Just before the film’s May 2 release in North America, Thunderbolts, the next tentpole in the Marvel Cinematic Universe, will open in Chinese multiplexes on April 30.
This is good news for Imax because its business in China, the second-largest exhibition market in the world, depends heavily on Hollywood films. But amid an escalating global tariffs turmoil prompted by U.S. President Trump, Wall Street has begun to weigh the impact on Imax from a Hollywood boycott measure imposed by China.
Furthermore, it is generally agreed that the impact will be minimal, particularly since a diverse Imax is probably better equipped to handle local language films on its screens in China. Imax China made a record $167 million at the box office in its first quarter, primarily from local language films and, more specifically, the Chinese animated comedy Ne Zha 2.
In an investment report released on Wednesday, Roth analyst Eric Handler stated that limitations on films made in the United States are not anticipated to have a significant financial impact. “Imax makes around $100 million at the Chinese box office from Hollywood films in a typical year. We calculate that, in the event of a Hollywood ban, the exposure to Hollywood might be cut in half, to $50 million, by substituting programs with either local language content or other foreign imports.
A Xinhua News Agency reporter’s social media posts about a potential ban on U.S. film imports have sparked speculation that Hollywood may face reprisal for U.S. tariffs in China.
Market observers warn that those social media posts are viewed as speculative and have not been accompanied by a statement from Chinese competitor media sources. Furthermore, it is believed that the China Film Bureau, which maintains a strict regulatory watch on the Chinese film industry, has no plans to alter the rules or regulations governing the distribution of American films in China.
Given China’s reliance on multiplexes to support a fragile real estate market and drive ongoing consumer spending, Mike Hickey, an analyst with Benchmark Equity Research, also believes that a complete ban on Hollywood tentpoles in that nation is unlikely.
In his own investment note on Wednesday, Hickey made the case that “recent record box office numbers and ongoing approvals of foreign releases signal confidence among regulators in sustaining a dynamic market rather than severing key content sources.”
Hickey continued, “Ne Zha 2’s success at the box office, which has brought in over $1.1 billion worldwide, also bodes well for Imax in China should a U.S. film ban emerge.”
“Recent trends indicate that local productions, which already command a sizable portion of China’s box office, could mitigate the disruption even if such a ban were to materialize.” Consequently, the impact on revenue and profits would be significant but not disastrous, demonstrating the growing power and tenacity of local language filmmaking in one of the biggest film markets globally, he contended.