How is it that US-based companies have managed to retain a position of dominance within the global film industry for the past century? Is this a case of the Americanisation of global entertainment, or of the internationalisation of American firms?
The United States (US) studios have benefited from a strong first-mover advantage. They were the first to industrialise filmmaking and perfect the art of distributing high-quality films on a global scale with broad cross-cultural appeal (Flew, 2012). By the mid 1920s, US films accounted for around three-quarters of those screened around the world (North, 1926). This paper examines how America, and in particular Hollywood, claimed global dominance of the film industry and how they managed to maintain this position.
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The process of Americanisation in global entertainment is the influence American culture has on other countries outside of the US. The term is commonly used by critics, in the target countries, who are against the influences. However, the US film industry has managed to spread itself across the globe by filming in foreign locations and adapting its content to suit a wider stretch of audiences. Thus, lately more scholars point to the internationalisation of US firms being the more probable explanation of US global dominance. This paper determines that the global spread of US films and influences does not simply reflect an Americanisation of cinema audiences around the world but must also be attributed to the internationalisation of US firms. (Miskell and Li, 2014).
With online streaming platforms becoming obstacles for many of the major production companies, this paper also examines the future of the TV and film industry. It is apparent that Netflix, among other financially lucrative online platforms pose a serious threat moving forward, as the consumers are wanting more readily available and catered to them content.
2.0 The Emergence of an International Film industry
2.1 Cultural Discount
India’s Film Industry, commonly known as Bollywood, produced over 1400 movies in 2013 making it the world’s largest film industry in terms of quantity of films (Tufilamu Pictures, 2018). Moreover, Genevieve Nnaji, a Nollywood actress and producer, recently received global commendation for the Netflix production “Lion Heart” (BBC, 2019). This was the first Nollywood movie to be acquired by an American movie streaming company and is seen as one of the best things to happen to Nollywood in recent times.
Whilst a large number of films are made in these countries, only a very small number are successful in reaching a global audience and as such, generate little revenue internationally.
Some scholars point to a cultural discount to help explain this. The theory of cultural discount suggests that a product may be valued to a lesser extent by foreign audiences that lack the cultural background and knowledge needed for full appreciation of the product (Hoskins and Mirus 1988). In the US, films are created in one language. The same cannot be said for countries such as India where films are created in about 20 languages, limiting the film to a particular group of people. The rapid spread of the English language worldwide, that aided films being widely available for export, has helped fuel Hollywood to grow into the most influential film industry (De Zoysa and Newman, 2002).
2.2 The Economics
The liabilities of foreignness describe the costs that firms operating outside their home countries experience above those incurred by local firms. Firms are often willing to pay less the more culturally different a product is from its home country as it will have a smaller appeal. Information asymmetry can also play a part when taking a film overseas. Overseas firms will know if a film is popular in a local market but may be reluctant to share this information. For example, a Spanish distributor may not be entirely honest about how successful a film is doing in Spain; they are instead opportunistic in order to increase their own profits. The US have had many accounts of people encountering this problem domestically.
In the early 1920s, people of all ages attended the movies with far more regularity than today, often going more than once per week. By the end of the decade, weekly movie attendance swelled to 90 million people. During this time, in order to combat the issues of information asymmetry, the US moved to system of direct distribution. In 1919 , Mary Pickford, a Canadian-born American film actress and producer, teamed with D.W. Griffith, Charlie Chaplin, and Douglas Fairbanks to create United Artists, an organization designed to distribute their own films (Neely 2008). Previously, Pickford was returning approximately 60,000 francs per film. With direct distribution, this rose to 150,000 francs. Pickford went on to become Hollywood’s first million-dollar actress.
More recently, the US operates a system of random checks across many cinema chains to check how popular a film actually is and whether they are getting their agreed share of the profits. However, this is extremely difficult method to put into effect efficiently, especially on a global stage. Relying on honesty from your global distributors is always a risk.
When determining whether to internationalize there are significant sunk costs including directors and actors’ fees and the cost of production. The potential revenues increase greatly with new markets whilst the production costs proportionally increase much slower, the main extra costs being distribution. Therefore, even if alternative markets are not bringing in substantial revenues, providing they can bring in more than the additional costs, which is highly likely, this doesn’t really matter. Thus, despite the liabilities of foreignness and information asymmetry, there is still a strong incentive to follow fin the footsteps of Hollywood and internationalize.
2.4 Location Advantages
Attending the cinema has long been a popular activity in most parts of the world and thus there is an incentive to expand internationally. As explained previously, if the costs of production are almost constant, foreign markets don’t need to be large to be attractive.
The United States stretches roughly 9.8million km2. This is significantly larger than the countries of Europe, such as the United Kingdom and France, which are 0.25million 0.64million km2 respectfully. This significant size advantage allows American firms to invest large production budgets based on domestic market alone whilst the European markets are too small to justify Hollywood-style production budgets.
3.0 Hollywood’s Dominance
3.1 Emergence of the Feature Film
Origins of Hollywood’s dominance really dates from World War One with the emergence of the feature film. Films became longer and storytelling became the dominant form. By 1915 over 600 feature films were produced annually in the United States.
3.2 Production Costs
As more people paid to see movies, the industry which grew around them had ambitious plans for their international expansion. Initially, the majority of films in the programmes were the French Pathé films, but this changed fairly quickly as the American companies cranked up production. The US were willing to invest more money in their production, distribution and exhibition. Rapid escalation in film production costs caused European films to struggle to stay in the “quality race” and by early 1920s US firms has established a lead they would not relinquish.
Prior to World War One, when films were short and novelty, audiences weren’t familiar with the actors in the films they were viewing. Adolf Zucher, head of Paramount pictures, pioneered the idea of building the actors into stars making the brand that supported their products. This was very successful and led to an escalation in salaries and therefore production costs. By end of 1920s, the US had established a sizeable lead as other countries couldn't keep up with this level of investment and the power of this “star-system” strategy was initially underestimated.
3.4 Film Content
America was very clever in adapting the film content to cater to a wider audience. This cosmopolitan attitude of Hollywood has reinforced the universal appeal of its production TheUS firms sought to adapt their product lines to appeal to international audiences (Miskell and Li, 2014)
Films that include more international stars or internationally renowned directors or setting/feel of the movie - do we feel like would have more of a appeal globally - designed to be on an international stage so content also drives international; appeal
4.0 Europe’s Struggle
Studios control a lot of the major cinema chains in Chicago, New York and other leading cities in the US. By the 1920s, US firms had contracted extensive distribution networks providing access to international markets. No European films managed to do this. The US vast global network of distributors has continued to grow allowing for greater expansion. However, it is important to note that while the major US film companies may have based their main production in Hollywood, these firms typically headquartered elsewhere, often New York, where their distribution networks were centered (Gomery, 1986). Thus, whilst Hollywood was an important production hub, supplying the major film distributors with content, it was not the only source of content that these distributors could use (Miskell, 2019)
4.3 Film Europe
The late 1920s saw the introduction of the Film Europe movement, pioneered by the German producer Erich Pommer, which saw European countries agreeing to import each other’s films in order to boost Europe’s box-office revenues. Higher box office revenues meant there would be more money to reinvest into production costs. Co-productions also arose enabling countries with limited resources and ambitious production costs a chance to compete. Germany, France and the United Kingdom built the base for a cooperative continental market made Europe strong competitors in the film industry and reduced the number of US imports.
A problem that both the US and European film industries encountered not long after the introduction of film Europe was restrictions and sometimes bans on foreign-language films in several countries. The coming of sound to Europe in 1929 revolutionised the film industry but did bring with it its problems. These foreign-language bans threatened national culture, but the US were opportunistic and opted to produced films in multiple language versions in order to satisfy the requirement for films in other languages, as well as to avoid import quotas.
In order to achieve this, US studios invested heavily in European film industry via two routes. The first, importing Europeans to Hollywood and the second by setting up production centres in Europe. All of the major US studios built large studios across Europe, notably in Paris and Berlin, and were quickly churning out films in as many as 14 languages.
European MLVs continued to be made throughout the early 1930s, though the vast majority were produced under the auspices of Hollywood studios. While MLV production was dropped in the mid-1930s for the cheaper solutions of dubbing or subtitling, it is noteworthy as the first concerted period of international co-production in cinema history.
5.0 Americanisation or internationalisation?
Americanisation is a term that has been used since the early 20th century (Moffett, 1907) which refers to the influence American culture has on other countries outside of the US. It’s clear that US firms have dominated the international film industry for the last century and some scholars argue that this has led to Americanisation, with the interests of the US controlling the supply of entertainment and ultimately making their audiences more American. The culture influences often show most in areas such as fashion, phrases spoken and international baby names, to name a few.
A British Daily Express columnist in 1927 claimed that “we have several million people, mostly women, who, to all intent and purpose, are temporary American citizens” (Glancy, 2015). As Glancy notes, this suggests that the negative perceptions of the American influence were often focused on young women from working-class backgrounds whose whose “patriotism and mental fortitude were not so easily assumed”. Violaine Roussel argues that even in more recent times, American culture which is portrayed to us so often through TV and film , has cast a shadow over cultural products in much of the world. Roussel further argues that countries across Europe are having their cinemas flooded with multimillion-dollar US productions and the attempt to preserve their own artistic industries through government subsidies still fall short in comparison.
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However, those who associate Hollywood with pro-American propaganda are often vague about the actual processes through which films have indoctrinated their viewers with American culture. In fact, this points back to the element of cultural discount where some consumers actually felt there was a barrier to their enjoyment rather than a selling point. In a further irony, Glancy points out that Hollywood has rarely been associated with mainstream American culture within America itself (Glancy, 2015).
Alternatively, some scholars argue it is in fact an internationalisation of US firms, rather than the Americanisation of global entertainment. US firms have sought to adapt their products in order to appeal to global markets. It is argued this strategy was first seen in the 1920s, with the increasing tendency for US distributors to source their internationally themed pictures from foreign production companies (Miskell and Li, 2014). The growing importance of foreign markets in the 1950s and 1960s meant the proportion of ‘international’ films within the portfolios of US distributors also increased.
During this same period, instead of producing international films in-house, the US distributors often opted to source their international films from foreign production companies. This allowed US firms to take a role as global distributors for the world’s entertainment, rather than as international exporters of American films. This is not to say, of course, that the product portfolios of US film distributors reflected a balanced ‘world view’ with films of all nationalities represented equally. Far from it. However, this does lead us to question the assumption the international success of US film distributors constitutes a form of American cultural dominance.
5.2 Is this measurable?
Measuring the international orientation of film content is difficult but not impossible. Miskell attempted to measure using a scoring system where films with a high score are those set in foreign locations involving foreign characters and employing an international cast of actors and creative personnel, for example. This provides a fairly crude measure of how international a film is in terms of content but does provide us with some data to analyse.
6.0 The Future of the Film Industry
6.1 The Netflix Effect
The well-known, American filmmaker, Steven Spielberg is “a firm believer that movie theatres need to be around forever”. However, like many in the industry, he views Netflix as a serious threat to the future of the film industry. Netflix grows its number of subscribers by around 10% a year with an estimated 167 million subscribers worldwide. The ease of watching a film or endlessly streaming a new series from the comfort of your own home is discouraging the public from physically getting out and going to the cinema. Viewers want contents that is tailored to their preferences and is easy to use.
Whilst Netflix has an impact on many different industries, film and TV are hit with the greatest impact. The company used to be a boost to traditional shows and would draw users to existing shows that were still airing on TV. However, since 2013, Netflix has been creating its original content which pits it in direct competition which means network TV are losing viewers. The liked of Netflix, as well as Amazon and Apple are beginning to invest in film productions themselves, to ensure that they are able to offer exclusive access to some content (Garrahan, 2017).
The emergence of alternative new streaming services from Apple, Disney, Warner Bros. and other financially liquid studios are competing against Netflix to prevent it becoming a media giant or even monopoly. As the film and TV industry continues to change, these companies must adapt their approach in order to remain feasible in the long term. Moreover, the competitive rivalry between traditional distributors and aggregators, is set to be a key determinant in who will dominant the next phase of global competition within the industry (Miskell, 2019).
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