"The biggest part of the budget for tent-pole movies is the special effects and it's very difficult to bring down those costs, particularly when you are continually trying to raise the bar and often working on a tight schedule," said Warner Bros. film group President Jeff Robinov.
The pressure to produce fantastic special effects has been driven in part by the fact that Hollywood's revenue growth is coming not in dollars but in pesos, rubles and yuan. International box-office receipts grew 35 percent between 2007 and 2011, while domestic grosses were up only 6 percent. Total international box office in 2011 was $22.4 billion, compared with $10.2 billion in the U.S. and Canada.
Given the ongoing decline in DVD revenue, that means studios must try to predict what audiences in Moscow, Shanghai and Rio de Janeiro want to see. The safest bet is often over-the-top action and effects that don't need any translation. Even the effects-laden digital dud "John Carter," which grossed a measly $69 million in the U.S. and Canada, took in $200 million internationally.
"Since most of the growth in the movie business right now is coming from the international marketplace," Universal Co-Chairman Donna Langley said, "it makes sense that we in Hollywood are collectively gravitating toward these films with scope and spectacle that have universal appeal."
In other words, Hollywood will keep spending more because that's what audiences around the world most reliably want. And that's not changing anytime soon. Next year's slate, packed with costly films such as "Iron Man 3," an untitled "Star Trek" sequel, "The Lone Ranger" and the new Superman movie "Man of Steel," could easily make for the first $3-billion summer.
"Everybody's trying to look at what they're spending, but it's one thing to look and another to actually curb," said producer Joe Roth, whose upcoming big-budget productions include "Snow White and the Huntsman" and "Oz: The Great and Powerful." "There's no question you can lose more money on movies than ever before. But you can also make more."
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