Global Impact: Next Eleven nations offer boom in population, theaters
As many of the BRIC nations — Brazil, Russia, India and China — become more established, Hollywood’s hunt for the Next Big Thing in its chase for global box office carries a less sexy name, but a wide world of opportunity.
Hollywood studios looking to grow their international shares are targeting what economists have coined the Next Eleven (or simply N-11) — the newest group of emerging markets — including Indonesia, Iran, Mexico, Nigeria, the Philippines, Turkey, South Korea and Vietnam. Latin America is also a buzz region, as are some countries in Central Europe.
It’s not like the BRIC nations have crumbled, however.
Led by China, those four countries have comprised most of the international box office growth over the past five years or so. Box office in China, projected to reach $4.5 billion by 2015, is tracking this year at $1.9 billion — 28% ahead of 2011. Moreover, the Chinese B.O. boom has attracted overseas investment from companies like Screen Capital Intl., which recently made a $50 million investment with Ira Stiegler’s Red Carpet Cinemas to build 50 theaters on the mainland. Brazil’s economy continues to perform strongly, raising box office and admissions. Emerging neighboring country Argentina is riding that financial wave, as well.
“The BRIC nations are still experiencing significant growth,” says IM Global prexy of international sales and distribution Jonathan Deckter, pointing out China’s promising VOD business — still a growth area in emerging markets — and Russia’s hunger for Hollywood product.
Streaming is getting into the act as well. Apples iTunes Store extended part of its reach last week into Russia and India — and Turkey, Indonesia and South Africa, too — offering digital movies in addition to music.
In fact, burgeoning middle-classes and exhibition growth in other parts of the world have turned Hollywood’s eyes further afield.
“An area where we see growth on the production front is Latin America,” Deckter says, noting IM Global recently joined Canana to launch area-based sales company Mundial. “Our aim is to service the filmmaking community throughout the region on a worldwide basis. There’s an incredible amount of talent, and production funds to match.”
A look at some of the Next Eleven:
The country has been re-establishing itself after the financial fallout in the late-1990s, mirroring theatrical growth in neighboring Brazil. Higher ticket prices and increasing admissions have led to an 85% surge at the Argentine box office over the past three years. Despite limited ancillary and TV-licensing opportunities throughout Latin America, Argentina has the highest concentration of independent studios in the region, with output deals with Disney, Fox TV, Endemol and MTV Networks.
Indonesia and Malaysia
Population growth is the key to these two nations. Indonesia’s population of 242 million is the biggest reason for optimism locally. Malaysia, thanks to a similar population surge, has seen significant box office growth over the past three years, up 73% from 2009 to 2011. The nation should start contributing more noticeable revenues over the next five years.
Multiplex growth and discretionary spending have sped up in Malaysia since 2000. The country’s film development org Finas has high hopes for transforming the local film industry. Pinewood Iskandar Malaysia Studios, a production facility with 124,000 square feet of soundstages will open next year. Finas’ director general Mohd Naguib Razak says he hopes strategic development of local infrastructure will help bring in $1 billion annually, and create 10,000 industry jobs by 2020. Earlier this year, Ruzak said he hoped to have tax incentives in place by 2013.
Local box office in Poland has grown an astounding 107% since 2005, the same year the country’s production fund was established by the Film Law, and the year the Polish Film Institute was founded. In 2011, Polish productions — subsidized by the PFI’s production fund of about $40 million — accounted for a record-setting 28% of the country’s total admissions. PFI-financed Arthouse Cinema Network also has increased exhhibition of arthouse films locally. The exhib infrastructure in larger Polish cities has reached saturation, however; smaller markets are being developed.
Though the nation suffers from drastic social extremes, South Africa has experienced slow but steady growth in exhibition over the past decade. Auds seem to turn out most reliably for comedies and musicals, especially ones that target the white, Afrikaans-speaking market. Aggressive tax breaks, including an incentive of up to 25% for qualifying foreign productions, and the boffo perfs of locally shot pics like “Chronicle” and “Safe House” have raised the country’s profile.
Stable audience growth has led to a promising forecast in Turkey; the country’s three highest-grossing films last year were local productions. In an attempt to bolster relations with Hollywood, the Turkish Film Council plans to host a yearly dinner party for some 500 biz dealmakers. The country’s highest-grossing film in 2010, “Five Minarets in New York,” which made $20 million locally, was a breakthrough Turkish production that filmed in Gotham and starred Danny Glover.
The country is facing an exhibition boom fueled in part by a growing youth population: More than 65% of the country’s population is under 30, a result of emigration and a high death rate among the older population a decade ago. That has led to a vibrant and social-media savvy population. Vietnam also has a bustling cinema infrastructure owned by Cinema 21, which also operates multiplexes in Indonesia.
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