September 2, 2013

New Hollywood: How a Thriving International Market Has Changed American Filmmaking

Iron Man 3 Chinese PosterFor the past several years, we've been noticing the ramped up production of big budget films based on comics, graphic novels, and books. The American Society of Cinematographers offers an analysis as to why that is, and what role the international market, namely the fast growing Chinese market, plays in how American films are made and marketed. Highly marketable under the lucrative umbrella of a franchise, American films are heavily influenced and favored by the international box office, indicating that self-distribution through platforms like VOD is more important for independent filmmakers than ever.

The film industry is just that: an industry. The main focus of studios, as evidenced by their choices of  films they produce, is to make the most profit. Film franchises offer the most return for their investment, because they exhibit stories, conventions, and heroes that audiences know and enjoy.

The most profitable "brands" include a lot of action and special and visual effects, mostly because images translate better overseas than dialog. These films become massive tentpoles that hold studios up financially, even though the budgets are massive, ranging anywhere from $100-250 million for production and $175 million for marketing.

The returns from the last "mega films" range from 9% for The Great Gatsby to 107% for Iron Man 3, but these profits are largely due to the international box office. According to the ASC article, written by Benjamin B, two-thirds of Hollywood studio profits come from international sales.

Top 10 film gross two thirds
The Chinese market is the fastest growing market today, expected to overtake the American box office in 5-10 years. Because of China's incredible financial influence, Hollywood studios are designing their production plan around their tastes, as well as those of other countries, which means that big concessions are being made. Benjamin B writes:

Getting American films into the government-regulated Chinese market is not easy. China has established a maximum quota of 20 American films per year. In February 2012 an agreement between vice-president Joe Biden and his counterpart Xi Jinping allowed for another 14 US films per year, provided they are in 3D or in the IMAX format.

Studios have taken it a step further by reworking films in order to add, cut, or censor scenes based on the preferences of Chinese authorities. Some of these changes include censoring on morality, like cutting love scenes from Cloud Atlas and Kate Winslet's breasts in Titanic. However some include plot changes that put China in a more favorable light, barring a scene where James Bond kills a Chinese guard, making the antagonists in Red Dawn Koreans instead of Chinese.

Here is a scene from Iron Man 3 that includes Chinese celebrity Fan Bingbing that isn't included in the American version.

So, what does all of this mean for independent film? Are the global economics of international cinema making it harder for low-budget filmmakers to produce their work domestically? Well, yes and no. Studios haven't stopped production on all low-budget films, nor have distributors stopped working with indie filmmakers. In fact, the recent poor performance of big-budget tentpoles this summer has indicated a shift in domestic tastes, which could potentially have a greater impact on which films are made the U.S.. Producer Lynda Obst touches on this in an an interview with Kim Masters on KCRW:

Certainly our audience has tired of the sameness of certain kinds of franchises. And the domestic audience, we need to have a very good in order for it to work, because our word of mouth travels very, very quickly. And it seems to me that there are only so many times you can see the same cities being destroyed over and over again before it becomes ultimately very tiresome.

However, the chances of a screenwriter's spec script getting picked up by a studio are slim, and independent filmmaker finding distribution through traditional means faces similar difficulty. This is why self-distrubtion through platforms like VOD is one of the greatest tools an indie filmmaker can have, because it allows filmmakers to have more freedom from the studio system to distribute their work (at least for now.)

As the international market for films continues to grow and change, it will be interesting to see what effect it has on independent film. Will domestic audiences begin foregoing big-budget action flicks for the more nuanced fare of smaller budget films? Will self-distribution turn cinema on its head? Only time will tell.

Link: Hollywood Biz 3.0 - part 1: China -- The American Society of Cinematographers

Your Comment

25 Comments

Maybe I should change my major to Chinese with a minor in film?

September 2, 2013 at 4:23PM, Edited September 4, 11:21AM

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Billy_Dee_Williams

That's not necessarily a bad idea. A semi-business partner of mine was involved in Chinese issues while a Marine Corps officer, and is now actively pursuing production partnerships in China. What sells here in the US (crap, mostly) also tends to be popular in China (then again, it's more accurate to phrase it the other way - what's popular in China sells here, and it's crap).

September 5, 2013 at 10:45PM, Edited September 4, 11:21AM

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you should learn chinese, because your bills and debt will all be in chinese in 10 years.

September 2, 2013 at 4:48PM, Edited September 4, 11:21AM

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ishoot720p

If America goes down hill any further, they can supplement us all the jobs the Chinese aren't willing to do.
If filmmaking doesn't work out for me, I’ll test my skills in the fur trade.
Or look for work in any of their stolen themed abandoned amusement parks that do nothing but collect dust.

Kidding.

September 2, 2013 at 5:03PM, Edited September 4, 11:21AM

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VinceGortho

Be sure to check in back here in 2023... ; )

China owns a lot of American debt, so they have plenty of reason to see us do well. If they sink us or tick us off, they're putting that debt at risk. I'd say we'll continue with English as the de facto language here in the US until AT LEAST 2025... ; )

September 5, 2013 at 10:59PM, Edited September 4, 11:21AM

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Is there still an American filmmaking market?

September 2, 2013 at 4:56PM, Edited September 4, 11:21AM

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VinceGortho

The best in the world

September 2, 2013 at 7:56PM, Edited September 4, 11:21AM

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Anthony Marino

Yes, it is actually a physical market that appears in Santa Monica California anually. Not sure if that is what you meant but, here it is. http://www.americanfilmmarket.com/

September 2, 2013 at 8:28PM, Edited September 4, 11:21AM

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Dan

The china thing is over, if you want $$$$$ go do business in Brazil or Africa

September 2, 2013 at 5:41PM, Edited September 4, 11:21AM

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john jeffries

Many movies get kickbacks from governments if they associate with producers from foreign countries. Germany, France, England and China are big now, but lots of countries want movies made about them. Foreign Presales are also huge.

September 2, 2013 at 8:29PM, Edited September 4, 11:21AM

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Dan

Agreed... Only those who are REALLY paying attention know that Africa is the next big hit.

September 3, 2013 at 2:41AM, Edited September 4, 11:21AM

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D. Williams

"the china thing is over" - just like the internet thing is soon coming to an end.

September 3, 2013 at 4:56AM, Edited September 4, 11:21AM

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Jonas

Mmm, well, with China being home to about one sixth of the world's population, it sounds like it's a market that can still be squeezed a little. In 2011, China had a population of about 1.3 billion. If any film tickles the fancy of even one percent of the population, that's 13 million people.

September 5, 2013 at 10:55PM, Edited September 4, 11:21AM

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In Rian Johnson's "Looper", the aged assasin (Bruce Willis) was originally supposed to go live off in Paris in the original script. But as part of producing the picture, production partner DMG asked that the location be switched from Paris to Shanghai. China has strict requirements of foreign films in order to qualify for the quota, such as the picture must partially be filmed in China, use chinese actors and crews, etc. Hence, Joseph Gordon Levitt says he wishes to go to Paris, but Willis says something like "Trust me kid, you want to go to China."

All in all, it was a good move, as Looper ended up making a killing in China.

September 2, 2013 at 7:23PM, Edited September 4, 11:21AM

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Dante

Plus theoretically with over 2 billion people in china even a failure (bad movie) could result in a large box office that's makes tons of money.

September 2, 2013 at 8:09PM, Edited September 4, 11:21AM

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Anthony Marino

@ Anthony - You're assuming that (theoretically) 2 billion people can afford to even go to the movies. The disparity of wealth there is huge that we can't just assume that 2 billion people means 2 billion middle-classers who have the kind of disposable income to spend on a weekend at the movies. They're not just a faceless mass of humanity. But, unfortunately, that's the way Hollywood seems to view the rest of the world - continually producing movies that are mired in paternalistic and racist stereotypes that will never truly work in an overseas market - vainly hoping that the audiences won't get wise enough to see their act for what it really is: pandering.

September 3, 2013 at 5:39PM, Edited September 4, 11:21AM

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Heironymus_Bosch

Pandering? Not so sure, hollywood is in business to sell. The middle class in china exceeds way over 300,000. That's more than all the people in the USA. Not to sound vicious but you do the math. And believe me they have a face, a say and can certainly drive their own market. I commend your post but that's not really where I was going.

September 3, 2013 at 7:41PM, Edited September 4, 11:21AM

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Anthony Marino

Correction 300,000,000

September 3, 2013 at 7:43PM, Edited September 4, 11:21AM

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Anthony Marino

Fair enough. I suppose it is easy to misunderstand comments out-of-contexts so I hope it didn't sound too combative or personal. It's just an issue that strikes a little close to home and while it's easy for me to chock up the decisions of Hollywood's upper echelon to a general insensitivity I can appreciate that you do have a point. It just bothers me that they're reaching out in such a half-assed way. It's like if executives from another country decide "Oh, let's just put a couple of white people in the background" as an afterthought and then they assume the movie will sell solely on the merits of those few throwaway scenes.

September 5, 2013 at 1:02AM, Edited September 4, 11:21AM

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Heironymous_Bosch

The Chinese economy is cooling down in general - too much bad debt - but they'll obviously be a major player for a long time to come. (BRIC is generally in a near-meltdown mode). The smaller budget US movies however do have to compete with the small budget international movies. The key is arguably in the middle-budget - $30M-$50M - films that have star actors and high production values but can recoup the investment in the North American market alone. Also, let's not discount the TV-DVD-streaming sales, which add another 50% or so on top of the global grosses.
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The VOD market is more important for the independents than for the medium-big budget Hollywood offerings but the VOD will need these medium-big films to make itself popular. Currently, there are too many sites vying for a very small piece of the pie. There's a need for consolidation and that's a couple of years down the road.

September 2, 2013 at 9:22PM, Edited September 4, 11:21AM

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DLD

I'm going to nit-pick a bit here, but that lead image of Iron Man 3 is in Japanese, not Chinese.
Of course, it's not completely out of context as the article does mention a generality of foreign markets, but considering the only countries mentioned in this article are the US, China, and Korea (with Korea only being mentioned in the context of censorship for the Chinese market), and there was an embedded video of a Chinese-only scene from Iron Man 3, I figured that there was a possibility that the intent was to have a Chinese language poster for the movie.
Anyway, just an FYI.

But yeah, for movies like Pacific Rim, the foreign market made all the difference compared to the domestic. That movie made $100 mil. domestically, but $400 mil. in foreign markets with China beating out the US's gross all by itself.

September 2, 2013 at 10:49PM, Edited September 4, 11:21AM

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Mr Blah

[Correction: Pacific Rim made about $300 mil. in foreign markets, not $400 mil. as I originally wrote.]

September 2, 2013 at 10:52PM, Edited September 4, 11:21AM

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Mr Blah

Nothing new here for non-studio film-makers. 20-30 years ago there was a thriving market for direct-to-video action pictures. Just like the "C" movies that filled-out the bottom half of the bill at the Drive-Ins you'd get an over-the-hill name-actor for 1 day of work.

"Ilsa, She Wolf of the SS," (1975) Here's classic low-budget film-making at it's finest. "The film was made on the set of the TV series Hogan's Heroes.[1] The series had already been cancelled and the show's producers let the movie be made on it once they learned that a scene called for it to be burned down, saving them the cost of having it demolished." http://en.wikipedia.org/wiki/Ilsa,_She_Wolf_of_the_SS How's that for inexpensive high-dollar production value 8-)

Here' another good one, "Rock 'n' Roll High School." (1979) "The film was shot on the campus of the defunct Mount Carmel High School in South Central Los Angeles, that had been closed in 1976. The actual demolition of the school was used in the end of the film 8-)

So just find find some rust-belt buildings that are going to be demolished, Then write an action story that fits the location.

September 2, 2013 at 11:10PM, Edited September 4, 11:21AM

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c.d.embrey

It's only natural that big buckbusters and studios are all about making sum money, this is capitalism muthafuka (profit as the primary value). But I laugh at those crying about "mah american movies", your only hope are indies, were for years and years. Not kiddie cgi-fests.

September 3, 2013 at 2:32AM, Edited September 4, 11:21AM

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Natt

Bonjour V Renée

Thank you for linking to my first post on the Hollywood Biz 3.0

I should clarify that my post does not necessarily reflect the opinions of the American Society of Cinematographers, although my blog -- thefilmbook -- is hosted on their site.

You might also be interested in part 2 of my exploration of Hollywood Biz 3.0, where I focus on indie filmmakers:
http://bit.ly/hwoodbizindies

All the best,

Benjamin B
thefilmbook

+++

September 6, 2013 at 8:08PM, Edited September 4, 11:21AM

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