The Motion Picture Association of America and the China’s state-run film distributor China Film Group have finally reached a settlement in a dispute over box office revenue. The dispute had cost the Hollywood studios hundreds of millions of dollars dating back to last year. But now the studios will finally see that money.
“We are pleased to hear that the Chinese government has addressed the matter and all money due will be paid in full,” MPAA chief and former U.S. Senator Chris Dodd said in a statement on Tuesday, notes Variety. “It is our understanding that the payment process has recommenced.”
According to Entertainment Weekly, the dispute began when China Film Group insisted that the studios pay for a 2 percent value-added tax that has been added to movie tickets by taking a chunk out of the studios’ 25 percent cut from total box office revenue. This meant that all of the studios lost out on $200 million of revenue from films like Life of Pi and Iron Man 3, both big hits with Chinese audiences.
China is now the second-biggest movie market in the world generating $2.7 billion and it’s predicted that by 2020, it may surpass North America. Although the terms of the settlement were not announced, it is still a major victory for Hollywood, which still does not get to release every film in China due to state standards.
The MPAA did not say if China Film Group had agreed to pay all of the 2 percent tax.