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World is not enough

Hollywood found int'l markets tricky turf in '05, as B.O. failed to meet expectations

Last year’s decision by Paramount and Universal to vaporize their decades-long distribution alliance appeared to send a simple and clear message: international box office is so valuable an asset, no studio is content to share the spoils with its competitors.

But in 2005, Hollywood found the world to be a shadowy and intractable place. With fewer hits across the spectrum, studios’ Stateside anxieties about splintering audiences, shrinking windows and new technologies were actually magnified overseas.

After surging 23% in 2004 to $12.5 billion, overall international business fell 4% last year to $12 billion on all films, with major drops in key markets like Germany, Spain, France and Italy. Hollywood films dropped 7% to $8.5 billion, with the last major 2005 film, “King Kong,” falling short of its high expectations.

For every longstanding assumption about the international box office, 2005 offered a contradiction or two.

  • Comedy is still a hard sell overseas, especially if it’s deeply steeped in American culture, as was the case with domestic hits like “Wedding Crashers,” “The Longest Yard” and “The 40-Year-Old Virgin.” But one of the year’s top offshore grossers was “Hitch,” a romantic comedy. It stars Will Smith, helping put an end to the theory that movies with black stars don’t travel well overseas.

  • Historical epics, often seen as a sure thing overseas, performed below expectations in 2005. “Alexander” and “Kingdom of Heaven,” while faring far better abroad than Stateside, did nowhere near the $300 million-plus taken in 2004 by “The Last Samurai” and “Troy.”

  • Horror films, especially those with familiar subject matter, traditionally have limited appeal internationally. But “The Ring 2” and “The Exorcism of Emily Rose” came up with decent overseas results.

  • Hollywood tentpoles have historically been the locomotive driving studios’ international campaigns. But a number of 2005 tentpoles fell shy of the mark. Four films grossed more than $300 million outside the U.S., compared to seven the year before, and 2005’s best performer — “Harry Potter and the Goblet of Fire” — will only be the third-best “Harry Potter” of the four Potter films.

“Studios put a lot of time and trouble into trailers and if they play to empty theaters, it doesn’t really do much good” notes BVI VP David Kornblum.

  • The day-and-date strategy, which studios hoped would be a cure-all for a rocky international market, proved successful mainly with obvious must-see choices like the final “Star Wars” and “War of the Worlds.” It did nothing for “XXX: State of the Union.”

Distribs offered conflicting theories for their year-end results.

“The problem we’re facing is that consumer habits are changing,” says UIP president Andrew Cripps. “They have a growing number of choices besides going to the cinema.”

Sue Kroll, Warner Bros. international prez, attributes “some of the decline to economic problems or the political climate.” Kroll contends it’s too “early to say that people are no longer going to the movies. The world’s far more complicated than that.”

What’s clear to everyone is that a stronger dollar in 2005 meant smaller numbers when foreign box office receipts were translated into U.S. currency. The easy availability of cheap pirated DVDs in foreign countries is also hurting movie attendance.

Perhaps most frustrating for Hollywood, the studios were also laboring under the expectations they set for themselves in 2004, a banner year for overseas B.O.

Despite many disparities from territory to territory, the overall international market displayed a few similarities to U.S. biz.

Midsize movies are as much of an endangered species abroad as at home. “A movie that’s mid-level performer in the United States, like ‘Kicking and Screaming,’ is going to have a hard time overseas,” Cripps notes.

  • Bomb in America and you’ll probably bomb overseas, as was the case with “Stealth” and the “XXX” sequel. The $125 million offshore take for “The Island” has to be the top salvage job of the year after a domestic drubbing.

The track record of “Island” is one of the positive signs in a confusing year. Another is that 23 films grossed more than $100 million, including such surprising candidates as “Constantine” and “Flightplan.”

Insiders are also confident the international marketplace will bounce back this year, pointing to a wide range of 2006 tentpoles — “Mission: Impossible 3,” “Superman Returns,” “The Poseidon Adventure,” “The Da Vinci Code,” “Cars” and “X-Men 3.”

As media companies struggled in 2005 to forge a deeper path into the burgeoning Asian economies, they met with decidedly mixed results. There was growth in emerging markets with expanding middle-class populations like South Korea and Russia. Elsewhere, Venezuela, the UAE, China, Poland and Turkey also showed potential for growth.

Warner Bros. remained international king for the second year in a row, though it didn’t match last year’s $2 billion haul. “Harry Potter and the Goblet of Fire” turned out to be the only film to beat “Star Wars”; “Charlie and the Chocolate Factory” showed a lot of foreign heft with grosses of $266 million.

With UIP due to be split up in a year, the distrib saw decent results from “Meet the Fockers,” “War of the Worlds” and “Madagscar,” while “King Kong” labored to get past $200 million offshore.

With the UIP divorce, Par and U are both betting they can make a lot more money overseas by controlling their own destinies. Par’s subsequent deal to buy DreamWorks was motivated, to a significant degree, by the need to feed its expanded foreign pipeline.

Par and U will now spend millions building their own international infrastructure. But that infrastructure will only succeed if their movies are tailored to overseas auds.

Too many studio movies in 2006 failed that test. Just ask Sony. Aside from “Hitch,” the studio had five major pics — “XXX: State of the Union,” “Bewitched,” “Stealth,” “The Legend of Zorro” and “Zathura” — whose combined foreign gross totaled only $250 million, not even half of “Harry Potter and the Goblet of Fire.”

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