Business

Cannes: China arrives on and off the red carpet

Gong Li at Cannes
Image caption Superstar Gong Li at Cannes. Every year, the Chinese presence grows in the south of France on and off the red carpet

It may have been pouring with rain for the first week but for most people, Cannes is all red carpets, glamorous movie stars and the palm tree-lined Croissette under a golden Mediterranean sun.

Less well known is that Cannes is also a film market.

It was created in 1959 - some 13 years after the film festival itself began - to sell, finance and distribute films and thus has become the premier meeting point for professionals in the industry.

Cannes is all about business; it takes place in May in order to extend the summer season, moving it forward so that hotels and local businesses profit for a longer period.

This was also the case with the competing Venice Film Festival, which was started by the owners of the grand hotels on the Lido in order to fill up their luxurious palaces well into the month of September.

Both festivals decided to invite some stunning Hollywood talent across the Atlantic, and showcase their films, thereby providing the perfect PR for their core businesses in the tourism industry.

'China has evolved'

With 109 countries participating, the US leads the way at the film market, followed by France and the UK. Staying inside doing deals seems to be the result of windy downpours, with the film market reporting an 8% increase in attendance from last year.

The ailing eurozone countries were there - even Greece - though sales for the troubled country were weak. Italy also had a difficult time but the French majors such as Studio Canal fared better than the weather.

Image caption Cannes is much more than the world's most prestigious film festival

Both Asia and Latin America weighed in with increased attendances of 15% and 21%, respectively.

Thirteen new countries have joined, representing a strong emerging market showing.

Overall attendance at the festival itself was also up by 25% from 2011, demonstrating that even during a financial crisis in much of the world, there is a strong appetite for new movies.

Taking a moment in his hectic schedule, Jerome Paillard, the executive director of the market, said: "One of the most interesting aspects this year is how the Chinese delegation has evolved to better grasp the importance of the international aspect of the market.

"Chinese producers are now thinking much more about making films which will work not only in China, but outside of China as well. This mostly translates as special effects and genre films."

Mr Paillard also pointed to the Chinese version of YouTube, Youku.com, which has 75 million individual visitors per day and is listed on the New York Stock Exchange.

Youku.com has an exclusive content agreement with the Chinese state broadcaster CCTV, distributing some of the most popular television series in China, and they showcased micro-movies at Cannes, a new venture that combines sponsors such as car marquee Buick with top name directing talent.

China obviously agrees and is showing an appetite for investing in American cinemas. A Chinese conglomerate, the Dalian Wanda Group, said it would purchase cinema chain AMC Entertainment for $2.6bn - China's biggest corporate takeover in the US entertainment industry.

And recently, Rupert Murdoch's News Corp, which owns film studio 20th Century Fox, bought a stake in one of China's largest film distributors.

Los Angeles-based Ryan Kavanaugh's growing media group Relativity is heading towards a friendly takeover of Germany's Senator film studio.

Relativity has already purchased IDG China Media, previously known as the Boston-based International Data Group's China-focused investment arm, and has formed a joint venture in China with Huaxia Film Distribution and Beijing-based Skyland Film-Television Culture Development.

New technologies

Cinema historically does well when the economy is gloomy. That was the case during the Depression in the 1930s, and for the most part, appears to be the case today.

But films are now being produced and distributed in more formats than ever before and by more countries, thus the good old days of studio-dominated products have given way to a multi-dimensional landscape of entertainment for as many kinds of screens as one can imagine.

A recent challenger to the big US studio-dominated releases in much of the world was the announcement that YouTube, Google's online video site, will invest $100 million to produce content.

Image caption Actor Ewan McGregor and director Andrea Arnold were on the Palme d'Or jury

Google is branching out into content production by funding filmmakers, writers and some of their most popular online stars and creating about 100 new channels. This helps it get around the expensive studio-driven content and will attract more serious advertising revenues.

The studios tried many years ago to produce content as well as owning the cinemas - so-called vertical markets - and were called out for monopolistic abuses. Now Google is attempting the same thing, becoming the producer, creator and distributor of content.

As it dominates the internet space through YouTube, one could say it owns a majority of the online cinemas as well.

New film funds in Europe and the US, greater sophistication on the part of Asian players, and a healthy Latin American presence could translate as a winning bet that cinema attendance will pull through in spite of the economic crisis.

And if history repeats itself, even if the crisis worsens, cinema attendance could remain healthy, as purchasing a ticket to the movies still remains one of the public's less expensive entertainment expenditures.

These last few days in Cannes, the sun has finally come out and the sunglasses are back on.

Everywhere except inside the cinemas, where films continue to remind the crowds the reason why they travel to the south of France each May.

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