Jena McGregor has an interesting story in Fast Company's Hollywood-themed December 2005 issue. "A Foreign Affair" rehashes Hollywood's growing dependence on the gravy of overseas box-office revenues, as well as the increasing popularity of shooting in foreign locales due to lower labor, equipment and other costs—and then steps off into an area I hadn't considered: Hollywood studios are increasingly taking on foreign partners to make movies overseas and then sell them locally, with the U.S. as at best a secondary market for flicks that translate well for U.S. audiences (think Crouching Tiger, Hidden Dragon):
Long one of America's most successful (and infamous) exporters, the U.S. film industry has traditionally made films for American audiences, viewing the international box-office take as mere gravy.
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But now Hollywood is adding a pull strategy to its pushiness: By helping produce foreign-language films designed for foreign markets—German films for central Europe, say, or Korean films for Asia—it's turning the old model on its head.
Don't worry: Hollywood will forever peddle Scooby-Doo 2 and The Island to anyone who will sit still for them. In fact, with 8 of the top-10-grossing movies of 2004 making most of their revenues overseas, Hollywood is increasingly dependent on foreign markets. But one look at the success of films like Crouching Tiger, Hidden Dragon here at home, or at the long-term prospects of markets such as China or Russia, and the studios' logic is pretty clear. Coproducing foreign-language films "is never going to be at the foreground of production strategy," says Robert Rosen, the dean of UCLA's film school. "But it's a good secondary strategy that has a likelihood of being successful."
So Hollywood doesn't care about making movies overseas per se, but is happy to go where costs are lowest and future profits are highest. It's cheaper to make a movie practically anywhere than here in the Los Angeles Basin, causing boomlets in U.S. movie production everywhere from Vancouver to Shanghai. (See "Only Cruise Could Go to China," December 8.)
Second, while protectionism may be falling by the wayside for commodities like timber and sorghum, it's alive and well when it comes to intellectual property that could undermine native cultures and economies. As Fast Company points out, Russians increasingly want to see Russian-made films. Added to this understandable chauvinism is the fact that many coproduction deals are designed specifically to get around movie quotas in countries like China, which also limits foreign studios' ability to extract their traditional large profits.
This article alone is worth Fast Company's $4.99 cover price for those looking to see where the movie business is headed, both in the U.S. and abroad. Or you can wait until January, when fastcompany.com's archives will be free to browse.
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