This document discusses the impact of globalization on the Hollywood film industry. It notes that Hollywood films now earn over half of box office receipts in major foreign markets, showing convergence of popular tastes globally. However, globalization also presents new challenges to Hollywood. It has led Hollywood to recognize the importance of foreign markets and adjust its business model to appeal to a global audience. Major impacts include foreign markets now providing the majority of revenue, films being altered for certain foreign markets, and Hollywood obtaining financing from global sources. While Hollywood remains the global leader, it faces competition from other film industries and barriers some countries erect to protect local films. Piracy also poses a major threat by reducing potential revenues.

1. Hollywood and Globalization
Sir Malit

2. • Hollywood films represent more than half, and sometimes
more than two-thirds of total box-office receipts in major
markets. Films that succeed in the US market also tend to
succeed in foreign markets. This suggests that a
convergence of popular taste may be coming about, though
in many countries this phenomenon also occurs against a
backdrop of cultural contestation. Hollywood has been a
success partly because of the unmatched competitive
advantages concentrated in its home base, partly because
of its extensive distribution network and US government
efforts to push open foreign doors. Despite its status as the
preeminent world center of the film industry, globalization is
also confronting Hollywood with many new challenges.

3. • Globalization has had a wide-reaching impact on all the
major industries across the world. Hollywood being one
of the largest entertainment industries globally is also
impacted by globalization. It has changed the business
model and strategies which were prevalent earlier in
the pre-globalization period. Hollywood has come to
realize the potential and importance of foreign markets
in the globalized world and is aligning its business of
filmmaking to appeal to a more global audience outside
the US.

4. Impacts of Globalization
• Hollywood is facing stiff competition from all the major
film industries around the world in different aspects of
filmmaking. However, to its credit, it still remains the
global leader in filmmaking. In the year 2014, the top
ten most profitable movies globally were made in
Hollywood.

5. Some of the major impacts of globalization on
Hollywood are as follows:

6. Emergence of Foreign Markets
• The economics of filmmaking has
changed drastically post globalization.
The majority of the revenue now comes
from foreign markets. Keeping this in
mind, Hollywood has to adjust its
business and products to a new
customer base, which is highly
heterogeneous. The success of
Hollywood movies is more driven by
foreign markets these days. This can be
understood from the example of the
Marvel movie “Avengers: Age of Ultron”
which debuted in theatres outside the US
and made $200 million in its opening
weekend. The fact that these $200
million were made from foreign markets
before the movie actually released in the
US, speaks about the potential of foreign
markets for Hollywood movies, post-
globalization. China which is the number
two market for Hollywood movies is
expected to surpass the American
market by 2020.

7. Movies Made for Foreign Markets
• Hollywood is also making
changes to some movies to make
it suitable for major foreign
markets. When the word went
around that in the Hollywood
movie “Red Dawn”, featured
Chinese villains, then the movie
was criticized heavily in China.
Fearing the movie will be
boycotted by the Chinese, the
villains were then digitally
removed during post-production
and replaced by the North
Koreans. This speaks about the
importance of foreign markets in
the globalized world.

8. Movie Financing
• Globalization has provided easy
access to credit to industries
worldwide. Hollywood has also
been using easy credit from
global sources for filmmaking.
Many major studios in Hollywood
like the Walt Disney have
bankrolled movies into
Bollywood, with a view to tap the
massive audience and enormous
potential there. During the 2008
global recession, when Hollywood
was struggling for movie
financing, it got help from
Bollywood and Indian sources.

9. Entry Barriers
• Many countries impost tariffs and quotas on foreign
movies. This is done to neutralize the perceived threat
of cultural invasion by the Hollywood movies and also to
protect the local film industry.

10. • The steady globalization of Hollywood as an expression
of both market forces and US government action on
international trade issues has, of course, engendered
numerous clashes and disputes. Some of these are
based on purely commercial differences of interest;
some are focused on cultural collisions of one sort or
another; and some, perhaps the majority, are a
complex mixture of the two as reflected in the
audiovisual policies of countries like Canada, China,
France, and South Korea.

11. • Given the appeal of United States' entertainment
products to mass audiences all over the world, the
country will probably continue to maintain a strong lead
as an exporter of motion pictures for the foreseeable
future. There are signs, however, that some important
shifts may be in the offing. For one thing there has
been a very significant rise in runaway production
activities from Hollywood to cheaper locations in
Canada, Mexico, and further afield.

12. • Hitherto, this phenomenon has not posed very much of
a threat to the basic role of Hollywood as a center of
creativity and deal-making in the motion-picture
industry, though there are signs that the outflow of
capital and work may be helping to stimulate the rise of
competitor film industries (for example in Toronto and
Vancouver). At the same time, and independently of
runaway activities from Hollywood, dynamic centers of
audiovisual production in many different countries are
now also beginning to contest and recontest global
markets.

13. Film Industries biggest opponent: PIRACY
• Film is usually regarded as the art form most
dominated by corporate interests. Writers, directors,
actors, and actresses are often forced to make artistic
compromises to satisfy the commercial demands of the
media companies and executives who finance their
films. You have probably read, seen, or heard
numerous stories of a filmmaker raging about
interference by the studio.

14. • The number one threat to corporations
funding these high-end art films is
piracy. Every year, millions of piracy
"transactions" take place, accounting for
incalculable lost revenue to those who
actually paid to make and distribute
those films. And those piracy figures
continue to grow.
• At some point, the numbers will become
unsustainable and the studios will have
to cut back their slates. They will not cut
back on their franchises (where they
make their real money) or low-budget
horror movies of the kind my company
makes. They will cut back on the art
movies that are risky and do not have an
easy path to profitability.

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