Only a couple years ago, amid the rise of new media players like Netflix and a dip in the U.S. theatrical market, doomsayers began predicting that the big-screen experience had entered its endgame. But after one of the most astonishing weeks in box office history, the upcoming gathering in Cannes of film lovers and executives from around the world is taking on the air of movie-industry avengers assembling.
The colossal haul of “Avengers: Endgame” ($1.5 billion and counting) follows a second consecutive record year at the global box office, which raked in $41.1 billion in 2018. With more big-budget films set to hit multiplexes in the coming months, 2019 could extend that streak.
In good news for the domestic industry, the North American total of $11.9 billion also shattered the previous record. But 2018 offered further evidence that, far from being gravy, international takings are fast becoming the meant for Hollywood’s tentpoles, and even for some of its more modestly aimed fare.
Of Hollywood’s top 20 titles, 18 made more money abroad than they did at home. (The exceptions were “Black Panther” and “The Grinch.”) That might not be so surprising in today’s globalized world, but what’s striking are the margins: Seven of the top 10-grossing pictures, including “Avengers: Infinity War” and “Jurassic World: Fallen Kingdom,” harvested at least twice as much outside the U.S. as what they reaped within. For a handful of hits — “Bohemian Rhapsody,” “Venom” and “Fantastic Beasts: The Crimes of Grindelwald” — the ratio of overseas to domestic box office soared past 3-to-1.
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International box office now represents 71% of global ticket sales. Little wonder that a project’s prospects or performance on foreign soil, more than on home turf, can determine whether a franchise blooms or withers. “A box office zero can turn into a box office hero purely from its international take,” says Paul Dergarabedian, a senior analyst at Comscore. “There are some franchises or films or types of movies, if it were not for the international marketplace, they would lose tons of money.”
China remains the Holy Grail of markets outside the U.S. While forecasts that the Middle Kingdom would overtake North America by now haven’t come to pass, the mammoth opening of “Avengers: Endgame,” on top of strong performances by blockbusters such as “Aquaman” and, more surprisingly, best picture Oscar winner “Green Book,” makes China a key stop on a movie’s worldwide tour. The country boasts more than 63,000 screens, far exceeding the U.S. number. Last year’s Chinese box office notched 9% growth, reaching $8.9 billion.
Whether imported titles will be allowed a bigger piece of that pie is still in question. The U.S.-China trade war has frozen progress on a new agreement over quotas, revenue sharing and an easing of the unofficial blackout periods for foreign films. Moreover, the Chinese industry is churning out hits of its own, proving that 2017 mega-earner “Wolf Warrior II” was no anomaly. The country’s three highest-grossing films of 2018 were all homegrown: “Operation Red Sea,” “Detective Chinatown 2” and “Dying to Survive,” which together posted nearly $1.5 billion. Already this year, sci-fi epic “The Wandering Earth” has pulled $700 million into its orbit.
Emerging markets continue to show promise for the film industry, says David Hancock of research firm IHS Markit. “If you’re in Latin America, Eastern Europe, Asia, parts of the Middle East, cinema is a vibrant, growing medium. There’s a very healthy, growing, developing side that is essentially coming to the party a bit later.”
In mature markets such as Western Europe, however, the landscape is uneven. Britain, the world’s fourth-largest market, was a bright spot, registering its highest number of admissions in nearly half a century. France and Spain held steady, but Germany and Italy experienced alarming drops, the former by an unexpectedly steep 15% and the latter by about 5%, for its worst result in a decade.
Analysts say the plunge in Germany is due in part to the country’s aging cinema infrastructure. Upgrading the theatrical experience, as exhibitors have been busy doing in places like the U.K., will be key to reviving flagging markets. “The quality of the cinemas themselves is a big deal,” Hancock says. “It’s got to be a premium experience now. It doesn’t need to be cheap, but it needs to be good value for money.”
Although blame is frequently heaped on Netflix and other digital platforms for the decline in moviegoing, a deeper look suggests that’s not necessarily the case. In Germany, figures show that streaming consumers actually went to the movies more often than non-SVOD users in 2018. Similarly, the Motion Picture Assn. of America reported recently that movie attendance per capita in the U.S. was highest among those ages 12 to 24 — a cohort one might expect to be shunning the big screen in favor of cellphones and laptops. “It’s symbiotic,” Hancock says. “High users of Netflix are high users of cinema.”
But the streaming space itself is set to become much more crowded, with Disney, WarnerMedia and others planning to offer direct-to-consumer services by year’s end. More than 600 million people worldwide have signed up with a digital platform, a number certain to keep rising. Global giants like Netflix and Amazon are competing not just against each other but also against regional players such as Showmax in Africa, Starz Play in the Middle East, and Iflix in Asia, all of which are making gains.
That has turbocharged the race for local content, some from previously unlikely places. Netflix announced its first African series in December, then unveiled a second one two months later. Apple’s newly announced lineup of originals features an immigration-themed drama to be shot in Korean, Japanese and English.
Traditional players are increasingly concluding that fighting the streaming behemoths alone is a losing battle. Across Europe, legacy broadcasters have begun setting aside old rivalries to form digital alliances that showcase their local roots. The “best of British” service BritBox, a joint venture of the BBC and ITV that’s already available in the U.S., is expected to launch in the U.K. later this year. Talks are underway with other British channels about participating.
The BBC is also pressing ahead with plans to overhaul its iPlayer catch-up service, which was once hailed as an industry leader but is already being talked about as a young dinosaur. The pubcaster wants to make content available for a longer period, personalize the service and offer live programming.
For BBC chief Tony Hall, it’s not about convenience; it’s about survival. Sudden, radical shifts in the market have forced even as venerable an institution as the BBC onto a new battleground, he warns, and the entertainment industry must adapt — fast.
“All this needs to happen at pace,” Hall told a gathering of media executives recently. “Not long ago, traditional broadcasters and media organizations could each do our thing and expect audiences to make time to come to us. Now we must fit around their lives, deliver value directly to them, or we all risk irrelevance.”