After the record-setting box office of 2012, the year so far has proved to be a nightmare for studios.
Through early March the box office is littered with financial wrecks (Jack the Giant Slayer, Bullet to the Head, Beautiful Creatures) and disappointments (The Last Stand, Gangster Squad).
Opening today is perhaps the biggest gamble of 2013, Disney's Oz the Great and Powerful, which some have tagged as a $325 million investment from the studio. Given Disney's history with Oz — namely, 1985's flop Return to Oz — you'll understand if studio execs are sleepless until the weekend grosses are available.
Yet even if the numbers prove frightful, Disney has an insurance policy against a film flop: the foreign box office.
Overseas revenue put Disney's $250 million flop John Carter in the black last year, despite only earning $73 million domestically. John Carter generated $209 million internationally — nearly 75 percent of the film's total gross. While Universal's much-maligned Battleship enjoyed a more than 3-to-1 ratio of foreign-to-domestic box-office earnings with its total gross of $303 million. In fact, by the time the $209 million film opened in North America, it was already profitable from its overseas ticket sales.
This surging power of the foreign box office might seem like a relatively new phenomenon, but it's "been an emerging force for 20 years," said Keith Simanton, IMDb.com's managing editor, beginning with 1995's notorious Kevin Costner flop Waterworld.
With a budget of $175 million — about $260 million in today's dollars when adjusted for inflation — Waterworld grossed only $88 million domestically, but it grossed $175 internationally, essentially turning its poor domestic showing into a sizable profit for Universal. The film also proved far more popular with foreign audiences.
"Waterworld was the No. 1 film at the Japanese box office, until Titanic beat it out," Simanton said.
Some might see this as an indictment of Japanese taste in cinema, but U.S. studios clearly view this as opportunity framed with dollar signs. Driven by audience turnout, big-budget films have been Hollywood mainstays for decades. The foreign moviegoers are simply echoing that preference for less-dialogue-driven and easy-to-understand cinema fare.
"In ten tpole and franchise films, they need less translation," Simanton said, while it's made-in-Hollywood comedies and dramas "that typically don't do as well internationally."
A comedic retread in almost every sense, The Hangover Part II earned about $20 million less in North American theaters than The Hangover, yet it grossed significantly more internationally than the first film. Overseas markets accounted for 56 percent of the box-office haul of Part II compared with 40 percent for the first film. That's the power of establishing a brand.
"[In] creating a small intimate drama they can't make small intimate drama 2," he said. "It's about developing a brand that [they] can replicate."
As Simanton noted, 60 percent of all revenue for the top 10 films in 2012 was generated overseas. Considering that eight of those 10 films were either sequels or the launch of a franchise, Hollywood in employing an important rule about its foreign markets:
Big-budget sells in any language and CGI is universally interpreted as a "must-see film."
Contact Kirk Baird at email@example.com or 419-724-6734.