Overview
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Hong Kong has one of the largest and most dynamic film entertainment industries in the world. In per capita production, Hong Kong ranked first in Asia and fourth in the world in 2007.
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Hong Kong's films have gained increasing recognition from the international film industry. Apart from buying rights for theatrical distribution, Hollywood is also interested in acquiring rights to remake Hong Kong movies. Hong Kong film talent has managed to make their names known in both Eastern and Western movie market.
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Utilisation of special digital effects has become a worldwide trend in film production. This is also becoming increasingly common in Hong Kong’s film production. Recent examples of Hong Kong movies include “Cheung Gong 7 hou (CJ7)” and “Painted Skin”.
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Hong Kong is also one of the world's largest television and film content exporters. There is a big market for film and TV productions within the region. The boom in Asian cable and satellite channels over the last few years has provided a ready market for producers. Hong Kong films and TV content have captured a fair share of the film markets of South Korea, Taiwan and Southeast Asia. Many filmmakers are also turning their attention to entering the North American film market.
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In December 2008, the Hong Kong Film Development Council launched a project called “Hong Kong Film: new Action”, which was aimed at promoting local films and new generation of Hong Kong directors to the Chinese mainland, and some other Southeast Asia countries, including Singapore and Malaysia.
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Hong Kong's audio-visual industry has preferential access to the huge Chinese mainland media entertainment market under CEPA, with quota free access to the Chinese mainland of Hong Kong-produced Chinese language films. Hong Kong-mainland co-produced films and television programmes are treated as mainland productions after receiving approval from mainland authorities.
Industry Data
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Motion Pictures and Other Entertainment Services
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March 2008
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March 2009
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Number of establishment
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1,693
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1,589
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Employment (excluding those in civil service)
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15,790
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14,412
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Source:
Quarterly Report of Employment and Vacancies Statistics, Census and Statistics Department
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2007
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2008
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Number of local films released
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220
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247
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Total box office receipts (HK$ million)
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1,051
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1,109
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Year-on-year (YoY) % growth of total box office receipts
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10.1
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5.5
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Source:
Statistical Digest of the Services Sector 2009 Edition
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/laser 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).
Based on statistics complied by Screen Digest, Hong Kong ranked fourth in the world's per capita film production after Iceland, Switzerland, and Estonia in 2007.
Exports
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Exports
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2007
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2008
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Video Discs and other recorded magnetic tapes ($million)
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536
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503
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YoY % growth
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NA
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-6.1
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Source:
Report on Hong Kong Trade in Services Statistics for 2009, Census and Statistics Department
Film distribution
As of end-2008, there were 47 cinemas in Hong Kong. Foreign films are mainly released through channels such as United Artists, Broadway Circuit and Panasia Circuit, whereas local films are released through Newport Circuit and Gala Film Distribution. Other movie distribution channels include selling of film DVDs and CDs, and broadcasting by local free televisions, pay televisions and subscription satellite services.
Hong Kong is among the world's largest film exporters. 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. In recent years, the Chinese mainland has become a very important market for Hong Kong movies.
Nowadays, an increasing number of movies have been co-produced by Hong Kong and mainland film production companies. Three out of five of the best film nominees at the 28th Hong Kong Film Awards were produced under the cooperation of Hong Kong and the Chinese mainland movie companies, including ”The Red Cliff”.
Hong Kong's films have gained increasing recognition from the international film industry. Apart from buying rights for theatrical distribution, Hollywood is also interested in acquiring rights to remake Hong Kong movies. For example, Hollywood's "The Departed", which won four Oscar awards in 2007, was the remake of a 2002 Hong Kong film "Infernal Affairs". In 2008, Hollywood's "The Eye" was also a remake based on a 2002 film "Gin Gwai" directed by Hong Kong's Pang Brothers.
Utilisation of special digital effects has become a worldwide trend in film production. This is also becoming increasingly common in film production in Hong Kong. Recent examples of Hong Kong movies with vivid special digital effects include “Cheung Gong 7 hou (CJ7)” and “Painted Skin”. CJ7 generated the second highest gross revenue in 2008, while Painted Skin was one of the five nominated films with the best audio and visual effect at the 28th Hong Kong Film Awards.
In addition, Hong Kong digital effect companies have also attempted to produce full-length animated movies, including ‘The Secret of the Magic Gourd’, a Centro production that was designed by Walt Disney to target the Chinese mainland market in 2007, and “Astro Boy” by Imagi, which will be released in the fourth quarter of 2009.
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. Hong Kong film talent has managed to make their names known in both Eastern and Western movie market. Maggie Cheung Man-yuk, one of Hong Kong's top actresses, won the Best Actress award at the 2004 Cannes International Film Festival. John Woo, Chow Yun-fat, Yuen Wo-ping, 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, “House of Flying Daggers”, the production of which involved film talent from Hong Kong, fetched distribution right sales of about US$10 million and US$13.8 million, respectively for the Japanese and North American markets.
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 Milan, where producers, distributors and buyers meet to initiate deals for the distribution of films. Hong Kong has hosted an annual film market since 1997 to promote Hong Kong as a film distribution centre in the region. The 2009 FILMART attracted 510 exhibitors and 4,503 visitors.
The Chinese mainland is of increasing importance for Hong Kong's films. Under the signed CEPA agreement, qualified Chinese language films produced by Hong Kong companies can enjoy much wider access to the mainland market, without being subject to the import film quota.
Television programmes
Hong Kong TV companies derive a substantial portion of their revenue from overseas markets, targeted 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.
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 millions of homes in Guangdong, 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.
Industry Development and Market Outlook
After a YoY growth of 1.2% in the third quarter of 2008, business receipts in film entertainment declined respectively by 10.7% and 18.4% in the fourth quarter of 2008 and first quarter of 2009.
Digitisation and Multimedia Convergence
One of the most dynamic developments affecting the media entertainment industry is the rapid digitisation of audio-visual content, which affects not only the ways in which audio-visual content is produced, but also how it is distributed. Hong Kong possesses the best design and multimedia capabilities in the region. For instance, Hong Kong-based Imagi International, a digital animation house, has successfully secured a contract from Hollywood giant DreamWorks SKG for computer-generated (CG) animation hit Shrek 2. Imagi has worked on DreamWorks’ digital animation television series Father of the Pride, which debuted in a prime-time slot on the US television NBC in August 2004.
Imagi released its first CG-animated motion picture TMNT in 2007; it is planning the worldwide release of its fully-animated film “Astro Boy” in the fourth quarter of 2009. Further, “The Secret of the Magic Gourd”, a film created by Hong Kong company Centro Digital Pictures that was released on the Chinese mainland in 2007, was known for its special, inventive 3D visual effects.
In December 2008, Hong Kong Film Development Council (HKFDC) launched a project called “Hong Kong Film: new Action”, which was aimed at promoting local films and new generation of Hong Kong directors to the Chinese mainland, and some Southeast Asia countries including Singapore and Malaysia. Besides, HKFDC, along with Hong Kong’s new generation directors, visited Guangdong and Taiwan to promote Hong Kong films produced by these new generation directors to buyers and distributors, and explored opportunities for generating collaborative films.
Hong Kong is a popular destination for movie-shooting. In 2007-2008, several Hollywood and Bollywood films chose Hong Kong as a location for filming. These movies included “ The Dark Knight”, “Fantastic Four: Rise of the Silver Surfer”, “Push”,…etc.
Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA)
Existing CEPA provisions include significant market liberalisation measures for Hong Kong's audio-visual services industry, including the production of television drama programmes. 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. In 2008, Hong Kong's Golden Harvest secured a market share of 20% in Shenzhen’s cinema industry. Moreover, the Group’s Shenzhen multiplex ranked the second highest box-office cinema during 2006-2008, with admissions growing by about 10% YoY in 2008.
In late 2005, Japan's largest publicly-listed entertainment content provider, Kadokawa Holdings took a majority share in Hong Kong's Intercontinental Group Holdings Ltd, one of the earliest distributors to introduce Western films into the Asian market, in order to explore business opportunities in the mainland's film distribution and cinema market via CEPA. In 2007, the Intercontinental Group Holdings Ltd was officially renamed as Kadokawa Intercontinental Group Holdings Ltd (KIGH), operating several companies, including Intercontinental Film Distributors (HK) Ltd (IFDL), Intercontinental Video Limited (IVL), Multiplex Cinema Limited (MCL), etc.
Under CEPA, 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 were treated as mainland productions, and the Cantonese version of these Hong Kong-mainland co-productions can also be distributed and screened in Guangdong Province.
Under Supplement IV to CEPA, which took effect from January 2008, any proposal of mainland-Hong Kong television drama co-production, the minimum number of words in Chinese contained in the synopsis of each episode is revised down from 5,000 to 1,500. This measure helps save the administrative cost and time of the involved production companies, giving them enhanced flexibility while streamlining the production process.
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Current Scope of Access
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Access for Hong Kong under CEPA
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Cinemas
- Foreign companies are allowed to construct or renovate cinemas in the form of minority-owned joint ventures.
- In seven pilot cities, namely, Shanghai, Beijing, Guangzhou, Chengdu, Xian, Wuhan and Nanjing, foreign companies can hold up to 75% of the cinema joint ventures.
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Cinemas
- Hong Kong companies can establish wholly-owned companies, each of which may construct or renovate more than one cinema theatre at more than one location for the operation of film screening business.
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Co-productions
- Ratio of foreign and mainland crews -- 50:50.
- At least one-third of the main cast must be Chinese mainlanders.
- Story of the film should take place in specific Chinese mainland locations named in the co-production agreement.
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Co-productions
- No requirement on the proportion of principal creative personnel from Hong Kong.
- At least one-third of the main cast must be Chinese mainlanders.
- The Cantonese version of films co-produced by Hong Kong and the mainland can be distributed and screened in Guangdong Province.
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Imported films
- Imports of 20 foreign films per year on a revenue-sharing basis.
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Imported films
- Hong Kong-produced Chinese language films are free from the annual import quota.
- The Hong Kong film production company must own over 50% of the copyright of the film.*
- The Cantonese-version of films produced by Hong Kong and solely imported by the Film Import and Export Corporation of the China Film Group Corporation can be distributed and screened in Guangdong Province.
- *The production company in Hong Kong must be a leading producer and contribute at least 50% of the invested budget of the film.
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Television programmes
- The State Administration of Radio, Film and Television (SARFT) to approve the finished tapes of mainland television programmes produced by Sino-foreign cooperation.
- Few approved imported television productions and co-productions can be broadcast by mainland television stations during prime time (19:00-22:00)
- The number of episodes of a television drama co-production is capped at 30.
- Synopsis for each episode of co-production should have no less than 5,000 words in Chinese.
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Television programmes
- Provincial radio and television administrative departments to approve the finished tapes of mainland television programmes with participation from Hong Kong artistes or production crew.
- Television programmes co-produced by Hong Kong and the Chinese mainland are permitted to be broadcast and distributed in the same way as Chinese mainland produced television programmes.
- Co-produced television programmes:
- at least one-third of the principal creative personnel (refer to directors, screenwriters, cinematographers and leading artistes) should come from mainland
- Mainland enterprise should own at least 51% of the production company
- The maximum number of episodes of television dramas co-produced by Hong Kong and the Chinese mainland will be no different from that for mainland-produced television dramas. Currently, there is no upper limit to the number of episodes produced by Chinese mainland companies.
- Any proposal of television drama to be co-produced by the mainland and Hong Kong programme production organisations, the minimum numbers of words in Chinese contained in the synopsis of each episode is no less than 1,500.
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According to Supplement VI to CEPA, which will be implemented from October 2009, Hong Kong service suppliers (HKSS) will be allowed to form wholly-owned entities to provide videos and sound recording (including motion picture products) distribution services on the Chinese mainland. Moreover, principal film production entity in the Chinese mainland can arrange post production processing of films in Hong Kong by obtaining SARFT approval.
As at end-June 2009, the Hong Kong government had granted HKSS certificates to 26 audio-visual companies out of 28 applications.
