http://online.wsj.com/article/SB10001424052748704913304575371394036766312.html
By LAUREN A. E. SCHUKER
When director Adam McKay pitched a sequel to his 2004 hit movie "Anchorman," he thought it would be a no-brainer for Hollywood.
The $20 million comedy, starring Steve Carell and Will Ferrell, grossed more than $90 million at the box office. But only $5 million of that came from ticket sales abroad. Viacom Inc.'s Paramount Pictures nixed the sequel this spring, fearing the comedy's uniquely American brand of humor wouldn't play abroad.
"At the end of the day, the economics of the business have changedthere is so much more pressure to play globally, and we couldn't fight that," says Mr. McKay.
The rising clout of international audiences is a sea change for Hollywood. Decades ago, a movie's foreign box office barely registered with studio executives. Now, foreign ticket sales represent nearly 68% of the roughly $32 billion global film market, up from roughly 58% a decade ago, according to Screen Digest Cinema Intelligence Service.
The result is that one of the most American of products is now being retooled to suit foreign tastes. Studios have begun to cast foreign actors in American-themed blockbusters like "G.I. Joe." Scripts are being rewritten to lure global audiences. And studios are cutting back on standard Hollywood fare like romantic comedies because foreign movie-goers often don't find American jokes all that funny. Several Hollywood studios have gone as far as financing, producing and marketing original movies for markets like South Korea and Brazil.
We need to make movies that have the ability to break out internationally," says Rob Moore, vice chairman of Paramount Pictures. "That's the only way to make the economic puzzle of film production work today."
The rise of the international box office has as much to do with a shifting global economy as with the evolution of the movie business. For years, Hollywood's bottom line was propped up by double-digit growth in DVD sales. From 2000 to 2005, for example, home-video sales increased by 91% in the U.S. But during the tough economy of the past two years, home videowhich used to account for the bulk of a film's profitsfell more than 20%, according to Screen Digest U.S. Video Intelligence Service. Dwindling in-theater audiences in North America also have contributed to the shift.
Another factor: Regions from Asia to Eastern Europe went on a credit-fueled building boom, erecting shopping mallsoften with multiplexes attached.
The Chinese government is expected to support the opening of roughly 35,000 more screens over the next five years, up from the current 5,000 in the country. The Chinese government recently announced that the country's box office had spiked 86% in the first half of 2010, after several Hollywood imports, from "Avatar" to "Alice in Wonderland," proved popular with Chinese moviegoers.
IMAX Corp. has opened 66 big-screen theaters abroad in the last three years, including 25 in Asia. The company last week unveiled its first foreign-language film: "Aftershock," a Chinese film that IMAX executives hope will increase the company's brand awareness in Asia. Early next year, IMAX will target rural viewers abroad with portable movie theatersdomes equipped with IMAX screens.
When American Paul Heth first arrived in Russia in 1993, the number of commercial movie theaters had fallen to less than two dozen. The collapse of the Soviet Union had decimated the local film industry, which depended on government support. Desperate theater owners began converting cinemas into casinos, car dealerships and grocery stores.
Mr. Heth went the opposite direction. Along with some partners, he turned an old 500-seat conference room in Moscow's Radisson Hotel into a makeshift theater. He set up a concession stand and filled it with boxes of Milk Duds, Sour Patch Kids and other candy he had carried in his suitcase.
He hung up a sign that read, "From Hollywood to Moscow." And Mr. Heth hired a young Russian to translate the movie's script as the film was playing and provided headphones for viewers.
In those days, Mr. Heth would travel to Los Angeles to pick up prints of films and carry them back to Russia on his lap. The first major Hollywood film he showed was the Western "Tombstone," starring Val Kilmer and Kurt Russell. It did well.
Today, the company he owns with Shari Redstone, Rising Star Media, has 75 screens in Russia. Those screens generate about 10% of the country's box office, which Mr. Heth estimates will hit $1 billion for 2010. He has plans to expand Rising Star in the coming years, tripling the size of the circuit by 2013 to capture about 30% of the country's box office.
Satisfying foreign audiences has been tricky for Hollywood. Years ago, audiences in Japan or South Korea would faithfully go to the multiplex to watch movies that were written, produced, and cast out of Hollywood. Now, increasingly sophisticated local films are giving Hollywood a run for its money.
In South Korea, ticket sales to local movies accounted for about 10% or 20% of box-office revenue in the 1990s. Hollywood movies grabbed the lion's share. Now, local fare makes up nearly 50% of South Korean ticket sales, according to Screen Digest.
In 2008, veteran film executive Sanford Panitch was shocked when a Twentieth Century Fox film he worked on called "Jumper" was nearly eclipsed in South Korea by a local crime thriller called "The Chaser."
"As I was looking at the box-office numbers rolling in that weekend, the power of local content really hit me," says Mr. Panitch.
Just a few months later, Mr. Panitch was plucked to head up the studio's new Fox International Productions division. (Fox is owned by News Corp., publisher of The Wall Street Journal.) Fox, noticing that local films were eating up more of the foreign box office, had become worried about its ability to reach up-and-coming markets with its Hollywood fare. Fox set up the new division so it could start developing, producing, and distributing local-language movies for those countries.
One of Mr. Panitch's first acts was to hire the "Chaser" director to do a South Korean film for Fox called "Yellow Sea." It will hit theaters at the end of this year or early 2011.
The director hasn't made a film since "Chaser," and Mr. Panitch believes his next one will be box-office gold. It stars the same two actors from "Chaser"some of the most sought-after talent in the country.
Mr. Panitch says he sometimes uses Fox's vast array of film production resources like relationships with special-effects companies to dress up foreign films. But he says it's more important to draw on local producers and their expertise to make films that appeal to that particular audience. The new South Korean film, "Yellow Sea," will cost less than $9 million to make, and Fox is splitting the cost with local production entity Showbox.
"It's not about bringing Hollywood tactics to the foreign markets, " says Mr. Panitch. "It's about participating in a local culture enough to create a product that those audiences will actually want to watch."
The studio now is producing about 15 local-language movies a year, double what it made last year. Its first Chinese movie, "Hot Summer Days," took the top slot at the box office this year over the Chinese New Year weekend, one of the most competitive in the calendar.
Donna Langley, co-chair of General Electric Co.'s Universal Pictures unit, was recently working on the script for an upcoming big-budget movie based on the Hasbro board game Battleship.
The plotline is classic Hollywood: Evil aliens land on earth and live underwater. One of the first people at Universal to read the script was David Kosse, the studio's London-based president. One worry surfaced immediately: The aliens only threatened the U.S.a premise deemed "too American."
Universal asked the writers to redo the script. In the new version, the aliens threaten the entire world.
"The movie takes place off the coast of Hawaii, but the question we asked was, 'How do we make this a global proposition?' " said Ms. Langley. Universal now tries to have senior executives vet scripts early to look for ways to make them more international.
"I can tell you that no studio head is going to make a big expensive movie that cost $150 million or $200 million unless it has worldwide appeal," says Mark Zoradi, a film-industry veteran who stepped down last year from his post as president of Walt Disney Co.'s Motion Pictures Group. "You can't pay back that production cost on the domestic model alone."
Last summer, Paramount was worried that its 2009 summer release, "G.I. Joe," which cost $175 million, might flop overseas. "People questioned whether it would travel outside the U.S. because the original formulation is a strong U.S. military theme," says Mr. Moore, the Paramount executive.
The solution: Stuff the cast with international stars. Byung-hun Lee, a major Korean movie star, was put in one of the film's title roles. A South African actor, Arnold Vosloo, played another key character, Zartan.
In the end, "G.I. Joe" grossed slightly more abroad than at home, taking in $152 million of its world-wide $302 million in ticket sales overseas. In South Korea alone, the movie grossed nearly $16 million.
But Hollywood has concluded that some movies just can't make it abroad. "A lot of comedies and a lot of comedians don't travel," says Mr. Moore. Paramount and others have begun to give them the ax.
"Wedding Banned" was planned as a romantic comedy about a divorced couple who try to stop their daughter from getting hitched, starring Robin Williams, Anna Faris, and Diane Keaton. It was given the green light by Walt Disney Co.
But the project was stocked with expensive stars whose films haven't all fared well abroad. And studio head Rich Ross yanked it late last year.
Fox Searchlight was recently developing "Baggage Claim," which chronicles a young flight attendant's search for Mr. Right and stars an ensemble of African-American actors, including Oscar nominee Taraji P. Henson.
But that film ended up in "turnaround," the Hollywood term for when a studio abandons the rights to a project and allows others to acquire it. It was heavily targeted to an African-American audience, a factor that often means the film won't play well abroad.
After passing on the "Anchorman" sequel, Paramount decided to use the money it could have spent on that to buy a new project from Sacha Baron Cohen of Britain. Mr. Cohen is one of the rare comedians whose filmslike "Borat" and "Bruno"bring in global audiences.
Since "Anchorman 2" was killed, Mr. McKay, the director, has been trying to broaden the foreign appeal of his next project, "The Other Guys." A $100 million comedy, the movie stars Dwayne "The Rock" Johnson, Samuel L. Jackson, Will Ferrell,and Mark Wahlberg as law officers, some good, some crooked. Sony Pictures will bring it out in August.
A key plot point of the film involves Mr. Wahlberg and Yankee shortstop Derek Jeter. Sony's executives initially worried that Mr. Jeterand the joke that involves himwould seem too American. They found a solution: The studio asked Mr. McKay to spend his summer re-shooting those scenes with international sports stars, and it went after soccer stars David Beckham of England and Cristiano Ronaldo of Portugal.
Sony wanted to release a separate version of the film abroad starring Messrs. Beckham or Ronaldorather than Mr. Jeter.
Neither soccer player was available in the end. But the studio plans to use the strategy in the future. "I gotta tell you, I loved the idea and still think it's really smart," says Mr. McKay.
"It's a whole new way of looking at movies," he adds. "Rather than trying to veer your audience toward the film, just tweak your film to the audience. Next, I'd like to start tweaking movies by region, one version for the Midwest, another for the East Coast, and the South."
