elephant Queen,’ which is based on a female elephant, and the movie is expected to be screened for the first time at Toronto Film Festival.  The second movie is The Wolfwalker, based on a young hunter who travels with her father to Ireland and hunts wolves. There were rumours that Apple is planning to buy Netflix but there is no confirmation about it.

Amazon moves to cloud

Amazon has $1 trillion market value. The company started with books and expanded to a number of goods and services. Recently, the business expanded to music, toys, electronics and movies. It has also expanded into the cloud computing and analysts believe   it is one of the most expanding businesses. Initially, it was believed to be into a non-profit business as the investment was very high as compared to profits.  

China – US trade issue impact on movies

Global trade issues are expected to get in the way of entertainment business. Currently, the movie and entertainment industry is unable to identify the real impact on the business. In September US president announced $200 million tariffs impositions on Chinese items. The latest 194 page list of US tariffs includes the products of editing, sound recordings on motions pictures and various other items used in entertainment business.  Even China imposed restrictions on $60 billion US items where the US has trade surplus with China in the entertainment sector. On the both sides, the trade delegates are condemning others actions, although, this will have unfortunate repercussion - long tem impact on the film imports, which was based on bilateral 2012 deal involving revenue sharing and distribution.

In China, movies earned more than $4.43 billion at the domestic box office and import and Hollywood movies earned $2.74 billion (the earnings reduced in the last quarters) as per data till August 2018. Some experts believe China will lose out on US goods, while, many Chinese investors are investing heavily on research and development projects. The recent actions may make it difficult for US businesses to run in China as the international disputes continue to grow.

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