News Column

Hollywood Gets a Bump from Overseas BO

April 15, 2013

Even with Rihanna and Brooklyn Decker aboard, Battleship was sunk long before it reached U.S. shores last year.

The $200 million film inspired by a board game had no defense against American critics, who excoriated the picture for a stiff plot, weak source material and a wicked addiction to computer-generated effects. Fans agreed, docking the film at the box office with a take of just $65 million, making it one of 2012's biggest flops.

The rest of the world, though, was all aboard the Peter Berg-directed film, propelling it to $238 million and making it an international hit.

Where Americans once were the only game in town, U.S. audiences are taking a back seat to moviegoers across the globe -- particularly in Asia. Just two decades ago, overseas box office routinely accounted for less than half of a movie's total haul. Today, international moviegoers make up almost 70% of a movie's overall business, the Motion Picture Association of America reports.

And as CinemaCon, the largest gathering of domestic theater owners, kicks off here today, exhibitors find themselves playing catch-up to the rest of the globe, which can barely build enough theaters and 3-D screens to meet demand.

From a financial perspective, do American moviegoers still matter? To a lessening degree, says Paul Dergarabedian, chief box-office analyst for Hollywood.com.

"It's like the blue-jeans industry," he says. "Once, Americans dictated the overseas market. Now, the market is influencing us."

Domestic take has shrunk

Already, American moviegoers are feeling the impact. Overseas box office, which once was a non-factor for studios, now typically accounts for 60% to 70% of a film's overall haul.

And foreign markets are getting the industry's highest-profile films first. Battleship opened in Asia and Europe more than a month before it reached the USA last May. One of last year's most anticipated films, The Avengers, opened May 4, a week after it premiered in 39 other countries.

While studios say some films must open first in foreign markets to thwart demand for pirated videos, the industry is finding the global cash hard to ignore. Over the past four years, international box office surged from $27.7 billion to $34.7 billion in 2012, according to the MPAA.

U.S. revenues also continue to climb, but that's largely because of rising ticket prices. Although last year set a domestic box-office record of $10.8 billion, attendance has dropped over the past decade, from 1.6 billion tickets torn in 2002 to 1.4 billion last year.

If the trend continues, analysts say, American audiences should brace for a larger diet of the fare that's hot internationally: Namely, films centered on big special effects and 3-D.

"Americans are still very important, because most of the product comes from here," says German-born Roland Emmerich, director of 1996's Independence Day and 2004's The Day After Tomorrow. The earlier film pulled in $817 million globally, including $511 million overseas. Tomorrow did $187 million domestically but $358 million in foreign markets.

He notes that even as its numbers dwindle, America remains the biggest single market for movies.

"You are the tastemakers," says Emmerich, director of this summer's White House Down, out June 28 (June 27 in Lebanon, New Zealand and Singapore). "At least until the Chinese take that over, too."

Japan, China do big business

The Asian theatrical market is already nipping at the USA's heels. While European moviegoing has remained static over the past five years, business bustles in Japan and China.

According to the 2012 MPAA industry study, the Asian market grew 15% last year, to $10.4 billion. In China, revenue skyrocketed 36% to $2.7 billion, surpassing Japan as the largest international market.

The foreign market, analysts say, has become an insurance policy for the industry's most expensive films, which have lost some luster with Americans but remain hot property for international moviegoers.

Take 3-D, which analysts say accounts for between 40% and 60% of a movie's U.S. take. But in Asia, where screens are being built at an average of nine per day, 3-D accounts for about 80% of revenues.

"China, Russia, Brazil, those markets have exploded," says Paul Hanneman, president of international distribution for 20th Century Fox. He says that international box office "used to be the poor stepchild because domestic (ticket sales) led the way. Now we see adventures, fantasy and blockbuster action films perform huge business" overseas.

The studio's Life of Pi, for instance, earned a healthy $124 million last year domestically. Still, the studio tweaked its promotion of the film by region to make it more palatable and wound up raking in an additional $484 million overseas, including $90 million in China.

In Europe and parts of Asia, Hanneman says, the studio focused its campaign on the spiritual elements of the best-seller adaptation. In the Latin American market, the studio played up the film's family element.

"You have to learn to work across cultures," Hanneman says. "There is a lot of money still to be made in this market. But the American market is still very important. I don't think you're going to see movies that appeal only internationally."

And Americans aren't giving up the aisle seat.

"The buzz still starts here, the biggest stars are still from here," Dergarabedian says. "And $11 billion (last year's domestic box office) in business isn't chump change. We'll just have to accept that the movies have become a global business, and that doesn't have to be a bad thing."

Life of Pi, starring Suraj Sharma in the title role, earned $124 million and four Academy Awards. It also earned an additional $484 million overseas.


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Source: Copyright USA TODAY 2013