U.S. Studios Don’t Need U.S. Audiences Anymore

Stop me if you’ve heard these: Wonder Woman is the highest-grossing film of the summer. The latest Transformers is a flop. Valerian has no chance to make its budget back. All of these statements are false (well, maybe not the one about Valerian…). That is, if you’re looking at the worldwide box office. While many news sites continue to primarily report on movies’ success (or lack thereof) in the good ol’ United States, increasingly, U.S. studios are looking to foreign shores to not only pad their films’ numbers, but to justify entire franchises.

In 1989, Tim Burton’s Batman was the quintessential franchise starter. It had a memorable actor in Michael Keaton playing the hero, and movie legend Jack Nicholson played the film’s villain. On a budget of $35 million, the movie scored $251 million in the U.S. box office, and immediately warranted a sequel. It also made a cool $160 million in foreign theaters, or about 39% of its total earnings. That’s certainly a significant number, but when you consider that “foreign theaters” potentially includes the entire globe, from South America to Western Europe to east Asia, it was readily apparent that the foreign box office wasn’t deserving of the attention that United States filmgoers received.

Fast forward a decade, and Bryan Singer’s X-Men again catapulted superhero films into the stratosphere. While not as successful as Batman, X-Men received a sequel, started a franchise and, arguably, ignited the current superhero genre craze. Its numbers, however, played quite different. X-Men made “only” $157 million on a $75 million budget. While it’s difficult to calculate just how much of the proceeds a film studio actually receives on a movie, many box office watchers will estimate that the cost of print and advertising roughly matches the budget of the film. If that’s true, the film ultimately cost around $150 million, and 20th Century Fox barely made a profit, but throw in the foreign box office, another $139 million, and there’s suddenly much more room for a sequel.

While X-Men increased its foreign share of income to 47%, it was probably 2002’s Spider-Man that really had film studio execs looking far and wide for profit. Spider-Man, the Sam Raimi film starring Kirsten Dunst and Tobey Maguire, had a huge-for-the-time budget of $139 million. it was a resounding smash in the U.S., earning back $403 million, but in foreign markets, it actually outdid the U.S. with another $418 million, for a worldwide total of $821 million. If we take into account advertising, as well as the cut from the theater, that means Sony made about $263 million dollars in pure profit on Spider-Man.

Iron Man was then released in 2008. It scored only 45% of its total gross in foreign markets, so in 2010, Iron-Man 2, which included a China-centric bonus scene for audiences in that country, jumped the foreign total to 50%. This strategy, reportedly at the behest of Disney, may represent the first time a huge blockbuster aimed for the Chinese market. Since then, the rapidly growing Chinese consumer has been a favorite target of U.S. studios.

Now consider Star Wars. 2015’s The Force Awakens made a boatload across the globe, including a by-that-time average 55% of its grosses in foreign markets. Its non-sequel follow-up, Rogue One, specifically included two well-known Chinese actors and a more diverse cast in general in a clear bid to attract more foreign viewers. In this case, the strategy didn’t pay off, as Rogue One split its total gross between the domestic and foreign markets, but that hasn’t stopped U.S. studios from continuing after the foreign golden goose.

Looking at just this summer’s movies, it’s more clear than ever that some franchises only succeed thanks to the foreign box office. This is great if your favorite film series needs the extra help, but consider this: sometime soon, perhaps now even, we’ll be treated to film after film only because the foreign market demands it. That’ll mean more movies in your theater catering not to American tastes and sensibilities, but to foreign ones. This isn’t necessarily a bad thing. After all, a handful of foreign films come to the U.S. everywhere and do fine, particularly those with “Studio Ghibli” on them. Americans are also avid consumers of other countries’ media, primarily including anime, but it is a different world indeed when American movie studios show American audiences American-made movies aimed at foreign viewers.

Let’s examine some of this year’s biggest films, and look at the impact of the foreign market on their success:

Wonder Woman

Even without its foreign total, Wonder Woman would be a profitable and successful film, but the foreign numbers show a franchise that still has room to grow. With only half of its tally coming from overseas audiences, it seems that the American audience’s appetite for a female-led superhero franchise isn’t quite the impetus to hit the theater for foreign movie-goers. Had Wonder Woman appealed to foreign audiences as much as its domestic fans, it would be the biggest movie of the summer. Instead, it’s barely beating out Pirates of the Caribbean, and lags behind Guardians of the Galaxy 2, which has a normal 45/55 split between its domestic and foreign totals.

Transformers: The Last Knight

With a budget over $215 million, Transformers is a catastrophic flop in the U.S., earning back only $127 million. Without foreign audiences, that looks to inflict quite the loss, but Transformers is an example of just the type of movie foreign audiences, and particularly Chinese ones, eat up. While Wonder Woman is a cheery, hopeful, action-drama, its setting of World War I can be problematic to attracting Asian audiences. Even further, though Wonder Woman has many special effects-laden battles, a sword-and-shield wielding Amazon can’t compete with giant, fighting robots. Transformers has brought in almost 77% of its money from foreign movie-goers for a whopping total of $547 million worldwide. Because of this, you can bet that while Americans have cooled on the once-hot franchise, many more Transformers films are coming.

Pirates of the Caribbean: Dead Men Tell No Tales & The Mummy

I include these films together because they are both huge foreign earners and they both succeed on the same principles: special effects and globally-recognized movie stars. While neither has a fighting robot in it, Johnny Depp and Tom Cruise are. Consider this: Tom Cruise’s last five films, including two Jack Reacher movies, all grossed over 63% of their revenue totals overseas. Depp isn’t quite as bankable, but several of his films have foreign grosses in the high 70s and low 80s. While it looks like the Pirates franchise might still be on its last legs, and the Universal Monsters-verse still struggles, Johnny Depp and Tom Cruise are going to keep getting high profile work.

Despicable Me 3

It’s crazy now to think that the Shrek series ever came to an end. Many audiences today forget how successful it was, but Dreamworks killed the franchise in 2010 after Shrek Forever After failed to make as much domestically as its predecessors (a still-robust $238 million). However, each film in the franchise continued to grow its foreign audience, and by 2010, Shrek‘s global total was a huge 68% foreign, with a whopping total of $752 million worldwide for Dreamworks. With a decision to kill that series, it’s no wonder Dreamworks has struggled since.

Universal isn’t making the same mistake with its Despicable Me franchise. Despicable Me 3 barely made half of what part 2 did in the United States, and while its foreign grosses also shrank, they did at a much lower rate. The latest entry in this franchise made 70% of its money overseas and with a budget of only around $80 million, a worldwide haul of $732 million is still hugely profitable. It also can’t be ignored that these films are made for a very reasonable budget that practically guarantees a profit. Prepare yourself for more minions in the coming years.

I’ll add here that Dreamworks scored a foreign hit with Boss Baby. The movie did an average $174 million here in the States, but that represents barely a third of its worldwide total. Smurfs: The Lost Village, from Sony, seemed to disappear as quickly as it arrived, but not before it gobbled up $150 million in just foreign totals — or 77% of its total gross.

Cars 3

Opposite Despicable Me, it’s hard to imagine that Pixar’s racing-centric franchise will ever see the light of day again. With Disney’s focus on attracting a global audience, the Cars franchise just doesn’t have it. Doing only so-so domestically, Cars 3 managed only a 42% foreign gross number for just north of $100 million. Without a released budget, it seems there was enough room in the total ($250 million) for Disney to avoid a loss, but likely just barely. Goodbye, Cars, you were the franchise we loved to hate.

Spider-Man: Homecoming

Continuing in the trend of Spider-Man films, Homecoming is already making a huge amount of money in foreign markets. At 56% of its global gross, Spider-Man: Homecoming‘s share of international grosses is about normal for a blockbuster today, and that’s great for a film based in New York about a white American kid. Spider-Man also happens to be the #1 comic book character worldwide, scoring more than a billion dollars a year across the globe in average franchise-related sales, so it isn’t a surprise that Homecoming has scored big.

Valerian and the City of a Thousand Planets

If you’ll notice, I didn’t include films released in the last couple of weeks. Movies usually don’t hit foreign markets all at the same time, so determining a movie’s success or failure at the global box office can take a while, but I include Valerian here because after its opening weekend of a paltry $17 million, it’s only projecting out to a domestic total in the low $40 million range. For a movie with a reported budget of anywhere from $175-210 million, it’s going to need have a global tally of around $400 million to keep financiers from losing their shirts. That means it’ll need around $360 million, or an unheard of 90% of its gross, from foreign markets! If it has a chance to do that it’s only because, in truth, Valerian is a French film and could potentially tap into the European market much more than U.S. films.

Are you prepared for a future cineplex full of fighting robots and Tom Cruises? Does the appeal to foreign audiences frighten or excite you? Do you think any of this will change the domestic audience? Tell me all this and more in the comments below, or tweet at me @LRM_Brian.

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