Hollywood's Overseas Lifeline Shows Peril in Trade Dispute

(Bloomberg) -- Overseas ticket sales saved the day for Hollywood last year.

Worldwide box-office revenue grew 5 percent to $40.6 billion in 2017, even as movie-going slumped in the U.S. and Canada, the largest market, according to a report Wednesday from the Motion Picture Association of America.

The data underscore the growing importance of international markets to U.S. studios, with territories outside North America accounting for 73 percent of revenue and all of the growth, and the risks as trade disputes proliferate under President Donald Trump.

This week, Trump slapped tariffs on China for what he says is unfair competition, including theft of intellectual property. Major studios have worked for years to get more of their movies released in China, the No. 2 market, and are in talks to improve the expanded access they gained in a 2012 memorandum of understanding.

“We have ongoing negotiations that are happening as we speak and we are hopeful they will have a positive outcome,” said Charles Rivkin, chief executive officer of the MPAA, said on a call with journalists. The U.S. trade representative is taking the lead in negotiations, he said, and so “we remain hopeful.”

China's 21 percent increase in movie ticket sales, to $7.9 billion, was a driver of global growth while Latin American, another target of Trump's ire, was another bright spot, up 22 percent, according to the MPAA.

The U.S. and Canada generated $11.1 billion, down 2 percent from the previous year, with Hispanic and Asian movie fans being the greatest per-capita consumers of Hollywood fare.

Home Viewing

Globally consumer spending on home entertainment, digitally and on disc, rose 11 percent to $47.8 billion. U.S. digital spending, which includes electronic sales, video-on-demand and subscription streaming, rose 20 percent. International digital spending was up 41 percent, the MPAA said.

While home viewing has grown, cinemas remain the biggest revenue source for feature films, John Fithian, CEO of the National Association of Theater Owners, said on the call.

AMC Entertainment Holdings Inc., the largest theater chain, announced a deal Wednesday to open as many as 100 locations in Saudi Arabia, obtaining the first cinema license in that country. Fithian predicted the market would grow rapidly.

“Four or five other of our members” are ready to open theaters in Saudi Arabia, he said of the country, which boasts a young population with considerable disposable income. “It is exactly the type of market you want for movies and movie theaters.”

To contact the reporter on this story: Anousha Sakoui in Los Angeles at asakoui@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum, Andrew Pollack

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