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 The release of two films online
during the lockdown provoked uproar in China's
film industry, with theatres fearing they could
be bypassed in future, devastating ticket
revenue at a time when they are already
uncertain how fast the public will regain
confidence to go to the movies.
Authorities told industry executives in recent
weeks that they plan to more strictly manage
"theatrical window period" requirements,
referring to a period of time for which movies
need to be screened in cinemas before they are
allowed to be shown elsewhere.
China's cinema industry, the world
second-largest by box office takings after the
United States, was left reeling by the
authorities order for more than 10,000 cinemas
to close in January for over three months.
Unable to release in a cinema, Huanxi Media
Group premiered its blockbuster comedy, 'Lost in
Russia' on Beijing ByteDance Network Technology
Ltd's online streaming platforms for free.
Even as industry executives complained that the
precedent set by the deal could damage their
business, a second film was also premiered on
online streaming platform iQiyi Inc.
In a letter to the National Film Administration,
23 theatres and film studios warned that online
releases would "destroy" the movie industry and
the process for film premieres.
To safeguard the industry as authorities prepare
to loosen virus-related restrictions, the
regulator has reinforced rules that movies will
only be shown on online platforms after they
undergo a wider release in cinemas, according to
the industry sources.
"We are all standardizing contracts now after
'Lost in Russia', which caused great concern
industry-wide; from now on we all need to comply
with the window period," said one of the
sources, an executive with a major state-backed
film distributor.
A senior iQiyi executive who declined to be
named told Reuters the company would follow
government instructions.
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 "Our goal is the same: let
people see good films," the executive said. An
iQiyi spokeswoman declined to comment.
The National Film Administration did not
immediately respond to a request for comment.
ByteDance also gave no immediate response.
The Beijing International Film Festival will run
an online festival this year on iQiyi during the
May 1-5 national holiday. The
National Film Administration said on Wednesday
that China's movie box office faces losses of
more than 30 billion yuan ($4.24 billion) this
year due to the coronavirus epidemic. Box office
revenue was 64 billion yuan in 2019.
The enforcement of the rules on theatre release
mark a potential setback for online platforms
and production houses like Huanxi Media.
Back on Jan. 24, Huanxi's share had soared as
much as 46% to HK$2, after the entertainment
group announced it had entered into an agreement
under which unlisted Beijing ByteDance would pay
630 mln yuan ($91.3 mln) to Huanxi for delivery
of licensed video content online.
Huanxi's share price traded at HK$1.49 on
Thursday, partly reflecting declines in the
broader Hong Kong market in recent virus hit
months.
In the case of Nasdaq-trade iQiyi, its share
rose 7% a day after a film was premiered on its
platform back in February. It traded at $23.85
on Feb. 3, and closed at $17.72 on Wednesday.
There will be a good number of films waiting to
be released once cinemas begin screening again.
A handful were allowed to reopen late last
month, but were quickly asked to shut again amid
worries that early relaxation of lockdowns could
spark another wave of infections.
(Editing by Brenda Goh & Simon Cameron-Moore)
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