Can't Beat 'Em? Join 'Em: Hollywood's Foreign-Language Films Booming Overseas

Courtesy of Sony Pictures, Warner Bros., Universal

U.S. studio-backed local-language movies are seeing box-office success, perhaps nowhere more than in Spain, where Sony's 'Ahora o Nunca' beat 'Spectre.'

This story first appeared in the Dec. 18 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

This is what a Hollywood blockbuster looks like in Spain these days: a low-budget rom-com that pokes fun at the Catalan independence movement. Universal's A Spanish Affair 2 became the top opener in the country with $8.4 million in November, beating the $8.2 million record set by the studio's Fifty Shades of Grey in February. The $3 million-budgeted sequel is on track to become the top earner in Spain this year, just one of several local-language hits bankrolled by U.S. studios.

In the past decade, Hollywood increasingly has invaded key foreign markets with custom-made films, producing and distrib­uting non-English titles from Buenos Aires to Berlin to Bangalore. Warner Bros. is behind a series of German comedy hits, including Til Schweiger's 2014 blockbuster Head Full of Honey ($66.5 million local gross), and this year the studio signed a joint venture with China Media Capital to produce Chinese-language films. Fox has a deal in China with the Huace Media Group, and in September it signed a first-look pact in Russia with local hitmakers Paul Heth and Michael Schlicht. Sony, one of the first in the foreign-language game with Crouching Tiger, Hidden Dragon in 2000, has active local production outlets from South America to India.

But perhaps nowhere has the local-lingo model worked as well as it has in Spain. Warners' Perdiendo el Norte, a comedy about unemployed Spaniards who seek their fortune in Germany, is Warners' top performer in the country this year, grossing $11 million. Paramount had a $12 million hit with the Spanish animation Capture the Flag, topping its best Hollywood import, Mission: Impossible — Rouge Nation, which earned $7 million there. Sony's Spanish wedding disaster comedy Ahora o Nunca earned $8.5 million, better than its Bond tentpole Spectre ($6.5 million).

"Three years ago, I would have been surprised that Warner Bros. and Paramount's best box-office performers were Spanish hits, but not now," says analyst David Rodriguez of Rentrak Spain, which reported that Spanish films took in a record 25.5 percent of the domestic box office in 2014, the biggest slice since 1977. This year, Spanish films are expected to account for about 20 percent of the total take. In addition to Spanish Affair 2, Fernando Gonzalez Molina's Palm Trees in the Snow, a big Warners release, bows Christmas Day.

For the studios, local titles deliver more bang for their low-budget buck. Universal's four Spanish-language releases this year — out of 24 pictures — accounted for 23.4 percent of the studio's box-office haul. Universal Pictures International Spain GM Jose Luis Hervias sees Spanish titles as an "organic part" of his strategy. Distribution strategies in Spain increasingly focus on theatrical because home video has been decimated by piracy.

At the same time, Hollywood titles have become less dependable earners in Spain. Warners' San Andreas earned just $3.5 million, and Disney's Ant-Man grossed $4 million. "Hollywood product (in Spain) is everything or nothing," says Ghislain Barrois, CEO of Spanish Affair producer Telecinco Cinema. "You have a handful of extremely successful pictures (that) perform better than expected or it's a disaster."

In this winner-takes-all market, he argues, the lower-risk/high reward model of local-language production is an opportunity few studios are willing to pass up.