Hollywood studios are salivating over the box office prospects of wider, tightly coordinated global day-and-date release campaigns.
There’s one problem: It’s far more expensive to market films day-and-date overseas.
Jack Valenti announced last month at ShoWest that domestic marketing costs rose 28% in 2003 — an alarming jump.
It’s still generally much cheaper to market pics abroad. But that could change as Hollywood releases more of its summer blockbusters in huge overseas campaigns with up to 10,000 foreign prints and well-coordinated worldwide media campaigns.
This summer will bring a flurry of global day-and-date releases. “Van Helsing” will bow in 33 markets, including the U.S., on May 7. “Harry Potter” is opening in nine major overseas markets along with the U.S. on June 4. “Spider-Man 2” bows July 2 simultaneously in the U.S. and in most of Asia and Latin America, with Japan a week later.
Studios hope to turn these pics into instantaneous, worldwide events — and not just to recoup their costs more quickly. Global day-and-date campaigns have also been seen as a hedge against piracy, and studios hoped they’d also bring economies of scale that would reduce overall marketing expenditures.
But it was much cheaper to release films the old-fashioned way — rolling them out slowly from territory to territory, hopefully building on strong U.S. openings.
With global day-and-date releases, studios spend more on saturation media campaigns to launch their pics with a bang. They spend more on prints, and pay a premium to complete dubbing and subtitling more quickly.
When pics don’t go day and date, studios have the luxury of assessing a film’s U.S. results. They can pull back on overseas P&A and opt not to release a pic in some territories if it doesn’t catch on Stateside.
Compounding the problem is a weaker greenback, which in itself means the majors are shelling out about 15% more for P&A in overseas markets than a year ago.
International P&A budgets are rising, but not at the same rate as in the U.S. In Japan, the U.K. and Germany, marketing costs rose 5%-10% last year, driven by higher media rates, primarily for TV, outdoor and print ads.
At ShoWest, Valenti reported that the average marketing budget for a studio film in 2003 was $39 million. But marketing execs privately say the average marketing budget for a summer tentpole is $50 million or more, thanks to saturation TV advertising.
Those same execs say that overseas, it’s common to shell out a hefty $50 million-$70 million on P & A for a tentpole day-and-date campaign.
For commercial pics with staggered dates, the spend is typically $35 million-$40 million, or roughly in line with the latest domestic marketing expenditures. It’s $20 million or less for films where execs have modest expectations overseas.
“We’re spending significantly less than $39 million on average,” says Buena Vista Intl. prexy Mark Zoradi. “But for a ‘Finding Nemo,’ a ‘King Arthur’ or a ‘Pirates of the Caribbean 2,’ we would spend an equal amount to domestic.”
Warner Bros. is understood to have forked out close to $80 million on P&A for “Harry Potter and the Chamber of Secrets” outside the U.S.
New Line’s network of international distribs spent as much in total on “The Lord of the Rings: The Return of the King” as New Line did in the U.S. — around $75 million.
Rolf Mittweg, New Line prez of worldwide marketing and distribution, won’t disclose his total marketing costs but points out the blockbuster was an unusual case in that its running time entailed high print expenses. The film itself ran so long in cinemas, he says, that distribs kept spending money to support it. It was a smart investment, too. “King’s” global gross came close to $1.1 billion.
Sony’s overseas P&A budget on “Spider-Man 2” will be “very close to” the domestic campaign, says Columbia TriStar Intl. marketing chief Scott Neeson, who calculates international ad costs have rocketed by 25% over the past three years due to the greenback’s decline against foreign currencies.
Moreover, he estimates total spending in dollars has ballooned by nearly 40% due to a combo of higher media costs, exchange rates and fragmentation of the media — which means distribs have to spread their coin across more outlets.
Rising marketing costs overseas, as in the U.S., are driven largely by TV advertising. Increasingly, international marketing execs are exploring new methods of promoting their slates.
In markets like Japan and Europe, new media platforms such as the Internet and text messaging are increasingly popular — especially with young consumers who are the target audience for summer tentpoles like “Spider-Man 2” and “Van Helsing.”
“That’s where our audiences are,” says Fox Intl. prexy Stephen Moore, “and it’s a cost-efficient way of targeting them. Ideally I would like to see new media replace traditional media, which is pricing itself out of business.”
New media reps a small portion of marketing budgets — as little as 5%, according to some execs — but at Fox, Moore says “it’s growing with every movie.”
He characterizes Fox’s Intl.’s investment in releasing Roland Emmerich’s “The Day After Tomorrow” as being “as great as any we’ve ever made in the company.”
BVI’s Zoradi notes the studio did deals with mobile phone providers to promote “Nemo” and “Pirates,” sending messages and video of the films to consumers and enabling them to play games related to those titles.
The majors can save a lot of bucks when they decide to rein back the releases overseas of films that flop domestically — such as “The Missing,” “Paycheck” and “Timeline.”
A poor U.S. result doesn’t necessarily mean a studio will give up on a pic, however. A case in point is “The League of Extraordinary Gentlemen,” which Fox Intl. marketed aggressively despite its disappointing $66 million domestic tally. Studio was rewarded with a foreign gross of $113 million.
But as studios seek to exploit their hits overseas in wider day-and-date campaigns, their marketing costs will continue to grow.