16 Feb 2017

Film Entertainment Industry in Hong Kong

Overview

Hong Kong has one of the largest and most dynamic film entertainment industries in the world. As one of the world's largest film and television content exporters, Hong Kong has captured a fair share of the regional market, in particular the market on the Chinese mainland.

An increasing number of movies have been co-produced by Hong Kong and mainland film production companies in recent years, which accounted for 54 out of a total of 89 that were granted co-production shooting permits in 2016.

Hong Kong acts as the hub of buying and selling Chinese mainland films and TV dramas through FILMART and it is increasingly seen as a remarkable platform to explore co-production in Asia. In 2016, there were over 200 Chinese exhibitors at FILMART.

Hong Kong's audio-visual services industry has gained preferential access under CEPA to the huge media entertainment market on the Chinese mainland. The latest CEPA agreement concerning the Mainland’s Specific Commitments on Liberalisation of Trade in Services for Hong Kong was signed in December 2015 for implementation in mid-2016, providing further enhancement in market access for Hong Kong service suppliers to the mainland market. Hong Kong acts as the hub of buying and selling Chinese mainland films and TV dramas through FILMART and it is increasingly seen as a remarkable platform to explore co-production in Asia. In 2016, there were over 200 Chinese exhibitors at FILMART.

Industry Data

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Service Providers

Most local film companies deal directly with cinema chains for local screening on a revenue-sharing basis. Rights will then be sold to distribution companies for other forms of release, including video rental and sales, and television broadcasting. There are also companies which specialise in distributing foreign films in Hong Kong.

The film industry is represented by several industry associations, including the Movie Producers and Distributors Association of Hong Kong Ltd (MPDA), the Motion Picture Industry Association (MPIA), the Hong Kong Film Directors’ Guild (HKFDG), and the Hong Kong Screenwriters’ Guild (HKSWG).

Industry Development and Market Outlook

Film distribution

As of January 2017, there were 55 cinemas in Hong Kong. Films are mainly released through channels such as United Artists, Broadway Circuit, the MCL Circuit, the AMC Circuit, Golden Harvest and Newport Circuit. Other movie distribution channels include selling of film DVDs and CDs, broadcasting by local free televisions, pay televisions, subscription satellite services and online platforms such as Amazon, iTunes and Google Play.

Hong Kong is among the world's largest film exporters. In 2016, 61 locally produced films were released. In 2014, Hong Kong’s audio-visual production-related services exports amounted to HK$675 million. Hong Kong's film industry as a whole is reliant on overseas revenues, given the limited size of the domestic market. Asia accounts for the majority of the foreign sales income.

The box office on the Chinese mainland has become a vital market for Hong Kong movies. In 2016 China’s box office had surpassed North America for the first time. 2016 Box office income reached RMB45.5 billion in the same year, though growth remarkably slowed down to 3.3%.

Nowadays, an increasing number of movies have been co-produced by Hong Kong and mainland film production companies. A record total of 89 films obtained co-production

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permits in 2016, up 11% from 2015 – with 54 of the co-productions involving mainland and Hong Kong producers. Co-productions have fared well in the Chinese film market in recent years. Chinese mainland-Hong Kong Co-productions always occupy spots among the top 10 box office films in the Chinese mainland.

Thanks to such co-operation, many good-quality films with critical acclaims have been produced. For example, The Grandmaster won the Best Costume Designer in the 8th Asian Film Awards (AFA) and the Best Cinematography of the 56th Asian Pacific Film Festival (APFF). Also, The Journey to the West: The Demons Strike Back (西遊伏妖篇), directed by Tsui Hark (徐克) and produced by Stephen Chow, achieved a new box office record of RMB355 million on its premier day in January 2017.

Hong Kong's films have gained increasing recognition from the international film industry over the years, with young talents on the rise. In 2016, Wong Chun (黃進) won the Best New Director Award at the 53th Golden Horse Awards with his debut feature Mad World (一念無明). Crime thriller Trivisa (樹大招風), directed by new talents Frank Hui (許學文), Jevons Au (歐文傑) and Vicky Wong (黃偉傑) and produced by Johnny To (杜琪峯), won the Best Original Screenplay (by Loong Man Hong (龍文康), Thomas Ng (伍奇偉), Mak Tin- shu (麥天樞) ). The movie also won Best Film Editing (by Allen Leung Chin-lun (梁展綸) and David Richardson) in the same year.

In 2015, Port of Call received the best film award at the 19th Bucheon International Fantastic Film Festival, and Aaron Kwok also won the Star Asia award at the 13th New York Asian Film Festival for his performance in the film. In 2014, Ann Hui won the Best Director award at the Taipei Golden Horse Film Festival with her film The Golden Era.

Apart from buying rights for theatrical distribution, Hollywood is also interested in acquiring rights to remake Hong Kong movies. For example, The Eye released by Hollywood in 2008 was a remake based on a 2002 film Gin Gwai directed by Hong Kong's Pang Brothers. Infernal Affairs was remade by Martin Scorsese to the Oscar-winning movie The Departed, which was released in 2006. Further, Korean film Mujeogja was a remake of Hong Kong gangster film A Better Tomorrow in 2010.

Hong Kong has a unique advantage in bridging the Chinese mainland with the Western audiences and opening a window on the world for Chinese audience. In 2015, Warner Bros. Entertainment and China Media Capital (CMC) formed a joint venture of US$1 billion, headquartered in Hong Kong, to develop and produce films for global distribution.

Hong Kong film talents and professionals have managed to make their names known in both Eastern and Western movie market. For example, Ann Hui also won the Lifetime Achievement Award of the 6th AFA. In Hollywood, Yuen Woo Ping is one of the best known and Chinese martial arts movie choreographers because of his involvement in Matrix. John Woo, Chow Yun-fat, Michelle Yeoh, Cory Yuen, Sammo Hung and Ronny Yu are just some of the Hong Kong names that have managed to successfully straddle both Eastern and Western markets. For instance, Ip Man 3 fetched a box office of US$1.6 million during the first ten days of its premiere in the North America market.

While major film companies have their own distribution departments, smaller independent filmmakers usually rely on distribution companies to sell their films in overseas markets. Key channels for international distribution are the three main film markets in Los Angeles, Cannes and Berlin, where producers, distributors and buyers meet to initiate deals for the distribution of films. In 2016, the HKTDC organised the

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Hong Kong Pavilion showcasing the latest Hong Kong film productions at the Marché du Film in Cannes.

Hong Kong has hosted an annual film market since 1997 to promote Hong Kong as a film distribution centre in the region. In 2016, FILMART attracted 800 exhibitors from 30 countries and regions, and 7,300 visitors from 60 countries and regions.

FILMART (Hong Kong), Marché Du Film (Cannes) and American Film Market (the US) have been chosen by film industry players as the top three most important global film events. FILMART is now the largest film and TV market event in Asia.

Hong Kong acts as the hub of buying and selling Chinese mainland films and TV dramas through FILMART and it is increasingly seen as a remarkable platform to explore co- production in Asia. In 2016, there were over 200 Chinese exhibitors at FILMART.

Hong Kong is also a popular place for overseas crews shooting commercial films, TV programmes and advertisements. In recent years, feature films from various countries that have made Hong Kong their filming locations included Transformer: Age of Extinction (US) and The Suspect (Korea). For TV programmes, Cesar to the Rescue (US) and Asia’s Got Talent (Singapore) were filmed in Hong Kong as well.

Television programmes

Hong Kong TV companies derive a substantial portion of their revenue from overseas markets, targeting primarily Chinese-speaking populations. In addition, some programmes are dubbed into other languages to target the non-Chinese-speaking audience. Hong Kong's television broadcasters sell their products using the following methods: programme licensing, pre-packaged programme content and subscription fees, with satellite distribution and landing rights now becoming an increasingly important source of revenue.

Recently, over-the-top (OTT) services through digital TV and mobile platforms have emerged to be an important distribution channel of TV programmes in Hong Kong. For example, most of the latest programmes produced by Television Broadcasts Limited (TVB) are available on their mobile application platform “myTV SUPER”. In November 2014, Hong Kong Television Network Limited (HKTV) started distributing their programmes through the internet, which can be accessed by various devices including mobile phones and tablets. ViuTV, the channel run by HKTVE and launched in April 2016, offers both free-to-air broadcast and media-on-demand streaming services on mobile devices. In January 2016, global streaming giant Netflix rolled out its OTT service in Hong Kong. Netflix users can enjoy unlimited movies and TV programmes on TV, laptops and mobile devices on a paid subscription basis.

China has the largest television market in the world. With a surge in TV and cable channels, the mainland's demand for quality programme content is huge. Landing rights have been granted to Hong Kong's TV broadcasters to provide TV entertainment to millions of homes in China, and much wider access of mainland-Hong Kong co-produced television programmes are provided under CEPA. Hong Kong's TV industry is expected to greatly benefit from more opportunities from the mainland.

Supports to the film industry

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In support of the local film industry, the Hong Kong government has established the Film Development Council (HKFDC) and Create Hong Kong within the Commerce and Economic Development Bureau. To subsidise locally-produced Cantonese firms targeting the Chinese mainland, the government announced at the 2016 Budget an addition fund infusion of HK$20 million to the Film Development Fund (administered by the Secretariat of the HKFDC).

As of end-December 2016, 52 out of 84 applications were approved with a total funding of about HK$147.1 million, since the launch of the Film Development Fund Scheme for Financing Film Production in October 2007.

Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)

CEPA provisions include significant market liberalisation measures for Hong Kong's audio- visual services industry, including the production of television drama programmes. As at end-January 2017, the Hong Kong government had granted Hong Kong service suppliers (HKSS) certificates to 81 audio-visual service companies.

CEPA relaxes the scope for Hong Kong companies operating wholly-owned units in respect of business of cinema construction and renovation, allowing them to construct or renovate more than one cinema theatre at more than one location for film-screening business. Many Hong Kong companies have set up cinemas, including flagship multiplex cinemas, in various mainland cities. Besides, Chinese language films produced by Hong Kong companies approved by Chinese mainland authorities are not subject to the import quota set for foreign films. In addition, films co-produced by Hong Kong and the mainland are treated as mainland productions.

The Agreement in Trade Services (ATIS) under CEPA, effective from January 2016, allows Hong Kong companies wider access to the Chinese mainland market in providing Chinese language motion pictures, jointly-produced motion pictures and TV dramas, technical services of cable television. Hong Kong's TV industry will continue to benefit from the growing opportunities on the mainland. Details of the preferential access concerning the audio-visual sector can be found here.

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