The second biggest box office market in the world is China - but is Hollywood getting blinded to the reality behind that cash? Much is made of the country's importance to global box office numbers, a topic which recently made headlines due to the outright failure of Star Wars: The Last Jedi in the territory. The sci-fi juggernaut has raked in more than $1.27 billion dollars worldwide, but some are calling the film a bomb because it failed to make an impact at the Chinese box office, and is expected to finish its run well under $50 million, a huge step down from The Force Awakens' $124 million haul, which itself was considered underwhelming.While it certainly would have been nice if Star Wars could break out in China, it really doesn't matter all that much. Actually, the Chinese box office is not nearly as important to a film's success as some people would have you believe. If a movie manages to hit overseas, that does not make up for its shortcomings in North America, and a blockbuster's failure in China does not undo its success everywhere else.Related: Star Wars: The Last Jedi Was A Box Office SuccessSure, China is the world's second-largest box office market, but there's far more to the equation than that attention-grabbing statement. The truth is far more complicated than that.How Much Money Does Hollywood Actually Make From China? (This Page)

China Doesn't Actually Save Franchises From Box Office Doom

Aaron Paul Rami Malek and Scott Mescudi in Need for Speed Movie

A particular narrative has been going around that China can "save" a movie from box office failure. Movies like Warcraft, Need For Speed and Terminator Genisys all had the dubious fortune of making more money in China than they did in America, and sequels for each of these films were strongly considered, at least according to hopeful studio executives trying to build hype. But how much is this true? Warcraft is often cited as a huge Chinese smash hit, yet no sequel has been put into production. Need For Speed 2 was being floated as a completely Chinese endeavor and still nothing has yet to come from those plans. As for Terminator, the series is being rebooted under the watchful eye of series creator James Cameron, essentially ignoring the events of Genisys (as well as Terminator 3 and Salvation).

If China's box office is so important, then why wasn't Warcraft 2 immediately greenlit? After all, the original made over $200 million in that territory alone. If it had made that much money in the USA, then a sequel would be a no-brainer! Alas, it's not that simple. It's easy to say, "Warcraft made $433 million worldwide off a $160 million budget! It's a success!" There's an old and outdated misunderstanding that if a movie doubles its budget in worldwide grosses, then it is profitable. That's simply not true.

It's tough to pin down the exact numbers for each film, but money earned in China isn't worth nearly as much as money earned in the United States. For a typical Hollywood movie, the film studio earns about half of the box office gross. It's never this exact, but conventional wisdom says that when 2016's Warcraft made a measly $47 million in the USA, the studio took home roughly $23.5 million of that cash. For most foreign territories, the studios only take home around 40% of the gross. Minus America and China, Warcraft brought in $172.7 million, which means Legendary took home about $69 million. When it comes to China, however, the typical Hollywood studio only gets to bring home a shockingly low 25% of a film's gross, or half of what they bring make from American ticket sales. Warcraft made $213.5 million in China. 25% of that is just $53.4 million.

Related: Why Star Wars Still Struggles at the Chinese Box Office

Adding up this rough estimate of money brought in by the studio, Warcraft only made Legendary $145 million, well short of its budget of $160 mil, and that's not even getting into marketing costs. Using math, it's easy to see that Warcraft was far from a hit. That being said, Warcraft, while not a success, wasn't a total disaster, and the money brought in from China certainly helped Legendary save face when it came to the film's financial fallout. An added wrinkle to this formula was the fact that Legendary was purchased by the Chinese Dalian Wanda conglomerate in January 2016, which muddies the waters of the film's middling fiscal failure... Though that relationship may or may not be moving along so well, according to this article from Variety.

Dinobots - Transformers 4Dinobots - Transformers 4

Releasing A Film In China Is Very Complicated

In order to be released in China, movies need to obey their numerous arbitrary and loosely-defined rules which stifle creativity and homogenize the finished product. Among China's rules are decrees that a film cannot found to be "propagating cults and superstition," nor can it "Jeopardize social ethics or national cultural traditions." Other less-than-tangible regulations mean that films are often edited, not just for violence and sexuality, but for vaguely-understood "immoral content."

There are no traditional film ratings in China (R, PG, etc), so every film must meet national standards of decency, and that includes rules that clamp down on creative expression; for example, all villains must face some form of comeuppance, to be punished for their misdeeds.

In a 2016 interview with The Guardian, Hong Kong filmmaker Johnnie To stated, œTo make it really big, a film has to be one the Chinese censors can approve. The range of films that the world will get to see will be restricted. The world should not be subjected to the restrictions of the Chinese, but To predicts that such a future may come to pass if Hollywood continues to court China the way they did with stunts like the "Chinese Cut" of Iron Man 3 and their refusal to stand up to the country's censorship practices.

Related: Is China's Government Honest In Their Box Office Reporting?

Why do Hollywood studios put up with China's stranglehold on creative freedom? It's not because of the current state of China's box office, but because of what the film industry is betting China's box office will be in the future. There are nearly 1.4 billion people living in China; that's a lot of potential customers, and Hollywood believes that the Chinese box office is a worthwhile long-term investment, no matter the cost.

We Have Proof Blockbusters Don't Need China

Deadpool holding up to guns by his face in Deadpool (2016)

As mentioned earlier, China doesn't usually turn a flop into a hit; at best, the Chinese box office can be damage control, turning an outright bomb into merely a poor or middling performer. That being said, the inverse is also true: a movie doesn't need China to be a hit. As of this writing, Star Wars: The Last Jedi is at $1.27 billion and rising.

In recent years, there have been several blockbusters which dared to just throw their hands in the air and say "Screw it. We don't need China." While Logan got a (heavily edited) release in early 2017, Fox's R-rated superhero parody, Deadpool, did not. The legend goes that Fox tried to put together a PG-13 version of the film for international release, and a short-lived petition for a more family-friendly cut of the film briefly made social media headlines, but no such cut was ever made available, and the film was simply denied release in China.

Deadpool was a film which stuck to its guns and refused to capitulate to China's demands, and instead marched to the beat of its own drum however crude, juvenile, and gloriously obscene that drum may have been and it marched all the way to the bank, bringing in an unexpectedly huge $783 million worldwide, no China required.

Related: Hollywood's Box Office Problems Are Its Own Fault

Another recent superhero blockbuster that didn't get a fair shake in China was Suicide Squad. Despite its more inclusive PG-13 rating and an offer to change the title of the film to the less provocative Special Task Force X, China wouldn't allow the film to play in their theaters, likely objecting to the premise of using morally corrupt villains as the protagonists. Despite this, the film still went on to gross $746 million worldwide, more than enough for the $175 million production to be considered a sound financial success.

Hollywood Is Still Trying To Bait China

For some franchises, China truly is a key market. The two most recent Fast & Furious movies, for example, brought in nearly $400 million each (from which 25%, or about $100 million, goes to Universal), and Pacific Rim Uprising is largely being shaped towards the sensibilities of Chinese audiences since the first film proved to be a surprisingly strong performer in the country. It's likely that Uprising wouldn't exist without the aforementioned Dalian Wanda/Legendary acquisition; though Pacific Rim is a certifiable cult classic, it didn't do so well at the box office, and it remains to be seen if this long-awaited sequel will be able to succeed where the original failed. Maybe the possibility of a Warcraft sequel hinges on the success of Uprising, but it will take more than just a Chinese box office victory to justify these big-budget global blockbusters.

When a movie does well in China, the first and biggest beneficiary of that success is China. Movie studios only get 25% of the Chinese box office. That leaves a lot of money going to the state-run theaters and associated businesses. Hollywood definitely got the short end of the stick on that deal, but they were so desperate to get a foothold in the country that they thought it was worth investing in what was once a rapidly-growing market. In 2018, the Chinese box office has not expanded at the exponential rate many were predicting. Combined with the results of the recent audit on the country which found that China had under-reported their box office numbers by 9%, stealing millions of dollars from Hollywood studios, a big question needs to be asked.

Is China Worth It?

The massive alien ship lands in Independence Day: Resurgence

Is courting China worth compromising Hollywood movies, America's greatest export? Independence Day: Resurgence was lambasted for, among other reasons, its overuse of Chinese product placement, from milk to instant messaging services, and Tony Stark himself used a Vivo cell phone in Captain America: Civil War. Vivo is a low-rent brand which is only sold in China, certainly not something that Iron Man would use. Hollywood is willing to compromise the cohesion of their fiction and undermine their own characters just to try to get in China's good graces. It's shameless pandering to the farthest and most offensive degree, and it's a reality of the industry today.

Related: The Biggest Box Office Hits of 2017

But it doesn't have to be this way. Films like Deadpool and Suicide Squad - not to mention three Star Wars movies on the trot - managed to be quite successful without getting Chinese releases, but the fact is that studios (not to mention the trade websites) are just too interested in watching films hit that billion-dollar milestone. Indeed, if not for China's box office results, movies like Transformers: Age of Extinction, The Fate of the Furious, and the aforementioned Captain America: Civil War would have fallen short of joining the esteemed "Billion Dollar Club." Maybe entrance to that club isn't worth the price of admission.

Cinema is a business, and it's the fiduciary duty of those involved to make as much money as they possibly can, but the industry also has a responsibility to the art they create, and to not eschew their values and integrity just to make an extra buck. Hollywood was successful before the Chinese box office boom, and they can be successful today. If China wants a piece of Hollywood's action, they're welcome to it, but on Hollywood's terms, not theirs. Simply put, China's not worth it, especially when every dollar is only worth twenty-five cents.

Next: The 30 Most Anticipated Movies of 2018