DMG shows how international blockbusters made in collaboration with Hollywood can make inroads

China's expanding cinema sector is causing Hollywood to change its development, production and distribution models for the movies it plans to sell into the market.

Of the 21.8 billion yuan ($3.5 billion, 2.8 billion euros) in box office revenue produced in China last year, nearly 59 percent went to domestic productions. Those in turn contributed 96 percent of the 4.7 billion yuan increase in revenues since 2012.

With the market's quick growth and increasing competition with domestic movies, a new studio model is on the rise. This is shown by Hollywood working more closely with Chinese companies like DMG Entertainment, a Beijing-based film studio.

Dan Mintz, chief executive officer and co-founder of DMG Entertainment, now working in Mexico, overseeing the shooting of the action movie Point Break, a remake of the 1991 film that starred Keanu Reeves and Patrick Swayze.

The movie, set for release next year, is a DMG Entertainment production with its US partners Alcon and Warner Bros. Another movie, the thriller Autobahn, co-produced by DMG and IM Global and Silver Pictures of the United States, will also be released next year, starring Felicity Jones, Anthony Hopkins and Ben Kingsley.

As the first Chinese company to co-produce major Hollywood studio films, such as Transcendence, Iron Man 3 and Looper, DMG Entertainment says it is using its experience and platform to create a new model for China-US co-productions.

"DMG is a Chinese movie studio, but it is also an international movie studio," Mintz says. "Because of this, we are uniquely qualified to merge the best of both perspectives and tell powerful stories that appeal to a wide audience base."

A visit to DMG's Beijing office provides a concrete image of what Mintz means by "merge".

The door on the 25th floor of the MEN building not far from the Chaoyangmen station of Beijing's subway leads to a carefully designed and built space.

On the right as you enter the lobby, there is a small pond with goldfish. A stone bridge with six stone lions is built across the pond, leading to a pair of big red doors.

On the left, a life-size model of Iron Man stands coolly in a glass box, looking awesome with illuminated eyes and disk in the center of his chest, as in the movies.

Behind the model is a modern-style open space perfect for a casual chat. A big Buddha's head occupies the end of the lobby.

Upstairs are offices and on top of the building is a basketball court.

"The office design is intended to motivate and inspire creativity. We also wanted to have a physical demonstration of DMG's unique East and West heritage," Mintz says.

The third movie of the Marvel series, Iron Man 3, co-produced by DMG and Walt Disney, grossed a total of 770 million yuan in China and $1.2 billion worldwide, the global box-office winner last year.

In explaining his recipe, Mintz cites the model that he says DMG is creating, noting that "Hollywood has had trouble cracking the Chinese market, for the old models of distribution don't apply anymore".

The typical way Hollywood has looked at markets outside the US has always been from the perspective of distribution. If a Hollywood movie studio wants to show a movie in another country, it will sell the distribution rights to a local company, which will promote the movie in that market. The studio and the local company split the box office, the studio usually taking a bigger slice of the cake.

Since the US market traditionally dwarfed others, Hollywood studios did not pay as much attention to them.

Japan used to be the second-largest market, but its population of 126 million is much smaller than China's 1.3 billion.

China, now the world's second-largest film market, with annual growth of nearly 30 percent in box office revenue, is expected to overtake the leader by the end of the decade. The Chinese market is attractive, but regulations allow only 34 imported films into the country every year. These factors have caused Hollywood to change.

To get into the Chinese market, Hollywood studios have had to start thinking about Chinese people's tastes and preferences in the early production phase of a movie, as well as promotion activities in the country later on, DMG officials say.

Begun in 1993 as an advertising agency by Mintz from New York, and Wu Bing and Peter Xiao from Beijing, the company started its studio business, DMG Entertainment, in 2008. The founders sensed the huge potential for film with the accelerated rise of the cultural industry in China given Beijing's stunning choreography of the Olympic Games and the continued growth of the economy.

"We judged that China really needed about 5,000 screens before it became a viable film market," Mintz says.

Unlike many other Chinese film studios that will first consider the question, "How will this play in the Chinese mainland?" DMG Entertainment is making movies that will "work everywhere in the world", Mintz says.

Since 2009, DMG has co-produced many domestic blockbuster films like The Founding of a Republic and Go Lala Go, and distributed many popular Hollywood films in China such as Twilight and Resident Evil: Afterlife 3D. Since 2012, it has started to co-produce China-Hollywood blockbusters including Looper and Iron Man 3.

In developing Iron Man 3, DMG Entertainment created the character of Dr Wu, played by Chinese actor Wang Xueqi, and also Chinese actress Fan Bingbing's character for the Chinese version. In promoting the movie in China, it brought Robert Downey Jr to Beijing and hosted a red-carpet gala at the Forbidden City. Likewise, Johnny Depp also went to China to promote Transcendence, the science fiction movie that DMG distributed in the country.

DMG is among the first to bring a Hollywood movie star to China to promote a blockbuster movie, and the first to create TV shows about these promotions that were put on national channels like Zhejiang TV and Beijing TV.

This year, when The Amazing Spider-Man 2, and Captain America 2 (not promoted by DMG) were shown in China, the movies' major stars, including Andrew Garfield, Emma Stone, Chris Evans and Scarlett Johansson, went to Beijing to promote the films.

The new model that companies like DMG Entertainment are creating holds that Hollywood needs to market films in China more like they do in the US, which usually costs tens of millions of dollars. China is not simply a place for distribution anymore.

DMG's plans call for it to develop, produce and distribute more co-productions in the future. Films that skillfully blend Chinese elements into the stories will be more welcome in the market.

"For example, one of the scripts we have on our production slate is a big-budget Hollywood production that blends Chinese themes and universal emotions into an action-packed blockbuster," Mintz says.

Greater attention to the Chinese market seems to be having an effect. Domestic productions earned less than half of the 13.7 billion yuan in Chinese box office revenue in the first half of this year. Statistics from Entgroup, China's entertainment research and service producer, show that domestic films' proportion of the revenue had dropped from 56 percent to 47 percent since May 21, when the total box office revenue for the year to date surpassed 10 billion yuan, as imported films drew more viewers.

yangyangs@chinadaily.com.cn

DMG Entertainment's Beijing headquarters. It is the first Chinese company to co-produce major Hollywood studio films. Photos Provided to China Daily

(China Daily European Weekly 10/03/2014 page8)