How Hollywood Conquered the World (All Over Again)

For all the talk of American decline, there’s one thing we still make better than anyone on the planet: movies.


In the frenzied final weeks before the Feb. 26 Academy Awards, a curious behind-the-scenes battle was taking place to persuade Hollywood that the leading Oscar contender, The Artist, was an American film — even though a Frenchman wrote and directed it, another Frenchman produced it with French money, and a Frenchman and Frenchwoman are the two leads. Harvey Weinstein, head of The Weinstein Company, which is distributing the acclaimed movie, even persuaded the City of Los Angeles to proclaim January 31 "The Artist Day," arguing that the movie was shot there. Indeed The Artist, a black-and-white tale about a silent star’s fall from grace and subsequent return to fame, has a chance to become the first non-Anglo-Saxon film ever to win the Best Picture Oscar, even though it has made just $29 million in the United States since it went into general release on January 20.

Foreign films simply don’t play with American audiences. On average, foreign-language movies make up less than 1 percent of the U.S. box office, says Paul Dergarabedian, president of the box office division of In fact, compared to Hollywood productions, foreign films don’t even play that well in their home markets. Despite the relative decline of America and a huge spurt of filmmaking in countries such as Brazil, China, and South Korea, Hollywood still dominates in box offices across the world. James Cameron’s Avatar remains the top-grossing film ever, and when Chinese authorities attempted to remove it from theaters, their actions caused protests. Although some of the world’s top grossing films, like Rio, The Last Samurai, and The Mummy: Tomb of the Dragon Emperor, were shot outside the United States or focus on other countries, all of the world’s top 100 grossing films were Hollywood productions.

Dire predictions about Hollywood’s demise have cropped up almost as frequently as blockbusters. Ever since the silent era and then the advent of television, naysayers have spoken of its impending collapse. In the early 1980s, Chariots of Fire producer David Puttnam said he believed Hollywood’s future would lie in small-budget films that could compete with the rest of the world — only to find that the opposite happened. Despite globalization’s deleterious effect on the U.S. textile, automotive, computer industries, for movies it’s still very much America’s world.

That’s especially true in America itself, where a resistance to foreign film has been helped by Americans’ dislike of subtitles and lack of familiarity with dubbing — unlike such countries as Germany, where dubbing is routine, or France, where locals have a choice between watching a dubbed version or a "version originale." In the decades prior to 1947, when the Supreme Court told the studios they had to divest themselves of their theater chains, it was against their interests to do anything that might encourage foreign filmmaking — hence sophisticated dubbing technology never caught on. "We’ve tried to dub, but then the critics kill you — and these films play to audiences that pay a lot of attention to reviews," says Mark Gill, the former president of Warner Independent Pictures.

Because investors don’t expect foreign films to play well in the United States, still by far the world’s largest and most important film market (China and Japan are vying for second place, but each brings in about one-tenth the combined U.S. and Canada box office), they don’t get the same production and advertising budgets that Americans do. At the same time, broadcast television networks refuse to buy foreign-language products, leaving a crucial player in film financing absent when it comes to assembling the kind of multi-source deals that get most non-studio pictures made these days.

"We have a Lebanese film opening in the spring, Where Do We Go Now?, and in Lebanon it’s about to become the top-grossing film ever, beating Titanic," says Tom Bernard, co-president of Sony Pictures Classics, one of the few companies that continue to back foreign releases in the U.S. Despite this, it will only open on 10 screens here, he says — compared with 3,000-4,000 for major studio releases.

Production values for American films are vastly superior to foreign ones, helped by budgets that can exceed $200 million (100 times the price of many foreign films, and at least 30 times the estimated $6 million-plus budget of Where Do We Go Now?) And the marketing costs of movies have swollen so that even if a foreign film is less expensive than an American one, it is almost impossible to find a wide audience for it in the United States without spending millions of dollars.

There are exceptions, most notably 2000’s Crouching Tiger, Hidden Dragon, which earned $128 million "domestically" — as Hollywood executives like to describe North America — but even that was written and produced by American James Schamus and directed by Taiwanese-American Ang Lee.

Most foreign films remain box-office busts. Schamus and Lee’s subsequent Chinese-language Lust, Caution earned a paltry $4.6 million in the United States, compared to $62.4 million internationally. Iran’s A Separation, the biggest earner so far among the films nominated for best foreign-language picture this year, has earned just $1.6 million domestically.

"For every Crouching Tiger, there are hundreds of foreign films that don’t make any money here," says Dergarabedian. "In order to make films palatable to an American audience, they have to be in English. That’s why you see American versions of films like The Girl With the Dragon Tattoo. The Scandinavian version was perfectly good, but nobody saw it in the U.S."


There’s a strange paradox at play here: While Hollywood films are losing audiences at home, where they’re increasingly being siphoned away by social media, games, and the Internet, they’re building them abroad. Revenues from American films outside North America constitute more than 60 percent of each year’s take by the Hollywood studios, a number that’s risen from under 40 percent several decades ago. Paramount Pictures, for instance, made $3.21 billion of its total $5.17 billion earnings in movie theaters for 2011 abroad. This is despite the fact that foreign-made films are gaining an increasing share of their own industries: Japanese are seeing more Japanese films than ever; so are Russians, Chinese, and Koreans. Box office is simply growing across the board in those countries.  

China, with a population of 1.3 billion and more than a thousand screens built each year, already has strict limits on the number of U.S. films that can be released there. And why should this change radically, when the U.S. remains so resistant to Chinese movies? Even China’s biggest-budget film ever, Zhang Yimou’s $90 million The Flowers of War, has made a mere $205,778 in the USA. "It was a complete flop," says Gill.

Without a strong export market, countries such as China are likely to resist American pressure to deal with the single biggest threat to studio revenue — piracy — which has grown rampant thanks to websites operated everywhere from Nigeria to Ukraine. One 2007 study estimated that the U.S. loses $58 billion per year to piracy of movies, television, music, and other intellectual property, and the studios are terrified this will kill their business if it increases. The newly signed deal between the United States and China, allowing more U.S. movies to be shown there, was hailed as revolutionary, adding 14 to the present 20 films that can be screened in that country each year. (The deal has the important caveat, however, that the films be in IMAX or 3D.)

Hollywood studios have started to invest in foreign films, and companies such as Sony and 20th Century Fox have established divisions that finance "indigenous" filmmaking (Hollywood parlance for foreign films), but these films are generally restricted to release in their own countries or ones with the same language, like Sony’s co-financing of the Bollywood movie Saawariya and Warner Bros. with the Hindi film Chandni Chowk to China.

Way back at the dawn of film, the American dream was created by foreigners — people like Louis B. Mayer and Samuel Goldwyn, who had left their native Minsk and Warsaw. That is the great lure of Hollywood. It continues to draw major names such as Florian Henckel von Donnersmarck, who won an Oscar for The Lives of Others and then made the Johnny Depp vehicle The Tourist.

Philippe Falardeau, the French-Canadian director of Oscar nominee Monsieur Lazhar, admits, "I have tested the U.S. market — I’ve been approached by agents and yes, I’d like to work in Hollywood." If Hollywood can continue to draw the best and brightest from abroad, no matter how far the rest of America declines, Hollywood will remain untouchable.

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