PPI, UPI: New era for o'seas output

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The Monday launch of Paramount Pictures International and Universal Pictures International marked a sea change in the global distribution business.

The move is the first substantial shift in major studio overseas operations since the Walt Disney Co. organized Buena Vista International from scratch 15 years ago.

PPI and UPI are offshoots of United International Pictures, the 24-year-old Paramount-Universal joint venture foreign theatrical distributor. The latter now takes on a secondary role as one of three separate yet affiliated overseas film-releasing companies. All three companies will be headquartered separately in London.

Overseers of the change are taking into account the vastly growing and changing foreign market as well as technological developments that have increased the pieces of the distribution pie, hotter competition for the acquisition and distribution of emerging local-language product, as well as the quest for stronger corporate integration and identification.

UIP became an international film distribution colossus with offices in every nook and cranny of the globe. It has been chalking up record boxoffice returns from the release of films from Paramount, Universal and DreamWorks. Several years ago, it successfully fought off a European Union antitrust assault. The UIP breakup reflects the desire of the new management of Paramount and Universal to control the destiny of their product in a bigger way.

"Many companies combine their home entertainment and theatrical companies," said Andrew Cripps, who has segued from president of UIP to the same title at PPI. "As windows compress, it is essential that all of these divisions work very closely together."

UIP president David Kosse underlines the growing asset base of the international market. "We believe the international marketplace has enormous growth potential, and the best way to capitalize on this is to own and control our own theatrical distribution operations in the major markets," he said. "These operations will create increased access to local talent and help us stay on top of local trends and market movements."

Since the breakup of UIP was announced about a year ago, there has been a hectic period of office-switching, personnel swaps, new co-ventures and new hires. Unlike BVI 15 years ago, the Paramount and Universal takeoffs will be more gradual, and the entities are expected to be fully staffed and in place in about two years.

As a starter, Paramount, Universal and UIP divided the global markets, with PPI and UPI splitting most of the top-grossing territories and UIP holding on to the smaller markets and Japan. Under the division, PPI took over the UIP operations in the U.K., Australia/New Zealand, France, Mexico and Brazil; UPI got Germany/Austria, Switzerland, Italy, Spain, Russia, Belgium, the Netherlands and South Korea; and UIP held on to Japan, Scandinavia, Latin America (except Mexico and Brazil), Eastern Europe and Southeast Asia (except Korea).

In South Korea, when Universal took over the UIP office and renamed it Universal Pictures International Korea, Paramount closed a deal for CJ Entertainment, a local film business power and founding investor in DreamWorks (now part of Paramount), to serve as the exclusive distributor in the market for Paramount films.

In the U.K., two separate operations now are in place, and UPI is aiming to set up separate offices shortly in Australia, Brazil, Mexico and France, UPI's Kosse said. PPI's Cripps said he expects Paramount will have all of its own overseas offices in place in 18 months.

What is most emphatic during the transitional period is each company's determination to supervise the marketing, no matter which distribution entity handles the physical placement in designated markets. "The marketing for Paramount will be done in all territories by Paramount Pictures International," Cripps said. "We will service all marketing materials to all markets and will work with territorial marketing teams on the strategy and implementation of all marketing campaigns directly."

Even after Paramount and Universal establish their own operations in 15 key countries, it is likely that UIP, headed by veteran company executive John Horgan and still under the joint ownership of Paramount and Universal, will continue to service the smaller territories and Japan. That decision is based mainly on the cost of maintaining separate operations in the smaller territories. Sony Pictures Releasing International and Buena Vista International, for example, are partners in about 15 markets, and UIP also handles their product in a few of the smaller countries.

The situation relating to Japan is complex. Perhaps way down the line Paramount and Universal might consider setting up their own operations in Japan, one of the world's leading importers of U.S. films. Upsetting the employment structure there could cause problems with the government, and UIP has established such a strong foothold in the market that it was thought best to maintain the status quo.
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