The major Hollywood studios such as Disney, Fox, Sony and Warner Brothers are increasingly investing in local-language productions in China, India and the Middle East as growth slows in their home market. The move comes as local-language productions continue to increase their presence in emerging markets that were once dominated by exported Hollywood movies.
"The American film industry won't sit back and let somebody else eat their lunch," said Greg Coote, the chairman and chief executive of Dune Entertainment, one of the primary sources of funding for the recent blockbuster Avatar. "That's why professionals like Michael [Andreen] at Disney, [and others at] Fox, Sony and Warner Bros are making local-language movies. "It's only natural, because non-English-speaking markets want to reflect their own culture and their own language." Dune has a long-term film financing deal with Fox Filmed Entertainment, which booked solid returns this year on its investments in the film My Name is Khan in India and Hot Summer Days in China, both of which made their money back within their first three weeks at theatres.
"The collision of major studio muscle and local-language productions is incredible," Mr Coote said. During his recent visit to Abu Dhabi, Rupert Murdoch, the chairman of News Corp, Fox's parent company, singled out My Name is Khan as a model for the commercial potential of investments by international media companies in emerging markets. Although the Middle East lags markets such as China and India in being able to deliver commercial returns at the box office, notably because there are physically very few box offices per capita in the region, its population of 300 million Arabic speakers has been attractive enough to entice the Walt Disney Company to invest in Arabic-language films in the region.
"We have three projects in development and we are looking at the possibilities of production by examining what movies cost, what sort of distribution they might have and what sort of partners that we might work with," said Michael Andreen, the senior vice president of international production at Disney. The projects began about 18 months ago, he said, and include The Last of the Storytellers, a film based on Arab folk traditions and being produced by Rachel Gandin.
The big studios' interest in local-language films follows the rise in international box-office revenues. Mr Coote noted that when he entered the film business a generation ago, foreign revenues made up 20 per cent of the American studios' worldwide haul. Last year, they made up 65 per cent. This shift has also pushed Hollywood to think differently about the international distribution of its films. Mark Gordon, the producer of the big-budget Hollywood film 2012, said film was made and distributed with international audiences in mind.
"We consciously chose to leave money on the table in the United States to create better opportunities for ourselves outside of the US," he said. "So I think American filmmakers are very conscious of the international market. But pointing to the market in Japan, where the revenues from Hollywood films have declined by as much as 70 per cent in recent years, he noted a more fundamental change was under way internationally. "I think what's happening all over the world is that people have become more interested in their own stories than they are in the big Hollywood blockbusters."