As the World Turns in 2012: What's Next for Global Box Office
This story first appeared in the Jan. 20 issue of The Hollywood Reporter magazine.
The year ahead will be a crucial test for the foreign box office, perhaps the last (and vast) growth area left for Hollywood. Observers worry about the brewing economic crisis in Europe as well as the impact of the European Football Championship (June 8 to July 1) and Summer Olympics (July 27 to Aug. 12). There's also concern that 3D attendance will begin to slip, as it has in North America, as the price of those tickets clash with economic reality (though the growth rate of 3D screens remained staggering, up more than 70 percent in 2010 to 22,000). The 2011 foreign results were heady for the big six studios -- a record-breaking $13.5 million, up 7 percent from 2010 (conversely, domestic revenue slipped 3.4 percent as attendance fell to a 16-year low), with Brazil, Russia India and China surging. Can success be repeated? Hollywood's 2012 slate, which includes The Dark Knight Rises and The Amazing Spider-Man, will look to beat the success of last year's Harry Potter, Transformers and Pirates franchises. "There's a lot to be optimistic about," says former Paramount International president Andrew Cripps, who helped lead the studio to a record year before exiting in December. "But I do think moviegoing is being impacted around the world by the economy."
Box-office revenue in Britain and Ireland were up a pleasing 4.5 percent in 2011, reaching $1.7 billion and fueled by hits including the final Hary Potter film, The King's Speech and sleeper British comedy The Inbetweeners, which has earned an astonishing $140 million (beating out Hollywood's Christmas films). But film executives worry about the toll the soccer championships and London Olympics will have on the local box office. The Dark Knight Rises, opening July 20, has a week of play before the Summer Games get under way. In summer 2010, soccer's World Cup depressed moviegoing as British audiences were otherwise occupied.
Who says Hollywood studios can't live without promoting their films on the small screen? The French box office enjoyed its best year in 2011 despite the continued ban on television advertising for movies. Film distributors expect the market to stay strong in 2012, even with the overall cloud cast by the ailing euro. For Hollywood, competing with French films will be a greater challenge than ever. In 2011, local fare triumphed, led by runaway hit The Untouchables. The comedy has earned a staggering $140 million to date, beating out U.S. holiday tentpoles. French films saw a a 21.4 percent jump in ticket sales, capturing 41.6 percent of the market, compared to 35.7 percent in 2010.
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The German box office set records in 2011, crossing $1 billion for the first time as revenue jumped 3.8 percent from 2010. But not even Germany is immune to the European financial crisis, and moviegoing could be impacted in 2012, according to box-office observers. And theaters are sure to thin out during the summer's soccer championships (as with the U.K., the German box office was hit hard by soccer's World Cup in 2010). However, Hollywood movies -- which accounted for
80 percent of all ticket sales in 2011 -- should continue to dominate, especially 3D fare.
The explosion of new movie theaters -- and the popularity of digital 3D-- has turned Russia into one of Hollywood's most treasured allies, and that's not likely to change in 2012. With Brazil, India and China, Russia is one of the B.R.I.C. countries, where emerging middle classes are eager consumers. Tentpole after tentpole did huge business in Russia in 2011, exemplified by the 3D toon Puss in Boots, which grossed north of $50 million in Russia alone -- roughly one-sixth of the film's $311 million foreign cume.
While Mexico has been eclipsed by Brazil as the biggest moviegoing market in Latin America, it remains a vibrant and key territory. And if there's a premier 3D family market anywhere, it's Mexico, where Fox's Alvin and the Chipmunks: Chipwrecked has earned north of $6 million. But challenges loom in 2012: There are economic woes, and the advent of broadband is dramatically increasing digital piracy in Mexico and across all of Latin America.
Hollywood's love affair with Brazil will only grow hotter in 2012. Consider this: In 2008, The Dark Knight was its top earner, topping out at $20.2 million. In 2011, a handful of U.S. tentpoles grossed well north of $30 million, led by Rio with nearly $43 million and the final Harry Potter film with $35.7 million. Sure, there was a built-in audience for Rio -- set in Brazil's capital city and directed by Brazilian filmmaker Carlos Saldanha -- but the overall expansion of the box office is due to the country's strong economy, thriving exhibition business and popularity of 3D. U.S. studios dominated the top 20 chart, taking 17 spots. And like Rio, box-office hit Fast Five also was set in Rio de Janeiro.
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More than any other European country, the industry is most worried about Spain, where the unemployment rate has soared to 20 percent. (Among younger people, the rate is a staggering 40 percent.) Admissions reached 140 million several years ago but plummeted to 100 million
in 2011. Piracy also remains rampant, further eroding the local box office. Among the films making headlines was The Adventures of Tintin, with $24.7 million.
The MIddle East
Moviegoing is on the rise in the United Arab Emirates, Kuwait, Lebanon and Qatar, and film executives hope the Arab Spring will open up markets in other Middle Eastern countries such as Egypt. Combined box-office revenue reached $152 million in the UAE, Kuwait, Lebanon and Qatar in 2011, compared with $135 million the previous year. And the Dubai Film Festival in December was an international affair, hosting the worldwide premiere of Mission: Impossible -- Ghost Protocol.
Hollywood will continue trying to crack India's Bollywood-centric box office in 2012, both with its own tentpoles and co-productions. Fox has done especially well with its local co-ventures, while Paramount was smart to send Tom Cruise to India to promote Mission: Impossible -- Ghost Protocol, which has earned a resounding $11 million.
If 2011 is any indication, China is indeed the headline of the near future. For the first time, box-office revenue crossed the $2 billion mark in 2011, preceded by $1.62 billion in 2010. A strict annual quota still limits the number of outside films to 20, but Hollywood tentpoles did enormous business, led by Transformers: Dark of the Moon at $170 million, by far the biggest gross outside of North America ($352.4 million) and Kung Fu Panda at $95 million. Zhang Yimou's Christian Bale starrer Flowers of War, fast approaching $100 million, proves there is an appetite for Chinese films starring Western actors.
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Down Under will continue to be a litmus test for Hollywood tentpoles in the year ahead. More than any other territory, the moviegoing tastes in Australia mirror those in North America, and that's why so many Hollywood movies open there first to begin their international rollouts. Box-office revenue for 2011 reached $1.12 billion, slightly ahead of 2010's previous record $1.1 billion.
The Japanese box office has yet to fully recover from the devastating earthquake and tsunami in March. Revenue sunk more than 20 percent for the year, although the latest Harry Potter and Pirates of the Caribbean installments each grossed more than $100 million. Japan used to be the most important foreign territory to Hollywood, but that's changed. One note of hope for 2012: Mission: Impossible -- Ghost Protocol has been doing brisk business in Japan, already earning north of $10 million.