Studios Could Become Major Profit Drivers As Home Video Business Recovers: Analyst

THR

The 21 Surprising Hollywood Actors Whose Names Sell Movies Overseas

10:00 AM PDT 9/12/2013 by Pamela McClintock, Scott Roxborough

Frederick M. Brown/Getty Images; Pascal Le Segretain/Getty Images; Jason Merritt/Getty Images

From left: Keanu Reeves, Joseph Gordon-Levitt and Robert De Niro

This story first appeared in the Sept. 20 issue of The Hollywood Reporter magazine. 

On Sept. 9, Keanu Reeves was in Toronto pitching foreign distributors on his new movie Passengers. He's just one actor whose star might have dimmed in the U.S. but still burns overseas, where the decision to pick up a film can depend entirely on the above-the-title actor.

PHOTOS: The New A-List: 23 Salaries From Angelina Jolie to Robert Downey Jr. Revealed

In addition to usual suspects like Tom Cruise, Bruce Willis and Matt Damon, sales agents say the names who matter overseas include somewhat surprising rising stars Michael Fassbender, Ryan Gosling and Joseph Gordon-Levitt as well as aging stalwarts Robert De Niro, Liam Neeson and John Travolta.

Actresses with foreign sales value are far fewer and include Meryl Streep, Cate Blanchett, Angelina Jolie, Keira Knightley and Scarlett Johansson. "It seems like a lot of people, but it's not when you are all going after the same people," says The Solution's Lisa Wilson, a veteran sales agent.

PHOTOS: Starlets' Pecking Order: Who Gets Offered Roles First

Sellers hope new stars with foreign appeal will hit -- Joel Edgerton, Benedict Cumberbatch, Liam Hemsworth, Tom Hardy, Jeremy Renner and Zac Efron -- but just like in the U.S., overseas audiences are becoming fickle. "The trouble with Japan," says IM Global's Stuart Ford of a territory that once worshipped U.S. actors, "is they don't like anybody anymore."


Read the full post at THR



Deadline

Studios Could Become Major Profit Drivers As Home Video Business Recovers: Analyst

By DAVID LIEBERMAN, Financial Editor | Friday September 13, 2013 @ 9:54am EDT

Most Wall Streeters hate the movie business. It’s messy and unpredictable, and the profits typically aren’t high enough to justify the risk. But RBC Capital Markets’ David Bank urges investors to take a fresh look this morning with a 104-page report that says studios have “the greatest visibility and least downside risk in the long term versus other businesses in the [media] conglomerate mix.” He recognizes that this is a tough sell. Cash flow margins at the strongest studios rarely top 10% while cable channels typically hit 40% or more. What’s more, “investors usually do not give much credit for individual [box office] wins, while they tend to punish individual losses.” But spending on home video “has appeared to stabilize domestically” following the collapse in DVD sales. Home entertainment declined to 34% of distributors’ average revenues from about 50% in 2007. That should improve as consumers warm to electronic downloads and Blu-ray discs. Bank also expects “substantial growth” in the ranks of the middle class — and entertainment spending — in China, Brazil, Russia, and Eastern Europe. Hollywood is responding by releasing more “culturally neutral” stories, he says, “with an emphasis on action-adventure movies as opposed to comedies, which tend to be more culturally biased” and especially “globally recognized franchises.” Other tidbits in the report: The term “tentpole” was first used in 1987 for Beverly Hills Cop 2. And the film with the highest profit margin so far this year (as of the end of July) probably is Warner Bros’ The Conjuring, while the studio’s Magic Mike likely was the winner last year. Going father back, the film with the highest return on investment in recent years was ET: The Extra-Terrestrial, which had an $11M budget and generated $793M in worldwide box office sales.

Foreign Box Office

Never Mind 'The Avengers': Overseas Markets Are Hollywood's Box-Office Superheroes

Published: August 16, 2012 @ 5:38 am

By Brent Lang
 

With the budgets of major films soaring and movie attendance stagnant in the United States, Hollywood is using 3D technology and premium theaters like IMAX to bolster the sizzling foreign box office even in the midst of a worldwide economic downturn.
The special-effects driven and animated films that movie studios are so busy exporting have the advantage of being heavy on spectacle and light on dialogue, allowing them to overcome culture barriers to be enjoyed by a wide and remote audience, studio executives and analysts tell TheWrap.

“If you look at the stories that we’re telling, like ‘The Amazing Spider-Man,’ these pictures are meant for every person on the planet,” Rory Bruer, worldwide president of distribution at Sony Pictures, told TheWrap. “They’re not U.S.-centric. They’re relatable for everyone.”
So far, it seems to be working. A survey of the top 10 global box office hits so far this year shows that some films are actually playing better in translation than they are with U.S. audiences.

Take “Ice Age: Continental Drift”: The animated sequel debuted in North America to mediocre reviews and has so far racked up a decent $143.7 million domestically. But abroad it’s been a different picture entirely. The fourth film in Twentieth Century Fox’s Pleistocene era franchise has drawn a massive $620.5 million at the foreign box office, making it ones of the year’s biggest, albeit unheralded, hits.

Also read: Currency Woes: Why the Weak Dollar Is Helping -- and Hurting -- Hollywood

“[Ice Age] has a broad, universal character base that is beloved on a worldwide basis,” Chris Aronson, head of distribution at Fox, told TheWrap. “In certain territories, like Latin America, this is one of the biggest films of all time.”

And it’s not the only film that has found foreign audiences more hospitable. “Men in Black 3” and “The Amazing Spider-Man,” for instance, were outperformed domestically by their predecessors, earning $176.6 million and  $255.5 million respectively. Yet overseas audiences seemed to find the films fresher, propelling the latest “Men in Black” to $445.3 million at the foreign box office and helping to justify more “Spider-Man” sequels by pushing the latest wall-crawler film to $435.1 million at the foreign box office.

“Some of these older franchises don’t play as well when they’re rebooted here, but if you think about it from the perspective of an Indian audience, when the first 'Spiderman' or the first 'Men in Black' came out, they didn’t have the same cinema-going experience that they do now,” Bruce Nash, founder of the box office statistics site The Numbers, told TheWrap. “Now they can see it as it is meant to be seen in a fancy theater with bunch of friends and a great sound system.”

Even films that have been unequivocal smashes with U.S. audiences, like "The Avengers" and "The Dark Knight Rises," have racked up more than half of their total grosses at the foreign box office.

The rare exception is "The Hunger Games," which relied on domestic ticket buyers for nearly two-thirds of its $684.4 million worldwide take.


There’s another advantage to the increasingly global nature of the movie business, as well. The expanding marketplace for U.S. films is alleviating the pain of costly flops.

This year’s two most notorious turkeys, “Battleship” and “John Carter," both drowned in red ink. But the situation would have been much more dire were not for foreign audiences.





“John Carter” eked out only $73 million domestically, but overseas’ ticket buyers were far more amenable to the fantasy film’s charms, pushing it to a $282.7 million gross globally. Likewise, “Battleship” sank with $65.2 million gross at the domestic box office, but overseas its explosions and aliens played better, racking up an additional $237.6 million in foreign territories.

From 2007 to 2011, the box office in Europe, the Middle East and Africa underwent a 24 percent increase, a 38 percent jump in Asia Pacific and an 86 percent leap in Latin America, according to the Motion Picture Association of America. In 2011, the total international box office was up 35 percent in U.S. dollars from five years ago. In the U.S. and Canada, however, the box office over that same period rose a mere 6 percent.

Also read: Why America Doesn't Count at the Box Office Anymore

Helping to fuel this growth has been the expansion of 3D screens, which from 2007 to 2011, jumped by 61 percent in Europe, increased by 58 percent in Asia and grew by 97 percent in Latin America, according to IHS Screen Digest.

With China loosening its restrictions on the number of films it imports and countries like Brazil and Russia dramatically increasing the number of modern movie theaters within their borders, studio executives expect the good times to keep rolling.
American movies are even venturing into places they haven’t been in decades; witness Twentieth Century Fox’s announcement this week that “Titanic 3D” will sail into Myanmar, a part of the world that’s been closed to Hollywood for a generation.

With an eye toward broadening that appeal, studios are peppering their films with actors who have a significant fan base in foreign countries, but are largely unknown on these shores.





Take, for example, Japanese megastar Tadanobu Asano’s key role as a heroic navy captain in “Battleship” or Irrfan Khan’s supporting performance as a morally questionable scientist in “The Amazing Spider-Man” -- both men may be fine actors, but their appearances helped broaden the film’s appeal to foreign audiences.

There are still limits to what works overseas, however. It’s the rare comedy, like “The Hangover,” that is able to play well abroad, meaning that punch-line driven films like “21 Jump Street” will have to content themselves with making the bulk of their profits in English-speaking countries. Yet, as other countries grow more attuned to the American idiom, that could change too, as evidenced by the more than $100 million brought in by "Ted" at the foreign box office.

“It varies from film to film,” Aronson said. “It has to do with the types of comedies and the types of humor, but there are some that play well on a territorial basis.”
Another trend that may accelerate, is the practice of debuting films like “Battleship” and “Prometheus” overseas before they premiere domestically, allowing them to hit the American market having racked up a sizable financial cushion.

“The studios are less shy about releasing a movie internationally first than they were a few years ago,” Nash said. “There’s no longer a feeling that American moviegoers are going to feel snubbed if ‘Spider-Man’ opens 24 hours earlier in France.”

Hollywood's global strategy

24 Frames

Movies: Past, present and future

Hollywood's global strategy: Made in America, but not for Americans

January 10, 2012 | 12:09 pm

Nearly every year-end story about the film business was punctuated with the same depressing statistic — U.S. attendance at the movies had fallen to its lowest level in 16 years. Maybe that's because Hollywood, which for so long served as an icon for all things American, isn't making most of its movies with Americans first in mind anymore.
Whenever I talk to top studio executives these days they are invariably jet-lagged, having just returned from a trip to some far-flung country where they've either been setting up a new distribution entity, visiting a film set or negotiating a co-production deal. Moviegoing may be lagging in the U.S., but it's enjoying explosive growth in markets such as Russia, China, Brazil and South Korea. Just look at the numbers: Three of the four top-grossing films of 2011 — “Harry Potter and the Deathly Hallows — Part 2,” “Pirates of the Caribbean: On Stranger Tides” and “Kung Fu Panda 2” — did more than 70% of their business overseas.

This focus on foreign markets is clearly changing the way studios assemble their feature film slates. Nowhere is this more evident than at Paramount Pictures, Hollywood's market-share leader in 2011 with 19.2% of the overall business. In 2007, when the studio also had the largest share of the market, Paramount did roughly the same amount of business in the U.S. as it did overseas — $1.5 billion domestic versus $1.6 billion international. In 2011, the studio's films grossed $1.9 billion in the U.S. But they made a whopping $3.2 billion overseas.
Under Brad Grey's leadership, Paramount is now focused on making two radically different kinds of films — behemoths that appeal to audiences everywhere and low-budget ones that appeal to a specific niche of American moviegoers. Nine of the 10 movies the studio bankrolled in 2011 cost at least $125 million — or $25 million or less. The studio has a hit this week with “The Devil Inside,” a horror film released through Paramount's micro-budget Insurge label. Made for $1 million and marketed without any prime-time TV advertising, it was the weekend's No. 1 release, taking in $33.7 million.
“There's been a definite recalibration of the movie business,” Grey says. “With that in mind, our strategy has been to focus on big franchises or films that use the power of our Viacom-branded networks, which can bring in revenues from a variety of aftermarkets for years to come. And at the same time, we're making small movies that allow us to use innovative social media and viral marketing techniques to go after specific targeted audiences.”
The expensive films, “Mission: Impossible — Ghost Protocol,” “Transformers: Dark of the Moon” and “The Adventures of Tintin,” all were aimed at international audiences. In fact, the Steven Spielberg-directed “Tintin,” a co-production with Sony Pictures, was so globally oriented — the film is already on track to make nearly $300 million overseas — that it would've been a hit if it had never been released in the U.S. (The film opened in Europe two months before debuting stateside.) With “Ghost Protocol,” the movie's story line is constructed in such a way that its action unfolds in a string of international locations, notably Russia, India and the United Arab Emirates (where the studio held the film's premiere, in Dubai).
Paramount's other 2011 titles were lower-budget films that had little chance of playing well overseas: “Young Adult” was aimed at urban hipsters, “Justin Bieber: Never Say Never” was targeted at preteen girls, and “Paranormal Activity 3,” like “Devil Inside,” was for horror fans.
Paramount's one midrange film was the J.J. Abrams-directed “Super 8,” which cost $50 million. In years past, a splashy special-effects movie by one of the studio's leading filmmakers would've carried a far higher price tag. But realizing that the film's distinctly American subject matter (and lack of name talent) would have far less international appeal, the studio persuaded Abrams to make the film in West Virginia, where there were generous tax credits. The studio says Abrams also took no up-front fee for the picture.
This is no doubt great news for Paramount's bottom line, as well as for other media conglomerates that are moving in a similar globally oriented direction. But what will happen to the kind of movies we've traditionally viewed as distinctly American — “Mystic River,” “Milk,” “The Descendants” — movies that explore, define or simply poke fun at our American character?
We still see American-oriented dramas at Oscar time, since the lure of a best picture statuette can still hypnotize the most pragmatic studio executive into ignoring their bottom-line instincts. But this year's leading best picture contender, “The Artist,” is an international production, written, directed and produced by French film talent. If American filmmakers want to play the Oscar game, with rare exceptions they'll either be financed by wealthy outsiders — Kathryn Bigelow's upcoming film about the hunt for Osama bin Laden is backed by Megan Ellison, daughter of Oracle Chief Executive Larry Ellison — or they'll be produced for peanuts, as with Alexander Payne's next film, “Nebraska,” a black-and-white road picture that Paramount is spending $10 million to make.
In the past, our great American novels would provide regular fodder for the studio machinery. But their subjects are now too specifically American, not to mention too dramatically complicated, for studios to launch into the global jet stream. Three of the best recent novels — “The Corrections,” “A Visit From the Goon Squad” and “The Art of Fielding” — are in various stages of development, not at a film studio but at HBO.
You could argue that being associated with distinctly American subject matter can actually slow a film's acceptance across the globe. Surely it's not a coincidence that of the 15 top-grossing films in 2011, the movie that did the lowest percentage of overseas business was “Captain America: The First Avenger,” even though it was set largely overseas, as were “Harry Potter,” “Rio,” “Cars 2,” “Pirates,” “The Hangover Part II,” and “Fast Five.”
What the U.S. still brings to the table is the spunk and brainpower of American entrepreneurialism. Hollywood has a creative ecosystem that is virtually impossible to duplicate anywhere else. China, for example, has a domestic market easily big enough to make its own films. But according to Sony co-chairman Michael Lynton, the country still lacks key creative resources — starting with a thriving community of screenwriters — that are essential ingredients in making films.
“Our movies may no longer espouse American values, but they carry a ‘Made in America' stamp that guarantees a commercial and technical quality level that's unmatched anywhere else,” Lynton says. “When you're overseas, you often find yourself negotiating deals with someone's sister or brother-in-law who may or may not have any actual film experience. In the U.S., we have an entire system of institutions, from film schools to union guilds to talent agencies, designed to provide quality entertainment.”
So while something is lost, something else is gained. Our commercial movies may have less to say about specific American values, but they are still magnets for great talent, making their mark around the globe through their vibrant style and technical prowess. Filmmakers come from all different cultures: Peter Jackson, Ang Lee, Guillermo del Toro, Chris Nolan, Timur Bekmambetov, Neill Blomkamp. But all have found ways to make very American movies.
RELATED:
 Why so many Hollywood relationship movies are box-office duds
Roger Corman: Hollywood's original low-budget superhero
— Patrick Goldstein

THR: Foreign Box Office

Major Hollywood Studios Set Foreign Box Office Record in 2011

8:30 PM PST 12/29/2011 by Frank Segers

Warner Bros.

"Harry Potter and the Deathly Hallows Part 2"

Paramount leads the way with $3.19 billion, a company and industry overseas record; Warners and Disney follow No. 2 and No. 3. 

 

Another year, another foreign box office record.

While the major U.S. Hollywood studios faced a fair share of hurdles in the domestic market, offshore box office for “big six” notched a record $13.6 billion in 2011, according to preliminary studio figures.
That’s a seven percent increase from 2010’s record take of $12.7 billion, which marked a 20 percent leap from the 2010 figure thanks largely to the astonishing $1.476 billion offshore take last year of Avatar. While the percentage gain this year is comparatively modest, a new record is still a new record.

“Overall, admissions in 2011 remained constant with 2010,” said Veronika Kwan-Rubinek, Warner Bros.’ president of international distribution. She noted that the appeal of films exhibited in 3D has not diminished overseas, and that six of the year’s top 10 foreign grossers were presented in that format.

PHOTOS: Top 15 Grossing Threequels of All Time
The year’s biggest title, Warner’s Harry Potter and the Deathly Hallows Part 2 drew 54 percent of its total $953 million in foreign box office from 3D venues. Anthony Marcoly, president of Paramount Pictures International, said his studio’s top grosser, Transformers: Dark of the Moon (which grossed $771 million in the year), “saw 74 percent of the international grosses come from 3D.”

Then there was the China factor. Marcoly said the market “proved to be [Paramount's] highest grossing international territory for the first time,” generating for the distributor’s films $303 million in box office this year.

Said Warner’s Kwan-Rubinek, “The biggest growth story came from China, which increased more than 30% to gross nearly $2 billion for the year. China remains the biggest digital and 3D footprint outside the United States, with over 3,000 3D screens.”

PHOTOS: 2011's Hollywood By the Numbers: THR Year in Review
The bad news is that the import quota imposed by the Chinese State Administration of Radio, Film and Television limiting foreign-made films to 20 titles yearly remains firmly in place despite pleas from the World Trade Organization. As important, the extremely low rate of rentals return to foreign distributors – on average 15 cents of each box office dollar – also remains the practice.

Said one major studio international exec, who asked anonymity, “China is still a boom town (if you get your films in), but there is no movement relative to quantity of titles accepted or revenue share.”
Paramount was easily the year’s top studio in terms of foreign box office, notching a company record of $3.19 billion – the first time any Hollywood major has exceeded $3 billion in foreign box office in a single year. Paramount’s take was 60 percent higher than its comparable 2010 figure, and 56 percent ahead of the company’s previous box office record established in 2008.

PHOTOS: 15 Biggest Box Office Flops of 2011: THR Year In Review
Besides director Michael Bay’s Transformers, Paramount released Kung Fu Panda 2 ($501 million), Thor ($268 million) and Captain America: First Avenger ($192 million). Still in release are Mission: Impossible – Ghost Protocol and DreamWorks Animation’s Puss in Boots, which are expected to notch $201 million and $260 million, respectively, by the end of the week.

Warner Bros., last year’s top-grossing studio beating 20^th Century Fox by a whisker, finished a firm second this year with $2.860 billion in foreign box office. It marked the company’s second biggest offshore year ever, down 2 percent from the $2.93 billion grossed in 2010.

Other Warner’s gross generators beside the latest Harry Potter sequel were The Hangover Part II ($330 million), Final Destination 5 ($120 million) and Green Lantern ($118 million). Still in release is Sherlock Homes: A Game of Shadows, which has captured $88 million overseas thus far.

No. 3 of the big six was Disney, which projects 2011 foreign box office of $2.2 billion, down 5 percent from the $2.3 gathered last year, which set the company’s overseas  record. Top title by far for the year was Pirates of the Caribbean: On Stranger Tides, which tallied $802.6 in offshore box office, more than three times its domestic gross. Cars 2 came in with $368.3 million, nearly twice what it grossed in the U.S. and Canada.

Fourth in box office rankingswas Fox, which while it lacked an Avatar this year, boasted of a range of titles that performed at least reasonably well offshore. The studio reported $2.150 billion in foreign box office, down from the $2.92 billion reported in 2010.  Top titles were Rio ($343.9 million, nearly twice its domestic gross), Rise of the Planet of the Apes ($306 million) and Black Swan ($222.5 million).

Sony came up with $1.830 billion for the year with live-action/animation title The Smurfs leading the list of winners ($416.6, nearly three times its domestic gross), and Steven Spielberg’s The Aventures of Tintin: The Secret of the Unicorn – which Sony co-distributed with Paramount offshore months before its Dec. 21 domestic opening ($265 million). The Tourist starring Angelina Jolie and Johnny Depp scored well foreign, drawing $221.1 offshore of which $140.7 derived from Sony-handled territories in 2011.

Universal reported $1.3 billion in 2011 foreign box office, 9 percent ahead of the comparable 2010 figure. Its biggest title by far was the latest in the turbo-charge fast car franchise, Fast Five, which grossed $419 million offshore. The latest Roman Atkinson comedy, Johnny English 2, did well foreign grossing $154 million while surprise comedy hit Bridesmaids took in an impressive (comedies often don’t travel well overseas) $119 million.

Key independent Summit Entertainment says it grossed $753.7 million on the foreign theatrical circuit this year, with the latest in its girl-loves-vampire sequel, The Twilight Saga: Breaking Dawn Part 1, generating an estimated $410 million of the total. Summit also said that Cannes Festival top prize-winner, Tree of Life, has grossed $48 million offshore to date (including territories handled by Fox and other distributors.)

An interesting aspect of the 2011 overseas was the accelerated pace of major studio acquisitions of local-language product playing in various offshore markets. Notably successful in this regard was Universal release of Office Romance in Russia, which grossed $12 million; and Sony’s handling in the same market of Vysotsky: Thank God I’m Alive, a biopic of a legendary Russian figure, which has drawn $27 million so far in Russia alone.

2011’S TOP 10 FILMS OVERSEAS

 TITLE                                                                               FOREIGN B.O.       DOMESTIC B.O.

(Distributor)                                                                     (In Millions)                  (In Millions)                    

Harry Potter and the Deathly Hallows – Part 2 (Warner Bros.)  $953                                     $381
Pirates of the Caribbean: On Stranger Tides (Disney)               $802.6                                 $241.1
Transformers: Dark of the Moon (Paramount)                            $771                                  $352.4
Kung Fu Panda 2 (Paramount)                                                    $501                                   $165.3
Fast Five (Universal)                                                                    $419                                    $267.7
The Smurfs  (Sony)                                                                       $416.6                               $142.6 million
The Twight Saga: Breaking Dawn – Part I (Summit)                    $410                                $267.7
Cars 2 (Pixar/Disney)                                                                     $368.3                              $191.5
Rio (20^th Century Fox)                                                                   $343                                 $143.6
Rise of the Planet of the Apes (Fox)                                              $306                                 $176.7
SOURCE:  Studio figures.