China Solves Piracy
I’m willing to bet that the future of film won’t be decided in the US or Europe, even if that’s the framework most of us begin with (us being my readers and me, most of whom are in the West). I think we’ll be learning a lot from China, where the business is booming, like everything else. I was speaking with some people well-versed in the Chinese film business lately, and they told me something interesting.
Piracy is rampant in China, so much so that the majority of their profits come from theatrical, because soon after it opens, the film is on every pirate network so there’s no ancillary business to speak of. This is the opposite of the US, for example, where the box office is largely a loss-leader for the ancillary revenues (its marketing).
This is a big concern to all of the producers here trying to crack the market there, but my friends told me it isn’t such a concern for the producers in China – they’ve come up with a model that uses piracy to their advantage – product placement. As much as 30% of their budget will often now be made up from product placement by brands who just want to have their product seen by consumers. The brands don’t care if the film is seen legally, or via piracy, because they just want eyeballs. Win, win for everyone.
I know a bit about the arguments against branding, consumerism and yadda yadda, but I think this is a business model we should start following more closely.
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