Overseas BO Props Up Domestic Flops

By Robert Marich
   June 26, 2017-Three recent big-budget Hollywood movie stumbles are getting bailed out by booming overseas box office—“The Mummy,” Pirates of the Caribbean: Dead Men Tell No Tales and Transformers: The Dark Knight.
   The don’t-worry-foreign-will-save-us syndrome is much discussed, but usually not true. A bomb domestically is typically a dud overseas 
China is a bright spot for the lastest Pirates of the Caribbean adventure film

too. But the recent trio are enjoying redemption overseas.
   For example, at this point, Universal’s PG-13-rated Mummy racked up 80% of its blockbuster $342 million global boxoffice overseas (its U.S./Canada boxoffice is underwhelming for a major movie). The Tom Cruise-starrer cost about $125 million to produce and marketing costs are about the same. Typically, overseas is 60% of global, but for these films is a far higher percentage.
   “Such results have become the norm for some of Hollywood’s so-called tentpole movies, which regularly cost more than $200 million to produce and are expected to serve as studios’ biggest moneymakers,” says a Wall Street Journal newspaper story by Ben Fritz and Erich Schwartzel. “A poor showing in the U.S. no longer necessarily discourages studio executives from approving yet another installment in a long-running series, if enthusiasm from overseas moviegoers is high enough.”
   Last year in 2016, the foreign bailout effect for domestic boxoffice bombs was less pronounced. But Universal’s video-game adaptation Warcraft got a lift overseas, though Sony Pictures’ all-female reboot of Ghostbusters did not. Of Warcraft’s $434 million in global boxoffice, 89% came from overseas.
   Hollywood is studying soft domestic for its sequels and franchise films like Paramount Pictures’ Transformers. I expect the major studios to still make the glossy, big-budget derivative sequels and comic-book adaptions, but put a lid on production expenses. Where before $125-200 million production has been acceptable, in the future I’d expect studios shave off tens of millions in such expense to offset anticipated domestic weakness. Hollywood will continue to grind out movies based on pre-existing properties like comic books because they are easier to market. Audiences are familiar with source material, and thus have a pre-existing fanboy following. Glossy action-oriented movies are also easier to market overseas because visuals travel better than language-driven movies due to language differences. And of course certain American-centric themes like baseball and U.S. politics are tough sells overseas.
   It’s often overlooked in press reports that the boom in foreign boxoffice isn’t the overall economic boost it appears to be at first glance. First, international theaters keep a higher percentage of boxoffice revenue than domestic; in China, which is most egregious, film distributors like Hollywood majors get half the percentage that they get from movie theaters in the U.S./Canada. Finally, TV licensing of hit theatricals isn’t nearly as lucrative overseas, and such ancillary-media revenue is crucial to Hollywood movie economics. A U.S. basic cable network like FX or Turner might spend $10-25 million for domestic TV rights a theatrical film; in China, state-controlled TV networks don’t buy foreign blockbusters.
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