'Avatar,' 3D Boost Record-breaking Year for Overseas Box Office

5:26 PM PST 12/29/2010 by Frank Segers
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Studio estimates show offshore box office for the six Hollywood majors will total $12.7 billion, up almost 20% from 2009's former record of $10.7 billion.

Wow! What a year.

The past 12 months on the foreign theatrical circuit will go down in the record books as the year of Avatar and of the emergence of 3D as a force of undeniable box-office power.

According to studio preliminary estimates, offshore box office for the six Hollywood majors from all territories outside the U.S. and Canada will total $12.7 billion, a leap of almost 20% from 2009's former record of $10.7 billion.

(On the domestic front, 2010 is on track to match last year's take of $10.6 billion.)

"2010 marks a significant leap in international box office over prior years," said Veronika Kwan-Rubinek, Warner Bros.' president of international distribution.

For one thing, the year marked the first time that as many as three Hollywood majors posted more than $2 billion in foreign box office (and two very nearly nailed down an unprecedented $3 billion). By contrast, two distributors passed the $2 billion mark in 2009 (Fox and Sony), and only one did so in each of the preceding three years (Paramount in 2008, Warners in 2007 and Fox in 2006).

All this was accomplished despite the fact that "admissions have been more or less flat internationally versus 2009," one international executive noted. What made the difference was a more than doubling of the number of 3D titles released abroad at steeper ticket prices, thus yielding a roughly 35% 3D ticket surcharge.

And, topping off the year was a down-to-the-wire race for the year's foreign box-office crown.

Based on preliminary studio projections, Warners capped a strong end-of-year push to reach $2.92 billion in offshore revenue, pulling off a last-minute tie with Fox, which had enjoyed a comfortable lead in the overseas sweepstakes for most of the year.

Warners experienced a 55% jump in foreign box office on the combined wallop of Harry Potter and the Deathly Hallows Part 1 (generating $610 million), Inception ($531 million), Clash of the Titans in 3D ($330 million), Sherlock Holmes ($315 million) and Sex and the City 2 ($193 million).

Thanks to the Avatar juggernaut -- which grossed $2 billion foreign in total (with $1.476 billion coming in 2010) -- Fox flew past $2 billion in record time, by late June. But its other releases were hardly gangbusters. None made the year's Top 10 list, and the studio's second-biggest grosser, Knight and Day with Tom Cruise and Cameron Diaz, finished its foreign run with $186.2 million.

Coming in with foreign box office of $2.302 billion, Disney notched a record year overseas and, the company said, the "fourth-best year ever for any international film distributor." Fueling the action was 3D titles Alice in Wonderland ($690.2 million in offshore box office) and Pixar's Toy Story 3 ($649.2), the top overseas films released in 2010. On a worldwide basis, Toy Story 3 mustered a global take of $1.064 billion.

With offshore revenue of $1.983 billion, Paramount barely missed entering the lofty $2 billion circle, but the year marked the studio's second-biggest ever. DreamWorks Animation fed the distributor two Top 10 titles -- Shrek Forever After in 3D (total foreign gross, $505 million) and How to Train Your Dragon ($277.5 million). In conjunction with Marvel, Paramount also handled Iron Man 2, which drew $311 million overseas.

Sony grossed $1.38 billion offshore, the 11th time the studio has exceeded the $1 billion plateau. Its top hits were Resident Evil: Afterlife, the latest in the sci-fi action franchise ($236 million in offshore box office), which Sony handled along with various local distributors. Salt, starring Angelina Jolie, came in with $175.7 million; The Karate Kid update, Jackie Chan's biggest hit overseas, drew $182.5 million; and the critically applauded The Social Network bagged an estimated $103.4 million, with the film yet to open in Japan.

Universal finished the year at $1.2 billion, equaling the total it grossed in 2009. Its big driver was Despicable Me, the family-oriented 3D animation title that registered $291 million in offshore action and finished as the calendar year's No. 9 foreign box-office hit. While Universal's Robin Hood with Russell Crowe barely broke the $100 million mark in the U.S. and Canada, it attracted a solid $215 million on the foreign circuit.

"2010 was certainly the year when 3D had a major impact on box office, with eight of the top 15 international titles (presented) in 3D," said Andrew Cripps, president of Paramount Pictures International. (According to Fox International figures, there are some 13,000 overseas locations equipped for 3D exhibition as opposed to about 8,000 in the U.S.)

As a result, Cripps said, "International box office averaged 167% of the domestic total across the Top 20 highest-grossing international films of the year."

He added: "A major global hit can now expect well over 60% of its gross to come from international markets."

Selected Hollywood independent distributors also fared well overseas. The two top titles from this sector were Summit International's The Twilight Saga: Eclipse, which nailed down $392.9 million overseas to rank No. 6 on the foreign Top 10 list, and The Expendables, the retro Sylvester Stallone action vehicle from Millennium-Nu Image that grossed $148 million offshore.

The foreign theatrical universe -- including major studio releases, independently distributed titles and locally handled films -- rose to $20.5 billion in total box office in 2010, estimated Craig Dehmel, Fox International's senior vp sales and strategic planning. In 2009, the total foreign marketplace stood at $19.3 billion.

The Russia market came on particularly strong, increasing its take by an estimated 43% over 2009. For the first time, that market as a whole reached $1 billion in total box office. China also surged -- up 60% -- although the relatively low film rental returns to American distributors continue to diminish the dazzle of the large box-office grosses the market generates.

Not all was smooth sailing in 2010. The enormous success of Avatar -- plus the robust performance of Alice in Wonderland -- wildly skewed results of the January-through-March period. During that quarter, box office nearly doubled in China, and Russia registered a 60% increase, Dehmel said.
"Even the more mature (European) markets were 20% to 35% above 2009," the Fox exec said.

The second quarter went largely in the other direction thanks to the quadrennial World Cup, the world's most-watched sporting event. "Second-quarter results were a lot weaker because everybody bailed out of the World Cup," Dehmel said.

The soccer tournament sharply curtailed theatrical attendance in Europe, Asia, Africa and much of Latin and South America.

Fox discovered this when it released overseas The A-Team, its expensive feature rendition of the 1980s NBC series, in July -- head to head with the World Cup. Designed to provide an action alternative to family-oriented and children's fare largely unaffected by soccer distractions, The A-Team barely broke the $100 million mark offshore (cume was $100.7 million).

The third-quarter box office picked up, but 2010 ended on a down note as the fourth quarter struggled in vain vis-a-vis 2009's final quarter when Avatar was introduced to the foreign theatrical circuit.

Unlike in recent years, U.S. distributors did not reap the benefit of an "exchange rate bonus" resulting from a weak dollar versus major local currencies. The "bonus" results when box office in a strong local currency market is converted to dollars for repatriation to American distributors. The stronger the local currency, the more dollars are repatriated.

For much of this year, a strong U.S. dollar precluded the "exchange rate bonus." By Dec. 24, the dollar had increased in value 9.1% against the Euro, 4.7% against the British pound sterling and 0.5% against the Russian ruble. Japan was the only significant market where the value of the dollar took a hit, down 10.9% against the yen.

"The exchange rate was not a factor this year," Dehmel said.

 

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