Globalization has opened the doors for international products enter the market . Hollywood has also started to market and release its movies globally and increase its profitability. The filmmakers are focusing more on the overseas market and the domestic audience is becoming less significant to them. The reasons are straightforward- a rising global market for Hollywood and surging global revenues, while the domestic box office returns dwindle. The current article analyzes the rise of the foreign markets and its significance and value for Hollywood movies.
Growth of Foreign Market
International revenues have increased significantly for the movies made between 1990-2016 in Hollywood. The first time the international revenue surpassed domestic revenue was in the year 1997. It was due to strong performances of three major movies- Titanic, Men in Black, and The Lost World. From the year 2003 onwards, international revenues have been dominating over the domestic box office returns. The foreign markets continue to grow exponentially. The major reasons for their growth are as follows:
The American movie and theatre market are well developed and mature. The moviegoers have the purchasing power to buy movie tickets when they want to. They also have other sources of entertainment and streaming service providers. Some of the foreign markets though are not so well developed and are yet to reach saturation. As a result, there is tremendous scope for sustained growth for entertainment and movies in these markets, which makes Hollywood movies popular there.
The movies are being made to the tastes of a more global audience. The movies do not depict typical American stereotypes and their culture which a more local American audience can relate to. The movies have more special effects and visual imagery which appeal to a more global audience. Hence the receptivity of the movies in these global markets continue to be high.
Globalization has made it easier to sell movies to foreign markets. The entry barriers and the costs are coming down drastically. Social media and internet combined with globalization has made promoting the movies much easier and more widespread. Millions of people on social media platforms can see upcoming movie trailers at a fraction of the offline promotion cost. Movies are being released in foreign markets on the same day as the US release, and in some cases, they are being released earlier than the US market release.
China is the major foreign market for Hollywood movies. It is the number two market and is expected to become the largest market for Hollywood movies surpassing the American market by the year 2020. The Chinese market has seen unprecedented growth. It accounted for only 1.1% of the global box office revenue for Hollywood in 2005, which increased to 17.8% in 2015.
The foreign markets continue to grow at a fast pace. They have become highly important for Hollywood’s business of filmmaking. Currently, the major studios expect a 60:40 revenue split favoring the international box office. As the American audience is drifting from movies to the online streaming contents, foreign markets provide hope and optimism for Hollywood.