Earth To H’WOOD: You Win

The “Lion’s” roar was deafening in more ways than one in 1994. Walt Disney’s animated feature generated a whisker more than $640 million in worldwide theatrical, 55% of which was derived from overseas engagements. Foreign dates will ultimately account for more than 60% of the pic’s final gross.

But “The Lion King” was not alone. It was a banner year for U.S. pictures around the globe – so much so that a historic milestone was passed: In 1994, for the first time, offshore rentals – the amount of box office coin returned to distributors – surpassed domestic rentals.

The other side of the coin, unfortunately, was that indigenous product continued to fade: Films made for local consumption generally occupied a smaller market share than in years past.

Over the past decade, shaky national economies have cramped local film production. Country by country, there has been a steady decline in the number of film releases and fewer locally produced movies that click. Simultaneously, U.S. players have seized upon marketplace weakness to forge international ties that have assured access and favorable trading practices for U.S. product.

While in recent years box office gross for U.S. films abroad has edged ahead of North American numbers, rentals have lagged. Domestically, a 50% average return is common for the majors. However, the studios find it difficult to collect even 40% abroad because of withholding taxes and other regs in some countries.

Foreign theatrical is one of several bright spots for the U.S. film industry.

Universal Pictures president Tom Pollock notes that in addition to increased foreign rentals in 1994, his company’s films performed stronger in free and pay TV situations internationally. He adds that domestic sell-through video – lagging in foreign markets – was the only reason the domestic homevideo market continued to out-perform foreign.

But it may all be a case of too much good fortune. In the era of work trade agreements and the globalization of the media, Europeans are becoming ever more thin-skinned about the survival of their national identities and cultural heritage. As a result, U.S. studios have tried to assume an extremely low profile whenever possible.

And while moviegoing in general is on the rise in industrialized nations, the position held by national film industries is eroding as U.S. pix gain ground.

Among the top 20 titles of Variety’s annual survey of worldwide B.O. champs – of which just one was produced outside of the U.S – only four titles will wind up with a lower foreign box office: Warner Bros.’ “Maverick” and “The Client,” Columbia’s “Wolf” and (most likely) Disney’s “The Santa Clause.”

Paramount’s “Forrest Gump” was initially perceived as having less commercial juice abroad. But with Oscar prospects looming and Japan yet to unveil the Tom Hanks vehicle, the pic should at least equal its domestic take of $300 million.

Variety’s worldwide B.O. survey totaled $8.34 billion, an approximate increase of 3.5% from 1993. U.S. films accounted for more than 90% of the cume.

While Buena Vista nosed ahead of Universal and Warner Bros. for the foreign box office crown, Universal earned the highest percentage of its box office overseas: 59%. On average, studio grosses outside North America accounted for 56%.

Disney’s strength, at all levels, rests on a firmly established animation franchise. Five of its 43 citings in the worldwide box office chart were for non-live-action features, accounting for 42.2% of company total gross.

Sleeper

Politics aside, the growing portion of studio revenue from international begs one question: What’s taken so long? After all, the domestic marketplace contains less than 300 million people, compared with the 5 billion-plus inhabitants in the rest of the world.

But Western Europe, with a population one-third greater than North America’s, has a third fewer screens than the roughly 27,000 here. Japan, with half the people of the U.S. and Canada, supports about 1,800 screens, 600 of which show only local pictures.

“Every significant foreign market has tremendous, untapped revenue potential,” says an industry powerbroker.

“That’s a key reason for the renewed activity in building and refurbishing theaters by studios and chains in Europe, Asia and Mexico. What’s impeding that growth is access. Admissions in the U.K. have doubled in the past decade as a result of the growth of new screens. Virtually all American product plays in that market.”

Australia is the only other major territory that screens a majority of the annual U.S. production slate.

While the expansion of such markets as Germany and Korea has had a positive effect in a number of sectors, U.S. films have benefited the most. All but 11 of the top 100 worldwide grossers were U.S. productions and only four were filmed in a language other than English. Collectively, they accounted for about a 7% share of the total. Last year’s chart featured 12 films from outside the U.S., of which six were foreign-language outings.

French high

France, which has historically embraced its native cinema, last year was on a high with “Les Visiteurs” and “Germinal” ranking first and third among releases in the country. In 1994, only one local production, the English-lingo, New York-set “Leon” (“The Professional” Stateside), squeezed into the annual top 10.

“The Piano,” “Stargate” and “Little Buddha” are other recent examples of French-backed product with scant investment in the local talent pool.

Conversely, U.S. majors co-financed such “British” films as “In the Name of the Father,” “Shadowlands” and “The Remains of the Day.” Several U.S. companies now intend to invest or participate in non-English-lingo projects.

The only major nation to have a local production top its charts last year was the U.K. – with “Four Weddings and a Funeral.” The British film industry has had sporadic hits but has repeatedly failed to capitalize or follow up on these erratic, brief upturns. It remains to be seen if this time is an exception.

Also bucking the trend was Australia, with two local heroes – “The Adventures of Priscilla, Queen of the Desert” and “Muriel’s Wedding” – and Japan, which remained consistent largely due to protective legislation for local product.

But most of the world is like Italy and Germany: Each posted a single smash success from local releases, as compared with three as recently as five years ago. Such major territories as Spain and Mexico could not boast even a single breakout hit in the past 12 months.

Into the void

In Eastern Europe, privatization of the film industry has been a tremendous boon for U.S. movies. They’ve arrived with a vengeance to fill the void created when local production activity routinely dipped by 50% or more.

Further erosion of national film industries is due to the shrinking opportunities for distinctive product to travel beyond bordering countries. In order to compete with product from the U.S., film budgets have generally doubled in Europe since 1990.

Few major projects can be financed in a way that ensures a return on costs from local exploitation. That economic straitjacket in turn has led to dwindling local resources – public and private – and the decrease in the number of films.

Buena Vista releases among chart grossers ranked first both domestically and overseas, with an aggregate of $1.66 billion. Warner Bros. ranked second at $1.39 billion, followed closely by Universal, with grosses of $1.31 billion. Paramount films also posted more than $1 billion worldwide.

UIP, which distributes Paramount, Universal and MGM/UA product abroad, was supreme among foreign distribs, with a cume of $1.25 billion. Foreign sales companies, generally in decline in the theatrical arena, have been reduced to a handful of potent providers. New Line Cinema and Polygram – with domestic operations and foreign outlets – hold a unique position in the field. Among more traditional operations, Summit repped pix accounting for roughly a $100 million gross, followed by pix agented by Ciby 2000 and Miramax Intl.

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