Studios Translate Local Language Movies Into Lucrative Global Business

If you can’t beat ‘em, join ‘em, goes the old saying. While the studios continue trying to crack the nut of getting Hollywood films into China, many of the majors also have a wider global strategy that’s proving lucrative both there and elsewhere: Local-language production. Hollywood’s involvement in the area is not new. But, increasingly, movies that are co-produced or distributed by the majors in such places as China, India, Germany, Italy, Spain, Korea and Latin America are finding themselves reaping strong returns.

The markets “are huge,” especially where local box office rivals that of Hollywood pictures. Homegrown films in China, for example, generally snag about 50% of the annual market share and are currently widely outperforming Hollywood films – this week’s Iron Man 3 notwithstanding. In India, the indigenous share of a $2B market can be as much as 90%. There’s an argument to be made that Chinese or Indian films don’t cross cultural borders, but with those kinds of numbers, “Why would the film need to travel?” posits an exec.

Richard Fox, EVP International for Warner Bros., says the studio is looking to develop relationships to make Chinese-language films. “There are a lot of moving pieces in assessing which countries to focus on,” but, “if it doesn’t recoup in the country of origin, we don’t get involved,” he says. Warner recently bet well in Mexico where its comedy Nosotros Los Nobles smashed records with the second biggest opening ever for a non-animated local film.

Another studio exec says local language production “is all relatively opportunistic.” It can be a distraction to try and stay abreast of local material, but “paying attention to local markets, filmmakers and stories around the world gets you more educated in terms of worldwide taste and emerging filmmakers.” Plus, “the minute you have a hit, it’s ‘How much money are we making? Why don’t we up this business?’” Here’s a look at how the studios are speaking in various tongues:

There is a relatively low barrier to entry for many local language productions whose budgets are small by Hollywood standards. In China, the current number one local film of all time, Lost In Thailand – which did not have studio involvement – was made for $3.1M and has gone on to take over $200M locally. Then there’s the Village Roadshow Pictures Asia co-produced Journey To The West, which was made for under $20M and has paralleled Lost In Thailand’s success. Fox International Productions distributed Journey in Taiwan, Vietnam and Malaysia where it is one of the highest-grossing films of all time. Fox International has made three films in China including Tony Chan’s 2010 Hot Summer Days and the director’s 2011 Love In Space which cost $4M and grossed $12M locally. The studio is eyeing more.

In Japan, the average cost of a film is $5M and many gross over $50M. Last year, the market share for local pics was about 35%, but Warner Bros. Entertainment Japan president Bill Ireton tells me, “The pie is a moving target if you have big U.S. product” coming out. Warner Bros. is most active of the studios in Japan where the production model involves a consortium often made up of a local TV network, a distributor, an agency and a digital promotion partner like Yahoo. There may also be a comic book publisher in the mix. The local production initiative for Warner, says Ireton, is driven by the in-country P&L; “Whatever gets picked up overseas is all ancillary.”

Warner’s recent films in Japan include Takeshi Kitano sequel Outrage Beyond which it released there for a small piece of the equity. It also developed last year’s hit action drama Rurouni Kenshin and worked with the Amuse talent agency which reps star Takeru Sato. Amuse has a video distribution company, so it took sell-thru and Warner kept rental. “The profit flows back into the consortium pari passu,” Ireton says. On the upcoming Japanese slate are Takashi Miike’s Cannes competition title Shield Of Straw, and Sang-il Lee’s remake of Clint Eastwood’s Unforgiven, which is eyeing a September release.

Fox International, whose second local Korean film, Running Man, has grossed about $10M since its early April release, is also active in Japan. It backed Dragonball Z: Battle Of Gods which is still on release and has taken about $28M so far to make it the second biggest homegrown film of 2013.

Source: https://www.deadline.com/2013/05/studios-translate-local-language-movies-into-lucrative-global-business/