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Richard L. Gelfond: The Globalization of Entertainment

The entertainment industry — like so many others — is undergoing enormous changes as a result of globalization and the extraordinary growth of the worldwide middle class.


The impact of globalization on the entertainment industry has resulted in a significant shift in the global box office. Until recently, the U.S. generated two-thirds of the global box office, while the rest of the world contributed a third. Today, the reverse is true. Think about it: nearly 70 percent of the global box office is generated outside of the U.S. For the American entertainment industry, it would be foolish to ignore these numbers.

Today the traditional models for creating, distributing and monetizing content have changed. U.S. studios are paying more attention to international box office than they used to — in some cases, more attention than they pay to U.S. box office. Virtually no big-budget movie in Hollywood is approved without considering what its box office potential could be in China. Likewise, foreign studios are starting to think about their own export markets. Budgets in developing countries are increasing rapidly, and Hollywood would do well to take note.

What does all of this mean for the future of entertainment around the world?

While Hollywood, with its established infrastructure, certainly still has an advantage, the North American entertainment industry cannot afford to be complacent. Some of the fixed costs and some of the investment in capital equipment, as well as some of the psychology about worldwide distribution, may, frankly, be dated. Those who will succeed in the new media world order must understand these broader issues to maintain their leadership position.

The nature of storytelling must appeal to a worldwide audience, particularly when it comes to blockbuster films. It’s no longer enough to insert ethnic actors into big-budget movies. Studios must truly consider a global audience when making films.

North American studios must also approach each new market differently, partnering and acting locally and being mindful of cultural sensitivities to gain international market share.

For the first time in the history of American cinema, Hollywood studios have set up international offices to facilitate local productions filmed in local languages, such as Legendary Entertainment’s Legendary East in Beijing and Disney, Viacom and Fox’s subsidiaries in India formed to create Bollywood content. There’s every reason to believe that, over time, this trend will continue.

At IMAX, our global strategy has been simple: think and act like a local company. In China, we have over 60 employees, and if we have any local issues, we resolve them through our local relationships. We’ve built a business model that’s a win-win for all, and today China is our second-largest market outside of the U.S.

We now have 880 IMAX theatres across 60 countries. We tailor our programming to specific regions or countries through a combination of Hollywood and local-language films in markets like China, France, India and Russia. Since 2010, we’ve presented 23 local-language films in IMAX, to strong success.

Our global approach to programming — combined with our network growth — has resulted in our international box office surpassing our domestic box office in almost every quarter since 2013. There is no reason to believe this trend will change as we continue to expand our network globally.

Within this context, an interesting question emerges: Will this change caused by globalization affect the soft power traditionally wielded by Hollywood? The U.S. film industry has been the largest and most important exporter of Western values and American influence. Yet with the rise of international film markets, other voices want to be heard on the global entertainment platform.

Last year, the Dalian Wanda Group broke ground on a multi-billion-dollar movie production complex in Qingdao as part of a plan to recreate Hollywood in China. Fosun Group invested $200 million into Jeff Robinov’s Studio 8. SoftBank invested $250 million in Legendary Studios.

While all of this will create competition for Hollywood, it will also force it to challenge the status quo, and enhance its own understanding and ability to make better films for wider audiences.

I believe that the most successful studios will be those that can incorporate their home country’s
values and cultural identity, while adding subtle nuances to appeal to broader markets.

As a final observation, a conversation about global shifts in entertainment is not complete without mentioning the impact of digital advancements in how content is being consumed.

With more devices and better in-home entertainment experiences, out-of-home entertainment will need to evolve. There is a tremendous sense of responsibility among film executives worldwide to improve the movie-going experience in the future.

The theatre is where filmmakers want their movies to be seen first — in a comfortable environment with the latest image and sound technology. I believe consumers still want to have a social experience and see movies in a group, but that experience must be superior to what they can get in their homes.

That is one reason we believe IMAX has been so popular, particularly on a global scale. Our immersive cinematic experience offers consumers something that can’t be replicated in the home. As long as filmmakers produce compelling stories that connect with audiences, while pushing the boundaries of technology to enhance storytelling, we should be in great shape.

I don’t think anyone can predict how this all plays out at the end of the day. But there is no question in my mind that globalization will continue to have a major impact on the way people consume entertainment, the nature of storytelling, where content is created and where future audiences will emerge. I’m optimistic that for worldwide consumers, it’s all going to lead to better forms of entertainment as the global marketplace continues to evolve.

Top image: Guangdong Science Center in Guangzhou, China. Courtesy of huad262, iStock Editorial.

Richard L. Gelfond is Chief Executive of IMAX Corporation.

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