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Box Office: How Overseas Saved Summer

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Final numbers reveal hits like ‘Transformers’ and ‘Maleficent’ made up for falling U.S. ticket sales, but smaller revenue splits and declining mature markets mount worry.

 

After a chilly summer at the North American box office, where ticket revenue dropped by 15 percent, the Hollywood studios are becoming more dependent than ever on global ticket buyers to bail them out. Fortunately, new data reveals the foreign appetite for American tentpoles still is strong. While some major territories have seen revenue drops this year, the majority of them have been stable, and in a few — notably, China and Brazil — growth has been phenomenal. Chinese box office rose 32 percent in the first nine months of the year to hit $3.55 billion, already nearly equaling last year’s full-year total. Paramount’s Transformers: Age of Extinction, which took in more than $300 million in China, topped the list.

 

“Broadly speaking, the growth in international box office will offset U.S. losses [this year]. China alone as a whole market should do that,” says David Hancock of London-based analysts IHS Technology. However, international growth will have to remain buoyant — up at least 4 percent overall for the year — to compensate for the decline in domestic box office. Given the strength of American titles in certain foreign territories (Disney’s Frozen earned $250 million in Japan, where it opened in March, and nearly $80 million in South Korea), that looks doable, though.

But there is one major caveat: “If you are talking about gross box-office revenue, then international growth may well compensate,” says Doug Creutz, managing director at Cowen and Co. “If you are talking about the actual revenue the studios take home, I’m not so sure.” Revenue-sharing deals in China mean the studios collect a smaller fraction of gross revenue (typically between 25 to 40 percent compared with 50 percent in the U.S.). While Russia’s ticket sales are booming — attendance is up 10 percent — the collapse of the ruble means, on a dollar basis, earnings in the region actually have gone down.

 

And there’s an even more worrying trend, say box-office watchers: the overall decline in the moviegoing audience in so-called mature territories such as Germany, France and Japan. “You could argue it’s actually shrinking,” says Creutz, as competition from other media lure audiences away from theaters. Foreign audiences may have come to Hollywood’s rescue this year, but if they start behaving like domestic moviegoers, there’s trouble ahead.

(*See numbers for Brazil, China, Japan, Spain and France above.)

 

 


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