The capital market seeks benefits and avoids disadvantages, and the box office guarantee will not be "short-lived"

How popular is 62-year-old Jackie Chan? I believe all theater managers will tell you that Jackie Chan and his new film "Escape from the Jedi", who appeared at the right time during the previous summer downturn, have driven a lot of box office in the past weekend-in 4 days, exceeding 400 million yuan, making all opponents look forward to it.

Original title: Can the "Jedi" box office guarantee win? "Mermaid" is difficult to replicate

This "Escape from the Jedi" is once again the main action comedy. The 62-year-old Jackie Chan does not hinder the audience's love for his films. The same does not hinder the film and distributor's full confidence in him. Two weeks before the release, Tangde Films, the film's largest investor, announced that its wholly-owned subsidiaries Tangde Films had signed a guaranteed distribution contract for "The Escape of the Jedi" with Lianrui Pictures, and Hehe Pictures. Lianrui Pictures and other three companies paid Tangde Films 307 million yuan to obtain the right to distribute the film in the mainland of China, and promised to have a total guaranteed box office amount of 1 billion yuan in Chinese theaters, setting the largest guaranteed movie case in the summer.

Today's popular box office guarantees seem to be nothing new in the film industry. This craze to use finance to protect movies has been sporadic in previous years, but in 2016, which was in full swing, with the successful case of "Mermaid" with a guarantee of nearly 2 billion yuan and "Ip Man 3", which not only failed to guarantee but also fell into financial fraud. The negative case of box office guarantees has become unprecedented. Faced with the extremely fresh "Tang Monk meat" in China's film market, capitalists who do everything they can do are rushing forward one after another, always looking for a new magic weapon to eat.

Phenomenon "Escape from the Jedi" has a guaranteed minimum of 1 billion yuan. Tang De becomes the big winner,

Tang De, Lianrui Pictures and Hehe Pictures, how confident are they in "Escape from the Jedi"? Just one week after signing the contract for guaranteed distribution of 1 billion yuan, on the evening of July 15, Tangde Film and Television issued an announcement announcing that its subsidiary Shanghai Dingshi, which is engaged in film distribution business, planned to participate in the distribution of "The Jedi Escape", and paid attention to this end to He Pictures, Lianrui Pictures, and China United Alliance, which were previously responsible for guaranteed distribution of the film, paid 51.7548 million yuan in exchange for 15% of the guaranteed distribution of the film and the share of excess earnings. In addition, Tang De Film and Television also stated that it will increase the film publicity fee by another 20 million yuan based on the previously promised publicity fee of no less than 50 million yuan.

After selling the distribution rights, Tang De Film and Television continued to add an additional 70 million yuan in publicity fees. The response given by Tang De Film and Television was,"It is because there are good expectations for the movie's box office revenue and excess earnings share." Indeed, even ignoring the good results of "Escape from the Jedi" that have become popular all the way, Donde is still making a solid profit on this project-after deducting the 70 million yuan promotion fee, Donde still has a net profit of 230 million yuan. It also has 15% of future movie box office revenue.

Perhaps some people still have doubts about how to "divide" the box office of movies and the specific "guarantee law" for box office guarantees. Let's put it this way, excluding about 8.3% of taxes and fees and special funds for the film industry, the remaining 91.7% of a movie's box office is "divisible box office." For this divisible cake, the theater line will withdraw 57% first, and China Film Digital will retain 1-3% of the issuance agency fee. The remaining 40-42% goes to the film producers and distributors. Under normal circumstances, the producers will allocate 5-15% of the gross box office to the distributor (i.e. 2-6% of the total box office). Similar to box office guarantees, many times the distributor will pre-pay the promotion and distribution fees of the film, and the distributor will charge an agency distribution fee of 12-20%. If the issuer promises to issue guaranteed guarantees, buyout issuance, prepaid production fees, etc., a higher issuance agency fee will be charged.

As for box office guarantees, it is nothing more than a reflection of the capital market seeking benefits and avoiding disadvantages. Simply put, the publisher makes a box office commitment to the producer and pre-pays the box office in advance. The figure depends on its confidence in the box office prospects of the film. Take the latest "Escape from the Jedi" as an example. According to its previously signed guaranteed contract, if the mainland box office is between 1 billion and 1.2 billion yuan, Tang De will account for 70% of the excess of more than 1 billion yuan, and the guaranteed party will account for 30%; the box office is between 1.2 billion and 1.4 billion yuan, Tang De and the guaranteed party will each account for 50%; the box office exceeds 1.4 billion yuan, Tang De will account for 30% and the guaranteed party will account for 70%; The box office is between 1.4 billion and 1.9 billion yuan, and the guarantee party agreed to withdraw 10% of the excess as publicity rewards.

Of course, if the box office of "Escape from the Jedi" does not reach 1 billion yuan in the end, then Donde will still share the 1 billion yuan share (i.e., the 307 million mentioned at the beginning), and the publisher will inevitably bear the corresponding losses.

However, considering the current box office trend of "Escape from the Jedi", on the whole, it is not surprising that its final destination will be 700 to 800 million yuan-this is obviously not what Lianrui Pictures and Hehe Pictures hope to see.

Looking back at the box office guarantee, there are many people who have been successful and defeated

. Looking at this year's summer season,"Escape from the Jedi" is not the only one who has chosen to guarantee the release. Judging from the situation, there is a possibility that everyone who guarantees a guarantee may fall into the street: for the previously released "To Youth 2", microfilm guaranteed a guarantee of 400 million yuan, but the latest data is that its box office was 330 million yuan; among the films that have not yet been released, Hengye Pictures has guaranteed a guarantee of 350 to 400 million yuan for "Summer There is Qiao Mu and Elegant Hope to Paradise", and Century Changlong has guaranteed a guarantee of 1 billion yuan for "Tomb Robber Notes". Combined with "To Youth 2","Escape from the Jedi" and the overall situation of this year's summer season, it seems difficult for these films to achieve guaranteed box office results.

In fact, judging from the past of mainland box office guarantees, which is actually not short, this matter is a risky investment full of unknowns and a high failure rate. There are many cases of success and failure. As early as 2002, Bona Films, which had just been established a few years ago, won the distribution rights of "The Legend of Tianmai" starring Yeoh Ziqiong by guaranteeing a guaranteed share of accounts. At that time, President Yu Dong of Bona paid a minimum fee of 4 million yuan, plus about 3 million yuan in publicity and distribution expenses. In the end,"The Legend of Tianmai" won nearly 30 million yuan in the box office in the mainland, which then established the foundation for Yu Dong's co-production with Hong Kong. Status in the field of distribution.

Then, it was not until recent years that the case of box office guarantees became more and more active. In 2013, Xingye's "Journey to the West: Conquering Demons", the copyright party of Bingo Group, signed a minimum guarantee agreement with the mainland publisher Huayi Brothers. Huayi invested 81 million yuan as the minimum guarantee for the issuance, and later added an investment of 7 million yuan. As a transaction condition, when the net income of the film released in mainland China is greater than or equal to 20 million yuan, Huayi can receive a share of more than 70% of the net income, and other investors will receive a net income of no more than 30%. As the film grossed 1.246 billion yuan in box office, Huayi Congzhong's profit is expected to reach about 300 million yuan.

Other successful cases include: in 2014, Beijing Culture, Film Union Media and other publishers guaranteed a box office guarantee of 500 million yuan for "Heart Flower Road Release", with the final box office guarantee of 1.17 billion yuan; in the same year, Bona Films guaranteed a box office guarantee of 350 million yuan for Han Han's director's debut "There Will Be No Future", with the final box office guarantee of 630 million yuan; in 2015, 21 Holdings spent 150 million yuan to purchase 47.5% of the box office proceeds of "Lost in Hong Kong", equivalent to a guaranteed guarantee of 900 million yuan, and the box office of" Lost in Hong Kong" exceeded 1.5 billion yuan.

Of course, the largest and most eye-catching item is undoubtedly "Mermaid" during this year's Spring Festival. Its producers signed a sky-high 2 billion yuan box office guarantee agreement with the five major distributors, China Film, Longteng, Lianrui, He, and Light. At the time, it was nothing more than a big gamble. But in the end, the box office result of nearly 3.4 billion yuan made several major distributors happy, but also allowed everyone to once again see the infinite possibilities of the China film market.

However, if someone makes money, someone must lose money, and there are naturally many cases where box office guarantees go to the streets. The most famous ones include that in 2014, Wanda was rumored to have guaranteed a guaranteed guarantee of 1 billion yuan for Jiang Wen's "One Step Away", but the film's ungrounded spirit also caused the box office to stop at 500 million yuan. Some people even accused Wang Sicong of scolding the film on Weibo at that time and linked it to the guarantee failure.

In other failed cases, for example, LeTV Pictures guaranteed a minimum of 800 million yuan for two "Taiping Wheels" films, but in the end, they only earned 600 million yuan in box office. Another example is the continuous "three battles and three defeats" depicted by the drama actors: "Gardenia Blooms" released in July 2015 had a guaranteed minimum of 430 million yuan, with a final box office of 380 million yuan;"City in Love" released in August had a guaranteed minimum of 60 million yuan, with a final box office of 53 million yuan;"Master" released in December had a guaranteed minimum of 150 million yuan, with a final box office of 55 million yuan.

Of course, there is also "Ip Man 3", which was in the limelight in the first half of this year. Not only did it fail to ensure its guarantee, but it also fell into various scandals.

Analyzewhy box office guarantees will not be just a flash

in the pan to explore why box office guarantees have become popular. We cannot simply attribute success and failure to the so-called word "bet." Financial intervention in movies is a matter of time for China's film market, which is booming. However, just the box office guarantee that changes the profit distribution method will not change the nature of film investment that is always full of risks.

However, a remarkable phenomenon in China's film market is that in addition to a few solid giant companies, such as Huayi, Bona, and Light, more and more emerging companies want to join the film industry and strive to get a piece of the pie. In this market environment where there is still a shortage of people, the risk of distributing a movie is undoubtedly much smaller than that of producing it. How can a small company with weak strength find its own survival space when large companies generally monopolize high-quality films? Although it is risky, it is easy to guarantee the bottom of the box office with a small and generous box office. It is undoubtedly a good choice-even if it fails, it will already be famous.

For giant companies on the production side, the advantage of ensuring box office security is relatively obvious. Under normal circumstances, after a film is released, the box office of the movie will first be credited to the national unified account of the "Special Funding Office" from major theaters. It often takes a few months or even a year to wait for the funds to be transferred to the distribution company and the main producer. This makes the payment period for investment films too long, greatly reducing the efficiency of capital circulation in the film industry. Moreover, it must also be considered that in many cases box office receipts may not necessarily recover costs. The box office guarantee is to allow the producer not only to ensure that the movie will not lose money before it is released, but also to use the quickly recovered funds to continue to be integrated into the company's next production process. In the long run, it is undoubtedly a virtuous cycle.

Of course, judging from the current feedback, although Bona and Light have also tasted a lot of benefits from box office guarantees in the past, these industry leaders do not seem to have any intention of promoting this model. Previously, in March, Guangguang President Wang Changtian expressed his concerns about this model in an interview. As a member of the box office guarantee behind "Mermaid", Wang Changtian did not disclose the reason why Light's earnings were kept commercially confidential, but said only,"The biggest winner of this project must be Stephen Chow. Other companies have got what they deserve. Light is of course also one of the beneficiaries."

As for the distribution model with guaranteed box office guarantees, Wang Changtian's attitude at the time was,"It will not become mainstream and will be too easily influenced by economic laws. The vast majority of similar projects will fail." As for why Light was involved, Wang Changtian also explained,"First, your partner has an urgent or certain reason that he cannot refuse, and will do this in order to take care of the interests of the partner. Second, you can do it when you can definitely bear the cost of this guaranteed issuance."

At the same time, Wang Changtian has also expressed his caution about bubbles in the industry many times. He just said at a group interview with "Big Fish Begonia" the day before yesterday that "even during the low tide period, it cannot be said that there is no bubble." Previously, he also said,"Every industry has bubbles and disruptors. More often, our perspective is different from that of outside the industry. We will analyze the right and wrong of this approach, rather than attacking with others."

From this perspective, it is not unreasonable to imagine that industry leaders will put down their stance and join the trend of box office guarantees in the future. In a market economy, profit is definitely the first starting point for all companies. As China's film market matures, the entire industry is bound to have a significant improvement in the ability of a film to pre-budget evaluation, post-production publicity and final box office prediction. The biggest weakness of today's box office guarantee is undoubtedly the inaccurate prediction of box office prospects. If in the future, we can ensure that all the above-mentioned standards can be improved, we really cannot find any reason to refuse to guarantee the box office guarantee.

After all, no one cares about money, right?

Editor: yvette