Note: US$ rate is based on exchange rate at time of writing
Chinese entertainment powerhouse Huayi Brothers has posted its first loss in eight years, according to its 2016 annual report, released to shareholders earlier this week.
Total revenue for the year was RMB3.50 billion (US$508 million), marking a year-on-year drop of 9.55%. It posted a loss of RMB40.2 million (US$5.83 million). Film and television remains the company’s biggest sector in both revenue (73.1%) and expenses (91.3%).
The company’s biggest success in 2016 was Warcraft, which earned RMB1.47 billion (US$214 million) at the China box office. However, Huayi was only one of the eight financiers on the big-budget fantasy epic and is not expected to take a significant share of box office profits.
Despite the critical success of Feng Xiaogang’s I Am Not Madame Bovary (我不是潘金蓮) and Cheng Er’s The Wasted Times (羅曼蒂克消亡史), the two films earned only RMB484 million (US$70.2 million) and RMB123 million (US$17.8 million) at the local box office, respectively. Its other 2016 releases – omnibus Run for Love (奔愛), noir drama New York New York (紐約紐約), comedy When Larry Met Mary (陸垚知馬俐) and animated film Rock Dog (搖滾藏獒) – also performed weakly. Huayi was the lead distributor/financier on most of these releases.
Overall, revenue for the company’s film and television sector saw a year-on-year drop of 9.56%.
Revenue for its internet entertainment sector also tumbled from RMB861 million (US$125 million) in 2015 to RMB676 million (US$98.1 million) in 2016, marking a year-on-year drop of 21.47%.
Huayi’s box office stumble in 2016 was part of an overall trend that saw China’s film industry slowing down after years of exponential growth. Total box office saw a year-on-year growth of only 3.7%, marking its lowest growth in a decade. The slowdown is expected to continue in 2017.
Nevertheless, the company is putting on an optimistic face in its report, citing a solid partnership with the US’ STX Entertainment (which had a domestic hit last year with comedy Bad Moms), a new joint venture with the Russo Brothers (of the Captain America films), an expansion of its talent management business and a deepening its partnerships with local internet firms. It also announced a slate of big-budget projects with CKF Pictures, reuniting the company with producer and former production executive Chen Kuofu.
However, Huayi also announced this week that it is expecting a loss of RMB63 to 68 million (US$9.14 to 9.87 million) in the first quarter of 2017.