China will continue to be the big box-office focus internationally in 2015, but the importance of other key markets can’t be discounted. Among them, Korea, Russia and Brazil remain hugely significant territories for the studios, while nations such as Malaysia and Venezuela are on the rise — and present their own challenges. China has expansive growth, a massive population and throws off huge grosses every time a Hollywood movie gets in under the quota system — and it keeps hurtling forward. Leaving aside the big dragon in the room, I looked at these other key markets that have been experiencing their own shifts, good and bad. Here’s a snapshot of how they fared this year and what we can expect up ahead:
A funny thing happened to Brazil in 2014: the World Cup helped the box office. Although the national team advanced all the way to the third-place match, people still went to the movies. A healthy dose of counterprogramming by the studios (Maleficent, The Fault In Our Stars) was a strategic move that paid off and helped thwart what some thought would be a downturn in Brazilian box-office fortunes. Grosses are expected to be up this year, though numbers essentially were flat heading into the final weeks of 2014 at about $800M, according to Rentrak.
The country remains underscreened, but digital cinema convergence should be completed in 2015, which is good news for the studios. However, I’m told there’s also a new development that will play out over the next year: A screen quota is being put into place for local titles. It’s not exactly a quota on the scale of China, but big Hollywood films will be limited to no more than 35% of the total screens in a complex. A U.S. studio exec says it will take time to evaluate the situation: “It could be (you get) what you needed in the first place. It’s a watch-and-see.” It could also give Brazilian movies a better chance; there have been few in recent years that have made a significant impact, and their market share this year is just 13%.
While the réal versus the dollar is strong for the U.S., the economy is still struggling, and that is hurting Hollywood on a fee front, says one exec. There is less disposable income for moviegoing and therefore potentially less investment in new theaters. But groups such as Cinepolis and Cinemark are non-Brazilian companies building theaters there. Disney’s Maleficent was the biggest title in 2014 at more than $33M, while The Fault In Our Stars came in at No. 2 with about $31M. Brazilian moviegoers are big on family comedies as well, perhaps explaining why Adam Sandler’s titles often overperform in the market. Blended, which faltered elsewhere, is the No. 20 movie of the year at $10M-plus. With Sandler’s Netflix deal, the streaming service could certainly benefit here over time.
Asia Pacific is “still the most dynamic and rapidly expanding region in the world,” says an exec. And it’s not unheard of for studios to make up to two-thirds of their Asian business outside China. A lot of that can be attributed to Korea. Box office in the market through mid-December was up $107M, or 8%, over 2013 on 62 fewer titles, per Rentrak. The local film industry is strong and has often outrun Hollywood across the Top 10 films, but this year market share was more even which could be a sign of increased potential going forward. Over the first six months of the year, local titles had just 43% of the market. But by the end of the year, there were six Korean movies in the Top 10, led by Roaring Currents — the all-time biggest film at about $132M. Moviegoers respond to action, sci-fi, fantasy and spectacle. But they also have a soft side – Richard Curtis’ romantic comedy About Time last year was a huge hit here, and this year audiences connected with the sentimental aspects of Edge Of Tomorrow and Interstellar. The latter is the No. 3 film of the year with over $72M. Local documentary, My Love, Don’t Cross That River, about an aged couple’s lifelong romance, recently became the top Korean indie ever with $18.5M.
It’s often referred to as a fast-burn market, especially if a movie doesn’t open strongly. There is crossover between the major exhibitors and distributors and this can result in a quick drop in screen count. But when a movie is hot, it can play for several weeks, ie Interstellar, Frozen ($77M) and The Grand Budapest Hotel ($5.6M). The country has also taken on importance in terms of release dates. Studios know to steer clear of certain local films while pumping in blockbuster titles ahead of other markets as Paramount did with Noah and Fox did with Dawn Of The Planet Of The Apes and Exodus: Gods And Kings. The next big local title coming up that many are steering clear of is Gangnam 1970 on January 22. The Ha Yoo directed period noir thriller is set in the titular Seoul neighborhood at the height of political corruption and sees a pair of childhood friends divided when one goes straight and the other joins a powerful criminal organization. The only Hollywood film releasing the same day is Disney’s family pic Big Hero 6.
Each week this Southeast Asian nation provides big box office for Hollywood — often landing in the Top 10 markets on tentpole titles — and there is much room to grow. The country recently inaugurated the Pinewood Iskandar studios which means more inward investment — The Weinstein Co shot its event miniseries Marco Polo there. In October, a delegation that included the Secretary General of the Ministry of Communications and Multimedia traveled to Mipcom to mark its commitment to support local production companies and attract foreign producers. The screen count has also been on the rise with a further 20 added this year. One exec tells me, “There is a massive increase planned” in the number of screens with multiplexes going into malls over the next four years. Another says, “I have Malaysia pegged as one of the few markets with a chance to eventually join the Top 15-20. There is a huge population, abundant natural resources, growth of the middle class and infrastructure investment.”
Hollywood films don’t have an especially long tail in Asian ancillary, so getting people into multiplexes remains key. “There is not a lot of home entertainment and TV money coming out of these markets, so it’s about theatrical.” With p&a “almost nothing,” returns are high and audiences have a strong taste for Hollywood blockbusters, although animation doesn’t perform quite as well here. Admissions have steadily increased, from 24.69M in 2006 to 61.02M in 2013. However, by the middle of December, Rentrak had grosses tracking just a hair below last year. Despite that, one watcher says, “Malaysia will continue to emerge, definitely. Box office records are broken every year and will continue well into the future.”
Russia was mired in political turmoil this year, largely stemming from the annexation of Crimea which resulted in the controversial arrest of at least one Ukrainian filmmaker. It also led to some rejiggering of business plans for the studios while talent was not encouraged to travel there for a stint. But it wasn’t the politics that dented box office — it was the ruble. The currency’s devaluation led to a dollar discrepancy on Hollywood grosses of about $107M through December 16 this year versus the same period in 2013; that’s a drop of about 8.4%. Is there hope for 2015?
One distribution executive says, “It’s still a very robust market, but we’ve lost 30% in exchange in the past two to three months alone.” Another adds, “It’s very rare to have currency swings of that magnitude in a market of that magnitude.” As one of the biggest growth areas over the past several years, Hollywood would not want to see this trend continue. It’s fast-burn, but execs like Russia because p&a is low which yields a great margin. “If you gross $20 million, you take home $7 million net. Russia is a pure play,” says an international exec. It’s also a big consumer of what the studios put out — audiences love action, 3D and big spectacle — and is often among the top ex-U.S. or China markets for Hollywood. There is still local currency growth while screens are also going up, but there is also the threat that it is becoming more mature.
Some believe things will get better. A proposed cap on Hollywood films was shot down in the Duma late this year after President Vladimir Putin called the idea for imposing restrictions on foreign films wrong. Putin is seen by some in Hollywood as a supporter, or at least neutral. Surprisingly, the Russian entry for the Foreign Language Academy Award is a film that is largely critical of the current state of affairs in Russia. Leviathan is a contemporary look at corruption at the state level — it’s also on the Oscar shortlist. The local industry failed to produce a hit à la last year’s blockbuster Stalingrad, although Universal found success with the English-language Viy 3D ($34M) and this past weekend saw Timur Bekmambetov return to directing at home with hit comedy Yolki 1914 ($4.2M). Coming next month is the sequel to 2012’s local animation, The Snow Queen, which banked about $8M that year.
Despite political unrest over the past year, Venezuelans have been “going to movie theaters like never before,” says director Alberto Arvelo. He should know, his The Liberator has made just under $10M this year and is shortlisted for a Foreign Language Academy Award. I’m struck each weekend in doing my international box office reports that Venezuela seems to pop out with grosses that often go up week-to-week, rather than down. Arvelo says moviegoing has been on a steady rise over the past few years, but 2014’s numbers are “unprecedented.” Hollywood movies are up 55% through December 16, according to Rentrak, with three fewer titles released. Fox has four of the Top 10 movies, while Disney boasts the biggest of the year in Maleficent with over $25M. Typically, it’s the fourth biggest market in Latin America for Hollywood titles. But, hang on, all those grosses are actually locked inside the country.
Bolivares are not freely convertible to dollars meaning studio cash sits in bank accounts in Caracas. One exec says, “While we gross a lot, we don’t take much — or any — money out of the country.” Creative attempts to get around the blockage have included doing business with a U.S. company that has a cost-base there, or “you can also have a conference in Caracas and fly a bunch of people there or use your Caracas account for other costs around Latin America and pay from there. But, for the most part, it’s just trapped.” Reinvesting is also certainly an option via local production or building infrastructure so that when things change, the playing field is up to date.
Will that change come in the near future? Execs I’ve spoken with say that’s the idea. “Hopefully you cultivate a culture of moviegoing and when it becomes a thing that you don’t have to recycle inside the market, you have some found money,” a studio exec tells me. Venezuela’s current president is Nicolás Maduro, who took over after the death of Hugo Chávez in 2013. According to The Economist, more than two-thirds of voters think Maduro should not serve out his six-year term. Parliamentary elections are to be held by next December, but they cannot oust Maduro. However, The Economist said last month, they do “offer a chance to break the monopoly of power exercised by his Bolivarian socialists” since Chávez became president in 1999. One exec says the reasoning behind continuing to do business in a volatile market is “You figure, someday that guy’s gonna be out of office.”
In the meantime, I’m told Hollywood tends not to recognize its revenue from Venezuela, but still manages to get something for it. A source says, “Every couple of years the account gets too big so you go to some Venezuelan billionaire living in Miami who pays 30 cents on the dollar.”
Indonesia has a lot of promise, especially as it’s the 4th biggest nation in the world; Vietnam is one of the fastest-growing smaller markets with that expected to continue; same goes for Romania, while the Middle East also shows promise — particularly, says one exec, Iran “if relations with the U.S. could be normalized.”