Int'l B.O. forces biz to rethink stratgey

It’s not such a small world after all.

Struggling to explain how a film like “The Island” was dismissed by Americans but racked up $21 million in South Korea, industry execs are rethinking the role of international marketing.

Even as media businesses become more global — overseas box office surpassed domestic last year for the majors — the foreign audience seems to be growing more, not less, fragmented.

As a result, the majors are beginning to abandon the notion that what works in the U.S. will work internationally, and vice versa.

That means that they’re rethinking their fourth-quarter campaigns, figuring that the one-size-fits-all routine is not going to work anymore.

But the discrepancies between foreign grosses raise bigger questions.

As recently as the 1980s, few people raised questions about how a film would play abroad; it was all about the U.S. But today, the changing overseas equation has such an influence on decisionmakers, it seems likely to lead to the greenlighting of more pics designed to play abroad, but not at home.

And a big question lurking in the shadows is whether the day-and-date philosophy is over-rated. It seemed a perfect solution for fighting piracy. But that plan doesn’t allow for individual campaigns, tailored for foreign territories (which sometimes profited from the mistakes made in a domestic campaign).

The recent demise of UIP stands as a metaphor for what’s happening. When it was formed, studios felt the foreign market wasn’t important enough to merit its own division, so they decided to pool their resources. Now, Paramount and Universal realize that overseas is too big to share.

So far in the U.S., “The Island” has taken in just $36 million. Paced by its big haul in South Korea, the Michael Bay sci-fi actioner has grossed $121 million internationally.

It follows other domestic disappointments that managed to generate strong biz abroad: Fox’s “Kingdom of Heaven” did $47 million here, but then $163 million internationally. Because “Island” and “Kingdom” carried such large pricetags, they’re still struggling to turn a profit. Nevertheless, the discrepancies in grosses are changing studios’ international approach.

“There’s a cultural arrogance about believing that something that’s created in the U.S. can travel anywhere,” says DreamWorks marketing topper Terry Press. “It’s pretty clear, across most socio-political levels, that just because it comes from the U.S. doesn’t mean that it’s good.”

But figuring out how to reach the foreign audience is becoming a bigger priority for the studios. “When you look at the amount of revenue that’s generated outside the U.S., it can’t be an afterthought,” says Paramount’s new prez of marketing and distribution Rob Moore.

Domestic stragglers that have gone on to become overseas hits have been getting the most attention. But other pics have been confounding expectations.

“It is an interesting year,” says Sony vice chair Jeff Blake. “Some of the truisms that people say aren’t true anymore.”

It’s long been the conventional wisdom that a romantic comedy with an African-American star won’t travel well. But “Hitch” defied the odds. After grossing $179 million in the U.S., the Will Smith starrer went on to collect $188 million foreign.

“That’s been a very pleasant surprise,” says Blake. But he adds that what works and what doesn’t has always been shrouded in mystery. “We don’t always know why a movie that doesn’t appeal to an American audience but, with similar materials, does appeal to an international one.”

The possibility of a break in the link between domestic and international markets is a key consideration as studios prep their releases. Giant tentpoles like “Harry Potter and the Goblet of Fire” and “King Kong” are counting on giant overseas returns. But other films, with less audience presold awareness, require special handling.

If Hollywood moguls once pondered whether “it would play in Peoria,” execs are now more concerned with people in Prague, Paris and Palawan.

Warners, which handled foreign distrib on “The Island,” says the Korean success comes down to territory idiosyncrasies.

“Everything that could go right did go right,” says Warners international marketing chief Sue Kroll. “We had a very aggressive action campaign on TV, and we got the cloning issue front and center the week we opened. It was very relevant and incredibly timely.”

In some ways, the tailoring of the movie business to local markets is a return to an older distrib model.

Craig Dehmel, Fox Intl. exec director of sales and strategy, says, in the days when overseas grosses were just icing on the cake, foreign campaigns would either “utilize the domestic campaign or start from ground zero.”

That meant that local marketers had great control over their campaigns and could experiment with different strategies. “Waterworld,” for example was promoted in Japan with billboards touting it as the most expensive movie in Hollywood history (a gambit that would have been unthinkable at home) and the campaign worked.

But over the past 10 years, worldwide campaigns have grown more and more homogenous. Even the titles are not translated into the native language. As far back as 1994, an American colloquial title like “Pulp Fiction” was retained abroad rather than turned into something more idiomatic for foreign auds.

In the past few years, studios have become more bullish on global day-and-date campaigns. Since pirated DVDs show up on the streets of Hong Kong and Moscow the day after a film debuts anywhere in the world, the idea was to get movies into theaters before the pirates had the chance to bootleg them.

But that wisdom is being rethought.

“You’re always balancing the need to beat the pirates against the risk of being on the wrong date, the risk of spending all your P&A at once and the risk of getting all your materials into all your markets at the same time,” says Universal international prexy David Kosse. “You want to beat the pirates, but at the same time, you give a lot to beat them and I’m not sure if you get it all back in the end. The bar on day-and-date has risen to only the truly event films.”

The danger of making day-and-date routine, industry pros say, is if a blockbuster hopeful doesn’t work right off the bat, it’s too late to make campaign fixes on a territory by territory basis.

Day-and-date also helps rev up global PR: Next summer alone, pics with blockbuster hopes will include “Mission: Impossible 3,” “Poseidon,” “The Da Vinci Code,” “X-Men 3,” “Superman Returns” and “Pirates of the Caribbean 2.”

But even the marketing campaigns for event films are being customized.

On “War of the Worlds,” for instance, UIP prexy Andrew Cripps says, “We did a separate creative campaign for Japan that really played up the link between the daughter and her father protecting the family. We did that because of the importance of females in the overall Japanese audience.”

Local consideration is also being given in the development of the international campaign for “Harry Potter.”

“There are slight variations in each campaign with some with more action and some with more on the relationships,” says Warners international distrib prexy Veronika Kwan-Rubinek. “It’s more character-driven in Europe and action-driven in Asia and Latin America.”

As in the domestic market, Cripps says studios hold their own internationally with their big titles. “The tentpoles like ‘War of the Worlds’ and ‘Madagascar’ are always going to do well, but I think there have been problems with the mid-level films,” he says. “We struggled to find the audience for ‘Ray’ ($50 million foreign). That’s where the opportunity for growth is.”

The expanding foreign box office has helped rejuvenate a number of epic films set in ancient times, a genre that hasn’t flourished lately at the U.S. box office. After the experience of “Kingdom of Heaven,” “King Arthur” and “Alexander,” it’s clear that Americans don’t always embrace the historical epic genre.

But foreign grosses on all three (combined they’ve grossed nearly $450 million) is enough to keep Hollywood interested in the historical epic.

Robert Zemeckis is readying “Beowulf” for Warners and Par. And there are no fewer than four projects in development based on Boudica, an ancient queen of Britain familiar to every Blighty tyke but virtually unknown in the U.S.

“There are 300 million people in the United States,” says Kosse. “How many people are outside the U.S.? They may not go to the movies with the same frequency as domestically, but if you get something that appeals to them, they go in massive numbers.”

The epics, he says, “are stories about a part of the cultural heritage all across Europe and Eurasia, whereas it’s a history lesson for Americans.”

Animated films are also getting a boost from foreign interest. John Williams was a producer on “Shrek” and “Shrek 2.” Now, with his indie toon banner Vanguard Animation, he is looking to make family CGI titles.

The first effort was “Valiant,” which was made with 75% foreign financing. A story about pigeons during World War II and voiced by an all-British cast, the pic didn’t find much traction domestically, collecting just $19 million. Abroad it’s delivered $35 million.

Its other upcoming titles are also being designed with an international shade. “Happily Never After” is being produced in Berlin. Another Vanguard title is being developed with the Asian market in mind.

“We want to do things that have break-out potential, but we want to also make sure we have a home base, which is a market we know we can deliver,” he says.

Similarly, Sony co-financed “Kung Fu Hustle” with the China Film Group. The pic had made $83 million overseas — $28 million in China and Hong Kong and $16 million in Japan — before it grossed $17 million in the U.S.

Part of Paramount’s post-UIP international strategy is to look into either acquiring or co-financing more foreign productions, says Moore. “That’s a business that we haven’t been in, in the past, through UIP,” he says. “Having titles in your library that perform well internationally is very valuable on an ongoing basis.”

International studio execs are upfront about their expectations that some pics will perform better overseas than in the U.S., and that it’s not necessary to have a hit here to make a pic perform abroad.

“If a movie isn’t doing well in America, it used to have a much bigger impact on the strategy overseas,” says DreamWorks’ Press. “More often than not, that’s not the case anymore.”

Fox figured from the start that Baz Luhrmann’s contempo take on a period musical, “Moulin Rouge,” would be a better bet abroad, and the studio’s hunch was on the money. Pic, which Fox sent to open Cannes, made $57.3 million domestically, but $120.3 million in foreign coin.

The same scenario seems to have unfolded for “Kingdom of Heaven.”

“Day and date worked out really well for us because after the U.S. opening, the foreign exhibitors would have lost confidence in us,” Dehmel says. “When you don’t open well in the U.S., it’s an uphill battle.”

But for its fourth quarter pic “In Her Shoes,” Fox will go more staggered in its release sked. “These are gems, but they are a lot more difficult. We’ll have six weeks after the U.S. release so there’s plenty of time to learn,” says Dehmel.

The international biz increasingly requires that sort of forethought. “(News Corp. prexy and chief operating officer Peter) Chernin has been urging us to think more globally,” he says.

Bruce Berman, chief of Village Roadshow, which has produced several big foreign grosser including the “Matrix” pics, “Ocean’s Eleven” and “Twelve,” as well as this year’s “Constantine,” says that focus on international is the biggest change he’s seen at the studios.

“Factoring in the international potential of a movie is very much a part of the decision-making process for which movies get made,” he says. “Five or 10 years ago, it wasn’t given as much attention.”

(Dave McNary and Nicole LaPorte contributed to this report.)

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