#2: The Foreign Mirage                      

When Hollywood movies fail to find audiences in America, it is often claimed that these movies redeem their losses overseas. The assumption here is that the box-office receipts abroad are pure gravy for the movie studios.  For example, the usually financially-savvy Wall Street Journal reported on November 19, 2004 that three notable "duds" in America-- Troy, The Terminal and King Arthur-- "ended up turning handsome profits" because "in each case, box-office receipts from outside the U.S. far outweighed domestic returns."  It then cited impressive sounding numbers: Troy "made" $363 million internationally;The Terminal, $96.3 million internationally, and King Arthur, $149.8 million abroad-- as if, these receipts represented their salvation. 

In reality, however, these impressive-sounding receipts represented the foreign theaters' revenue, not the studios' share of them. In fact, the studios get an even smaller share of the foreign than of the American box-office.  Last year, the studios' share averaged about 40 percent of ticket sales. And from those revenues studios have to pay for foreign advertising, prints, taxes, insurance, translations,etc.  Once those expenses are deducted, the studios are lucky to wind up with 15% of what is reported as the foreign gross. 

Consider, a typical movie-- Disney's Gone In 60 Seconds . Its reported "foreign gross" was $129,477,395. Of that sum, Disney got $55, 979.966, of that it paid out $37, 986, 053  in expenses.

They included:

Foreign Advertising... $25, 197,723
Foreign prints...         $ 5, 660.837
Foreign Taxes ...        $ 5, 077,286
Foreign versions..       $     822,997
Foreign shipping..       $     454,973
Currency Conversion    $     266,900
Foreign Trade dues      $     122,275

After paying these expense, Disney was left with just $17,993,913 -- a far cry from the reported $129,477,395 "gross".  And the film is still over $153 million in the red.  So while the foreign box-office helps out, it does not necessarily make a movie profitable

 What Else Should Be Demystified?

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