China’s box office is poised to become the world’s biggest. What does that mean for Hollywood—and America’s soft power?

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In America, by contrast, a film’s takings at the theatre are usually eclipsed by what it earns through television rights, merchandising, video-game licensing and so on. It therefore makes sense for American studios to produce films and send them straight to streaming, as Disney is doing with “Mulan” in many markets. Disney’s films are in effect merely the intellectual-property engine that drives a much larger machine. Before social-distancing edicts obliterated businesses that rely on crowds, it made an annual operating profit of $2.7bn directly from its films and another $6.8bn from the parks, cruises and products that piggyback off them. These profits should return after the pandemic.

That ought to put American studios in a better position than Chinese rivals to keep telling stories in a world of declining cinema attendance—a trend that long predates covid-19. The average American visited the cinema 3.5 times last year, down from five times at the turn of the century. In China ticket sales have begun to slow as more people plump for local streaming services such as iQiyi and Tencent Video.

Project Power

What the shift to streaming means for American soft power is less clear. One possible effect is that East and West will consume less culture in common. At the cinema audiences often soak up stories from all over the world. As they turn to streaming they could do the same; Netflix is replete with local productions. But they more often consume content tailored to their country—and in China, almost exclusively so. The cultural and commercial tussle for global imaginations goes on for now. But one day it may see Americans and Chinese mutually retreat to their own, national, small screens instead.■