'Made in USA' losing its appeal

Foreign markets increasingly turn to locally

produced movies to fill theaters.
By John Horn and Lorenza Muñoz
Times Staff Writers

May 25, 2007

CANNES, France — CANNES, France — When Fox Searchlight unveils a movie at a

film festival, savvy American filmgoers have come to expect the production to make a
big impression at their local theaters — "Little Miss Sunshine," "Napoleon Dynamite,"
"Garden State," to name just a few recent examples.

Yet U.S. moviegoers are unlikely to see Catherine Deneuve's "Après Lui," a Searchlight
movie premiering at this year's Cannes Film Festival. That's because the studio made
the movie in French for the French.

Much of Hollywood's globalization movement has focused on U.S. studios hiring

foreign directors to make English-language movies, or American productions shooting
in Morocco, Hungary, Romania — wherever the story works and the labor is cheap. But
a different kind of international business is mushrooming, and its dividends are palpably
visible at the 60th annual Cannes Film Festival.

The festival is both a competitive showcase and market for new productions.
Historically, buyers on the sales floor have been international distributors browsing
through stacks of American movies, from prominent star vehicles to low-budget slasher
films.

But as if on a crash diet, the foreign appetite for U.S. productions is tumbling, with
foreign markets turning to their own locally produced movies to fill the void.
Hollywood blockbusters such as "Ice Age: The Meltdown" or "Spider-Man 3" are still
huge overseas. Increasingly, though, movies produced in foreign markets are pushing
aside movies made in the USA.

For the first time in 30 years, Japanese-language movies accounted for a majority of
Japan's ticket sales, and their local productions are making equally strong gains around
the globe. In Brazil, Fox's Portuguese-language production "If I Were You" sold even
more tickets than the American blockbusters "X-Men 3" and "Pirates of the Caribbean:
Dead Man's Chest." Last week, seven of the top 10 movies at the South Korean box
office were made in South Korea, China or Japan. French films accounted for 46% of
the total box office in France last year, up from 35% the year before, according to
tracking service Nielsen EDI. The Sony-backed "Niñas Mal" ("Charm School") sold
more than $7 million in tickets in Mexico.

"Local productions really have gained dramatically in terms of market share," said Paul
Hanneman, Fox's co-president of international theatrical distribution.
Several concurrent trends appear to be driving the business, according to executives
involved in the local language business. First, some foreign moviegoers (and their
governments) are pushing for greater cultural nationalism, possibly stemming from anti-
American sentiment. At the same time, an explosion of local television productions is
yielding a fresh generation of actors and filmmakers, with new theaters expanding
moviegoing options. And the flood of American studio money into these foreign-
language productions has become an accelerant to it all.

"One of the paradoxes of the world becoming a global village is that people now say
they have the time, the money and the inclination to see more and more of something
that's their own," said Gareth Wigan, vice chairman of Sony's Columbia TriStar Motion
Picture Group. Sony announced earlier this month that Wigan and Deb Schindler would
head a new international production arm with the goal of recapturing more of the
market.

Local productions also help overcome restrictive quotas; China, for instance, allows
fewer than two dozen non-Chinese films into its theaters every year.

Given the potential rewards — and the modest production and marketing costs
compared with American studio productions — Hollywood is rushing into India, China,
Russia and seemingly everywhere else to join forces with local filmmakers.

The most popular films in many of these countries will continue to be American
behemoths such as "Spider-Man 3." But local-language productions can still spark steep
profits; in a good year, a studio can pocket $50 million to $75 million in earnings from
these films.

The key test is whether a film can succeed in its home country. In Argentina, Disney
scored a solid local hit with "El Ratón Pérez." Every now and then, though, one of these
American-backed local-language productions crosses its original borders and becomes a
global triumph.

Released in 2005, "Kung Fu Hustle," a goofy spoof on martial-arts movies that cost
about $20 million to produce, turned into an international phenomenon. With global
ticket sales of more than $100 million, it was hugely profitable for its producer,
Columbia Pictures Film Production Asia. (Not surprisingly, Sony is making a sequel).
Sony has also signed a multi-picture production deal with Star Overseas, the Hong
Kong-based production company of "Kung Fu's" director-star Stephen Chow.

That's not to say it's been easy. Hollywood can still struggle figuring out the arcane,
sometimes complicated filmmaking systems in other countries, especially India and
South Korea. Anti-Americanism, some say, also has hindered the studios' ability to stroll
into foreign countries and establish what might be perceived as a filmmaking colony.
Instead, the studios have found the most effective way to make movies abroad is to
partner with local producers.

In China, Disney recently announced a Mandarin co-production with the state-run

China Film Group on an animated/live-action movie about a magical squash-like
vegetable called "The Magic Gourd." Despite some past Chinese productions (including
last year's "The Painted Veil") having battled Chinese censors, Disney is confident its
collaboration will be smooth.

"More than [just] approve of the film, they are elated by it," said Larry Kaplan,
executive vice president and general manager of Disney's Buena Vista International. "It
epitomizes certain values the Chinese government wants to accentuate for its country."

Universal Pictures recently signed a three-year deal with Oscar-nominated director

Fernando Meirelles ("The Constant Gardener") to produce English- and Portuguese-
language movies from his Brazilian company, O2 Filmes.

Meirelles said he expects to release at least three movies a year under his Universal
deal. Their first, the drama "Adrift," will be directed by new Brazilian director Heitor
Dhalia. Meirelles said the Universal deal will allow him to put together a slate of
movies instead of the usual one project at a time.

"It's always difficult to get financing for films," said Meirelles, noting that Universal
will finance all projects they approve. "With this partnership, all the writers and
directors in Brazil are coming to us." Universal also recently signed a deal with
Mexican filmmakers Alejandro González Iñárritu, Alfonso Cuarón, Guillermo del Toro
and two others to produce and distribute five of their films abroad — several of which
will be made in Spanish.

"The idea is to do things differently and to think about how you become a home for
global filmmakers," said David Linde, Universal co-chairman. "It's about being in
business where there is big business."

Filmmakers such as Meirelles, South Korea's Bong Joon-ho ("The Host") and
Germany's Tom Tykwer ("Perfume") know they are competing with Hollywood for
audience attention, and they are willing to use special effects, quick cuts and lots of
action to get people into theaters.

"People are willing to see European films if we are willing to give them the same value
for their money," said Florian Henckel von Donnersmarck, whose "Lives of Others" was
neither fast-paced nor laden with effects but managed to attract large crowds in
Germany.

Made for about $2 million, "The Lives of Others" not only captured the foreign
language Oscar but also grossed about $65 million worldwide. It could not have been
made without a $325,000 investment from Buena Vista International, which also
distributed the movie in Germany when no German distributor would touch it.

"A European film has to be several times as good to be able to compete with an
American film," said Von Donnersmarck. "You have to make up in storytelling what
you don't have in production value."

Tom Bernard, the co-president of Sony Pictures Classics, said that, while he is not
seeing as large an influx of Hollywood money into foreign productions as others detect,
filmmakers do have more tools at their disposal.

"These local-language folks are making Hollywood-style movies for their local market,"
he said. "Very seldom did you see anything in other countries close to those special
effects we see now."

If American-backed foreign-language productions are going to continue to thrive,

however, the stories must remain relevant to the local audience and not be calculated to
play in the global marketplace.

"A wonderful Argentinean film," said Tony Safford, Fox's senior vice president of
acquisitions, "doesn't have to work in Mexico."