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Big Opportunities, Changes, and Risks for Global Entertainment

A lot has happened over the last year in terms of elections and the trade landscape. What should matter most to movie studios and the global content industry in general?

For the MPAA’s member studios, three-quarters of box office revenue now comes from overseas. Though we are not always thought of in this way, the American film and television industry is an export machine, totaling more than $17 billion per year in exports and registering a positive balance of trade in virtually all of the 140 countries where our companies do business. The U.S. film and television industry is one of the most highly competitive economic sectors in foreign markets.

“For the MPAA’s member studios, three-quarters of box office revenue now comes from overseas”

Overall, the global market for filmed entertainment continues to grow, despite the general economy taking a hit. In 2016, the global box office for all films released in each country reached $38.6 billion, up one percent over 2015. The number of cinema screens worldwide also grew in 2016, increasing by eight percent, driven in large part by double digit growth across the Asia Pacific region. We are seeing exponential growth in China, for example, where at least twenty new movie screens are opening every single day. At this pace, China could meet or surpass the United States as the largest box office market in the world within the next few years.

We are working tirelessly to harness technology to reach new audiences in every corner of the world. Our companies are constantly licensing their content to different platforms to provide audiences with a wide array of legitimate sources for films and TV shows, in convenient and affordable ways. At last count, we had 466 unique online services offering legitimate access to movies and TV shows, including multi-country services, such as Netflix and iTunes.

On the other hand, content theft remains a serious problem for large Hollywood studios, independent producers, and foreign filmmakers alike. The illegal use of creative works diminishes the incentives to produce works of art and threatens the livelihoods of millions of American creators. Today, content theft takes many forms. Illegal camcording in theaters is one ongoing issue. These cameras are small and hard to detect, making the theft difficult to combat.

Digital piracy remains a serious problem around the world. The online marketplace hosts many torrent or streaming sites where people can obtain illicit and unlicensed movies and television shows. There are also illicit streaming devices, media boxes that can plug into a television and be used to download illicit internet apps containing pirated content.

Here in the United States and abroad, we are committed to fighting content theft and championing copyright – the foundation of our nation’s creative economy and nearly two million American jobs across the film and television industry. While people tend to focus on the glamour of Hollywood, behind the scenes are millions of everyday people contributing to the economy. We strive to protect and expand those jobs.

 

Some of the changes we’ve seen in the last year have been in the form of trade agreements that seek to address these copyright and IP issues. Is there an opportunity to take ideas in this area from TPP and apply them to a potential renegotiation of NAFTA?

The economic integration fostered by NAFTA has been a key driver of the development of the film and television industry in North America and we place priority on preserving the core NAFTA framework and commitments. That being said, the agreement is over two decades old. Today the global marketplace for copyrighted works is overwhelmingly digital, characterized by cross-border licensing in the online environment. One way the Administration could modernize NAFTA to better reflect today’s economy is to update the copyright protection and enforcement provisions to better respond to the challenges of the digital economy, and also to create a modern e-commerce chapter that secures nondiscrimination in the online marketplace.

 

What’s the global landscape for opportunity in the entertainment industry? You mentioned that three-quarters of revenues are coming from overseas.

Yes, over 70 percent of Hollywood studios’ box office receipts now come from foreign markets. Generally, consumers are expanding their use of digital platforms, watching films and TV shows on myriad devices whenever and wherever they want. Even emerging markets – such as Brazil and Mexico, for example – are rapidly embracing streaming and on-demand services.

 

What is your outlook on emerging regions such as Latin America for 2017? What could really change the debate between now and GetGlobal?

Despite economic downturns in Latin America, the outlook for media and entertainment is still quite good. Consumers are still often looking for a chance to escape everyday realities, and watching a movie or buying a Netflix subscription is an affordable option. As the economies start to rebound and the emerging middle class continues to grow, the outlook for entertainment will presumably only improve.

“Mexico is still a fast-growing market with the greatest infrastructure for digitized movie theaters in all of Latin America”

In the last year, we’ve seen positive signs from Argentina, where the bilateral ties are getting stronger after years of tension. With its proud cinematic heritage, we see Argentina as a potential high-growth market, given the right leadership and regulatory approach. We also see potential in Colombia, which also has a pro-business administration working to attract foreign investment in the film sector. And despite some of the political tension we’ve seen lately, Mexico is still a fast-growing market with the greatest infrastructure for digitized movie theaters in all of Latin America. Mexico also now ranks among the top twenty film-producing countries in the world. Finally, Brazil is another country where despite challenging economic stagnation and political upheaval, film, and particularly TV have been booming. In 2016, the box office in Brazil increased by five percent in U.S. dollars. Sky Brazil, Vivo Play, Netflix, and HBO Go, among others, have helped propel the online video market to $745 million in Brazil, and we see dramatic growth in its future.

 

Lastly, what can everyone expect from MPAA and yourself leading up to GetGlobal?

Above all, we aspire to advance the business and the art of filmmaking and celebrate its enjoyment around the world. This year, we will continue working to expand the legal digital marketplace for filmed entertainment in order to share the magic of American motion pictures far and wide, and with that, contribute to economic growth and jobs here at home.

Julian Leuthold

Julian is the founder and CEO of GetGlobal. Follow him on Twitter at @julianleuthold

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