Hollywood movies are one of America’s greatest exports. What can the prevalence of the Golden Arches – and the acceptance of US culture generally – in foreign markets tell us about the likelihood of movie producers finding commercial gold overseas? By C. Samuel Craig, William H. Greene, and Susan P. Douglas

 

ulture has a profound influence on all aspects of behavior. It determines how individuals perceive and interpret phenomena, and the meaning they ascribe to material goods and symbols. Cultural boundaries may also act as barriers and impede the flow of ideas and communication. But culture has long since ceased to be the exclusive preserve of anthropologists. In an increasingly global economy, the receptiveness of ideas and products that originate in other cultures in markets around the world is a central issue. And the failure to consider the impact of cultural forces has been behind many mistakes made in international markets.

Culture’s impact varies depending on the product. Power tools and heavy construction equipment have very few cultural connotations, for example. By contrast, food, clothing, and modes of artistic expression may be strongly embedded in a particular culture, and differ markedly from one culture to another. And individuals’ acceptance of such products from other cultures depends in part on the compatibility of the product with their own value and belief system. What’s more, individuals in a particular culture may want to emulate the life-style and behavior patterns of another culture. Think of how consumers in other countries have embraced American cultural icons like McDonald’s, Coca-Cola, and Levi’s.

Few studies have attempted to assess systematically the influence of culture on acceptance of a culturally embedded product. So we set out to examine the extent to which both the cultural content of a product and the context (i.e. the country) in which it is sold affects sales. We chose film, a highly complex product that is rich in cultural meaning. Films inevitably reflect the view and visions of writers, actors, and directors, all of whom are influenced by the cultural context in which they operate. Further, each film is unique and represents a new product offering. Best of all, sales data on many films are available on a country-by-country basis, making success relatively easy to measure.

 

Exporting Culture

The global film industry has come to be dominated by US studios, and film entertainment represents a major US export. Of the 256 top grossing films of all time in terms of non-US box office (gross revenue of $100 million or more), all but six were American. In 2002 the top five films in Germany, The UK, Australia, Spain, Argentina, The Netherlands, Japan, South Korea, and China were US films.

In 2002, US theatrical release revenues were over $9.5 billion, and US studios could expect to receive equivalent theatrical revenue from foreign markets. But the box office represents just a small slice of the pie. Studios generate revenue from multiple “windows” – pay-per view, DVDs, and broadcast television. The theatrical release window is the most critical, as it establishes the value of the film for subsequent windows, and for licensing, merchandising, and related products such as books or theme park rides. But in 2002, US theatrical revenue represented only 9.7 percent of the total revenue studios received from key film release windows.

In addition to their economic importance, films play an important role in the transmission of cultural values and mores. French films by Francois Truffaut, Swedish films by Ingmar Bergman, Italian films by Federico Fellini, and Japanese films by Hayao Miyazaki all reflect the vision of the directors and the cultures that produced them – just as surely as Steven Spielberg’s blockbusters are representative of America.

To date, the studies that have examined the performance of US films in foreign markets have focused on developing models to predict box office performance. And while both demonstrated that a film’s box office performance in the US is a strong predictor of its success outside the US, neither examined how the cultural context in which films are released influences their success.

For the purposes of our study, we broke down culture into three different components: the intangible elements or values and beliefs, the material aspects, and communication and language. Each plays a role in influencing the success of US films in foreign markets and interacts to provide a climate varying in the degree of receptivity to US films. And each give rise to a hypothesis that we set out to test.

 

Understanding Culture

Values and belief systems have been widely used in assessing the impact of cultural context on behavioral phenomena in cross-cultural psychology as well as management studies. There is a rich tradition in the international business literature examining the impact of national cultural values on foreign market entry, selection of mode of entry, and new product development. In general, societies with similar cultural values are expected to exhibit more similar response patterns than those with different values. So insofar as US films reflect US values, we hypothesize that the more culturally similar a country is to the US, the more likely a US film will be successful at the box office in that country.

The range and variety of material goods available in different cultures also provide an important indicator of their receptivity and openness to products from other cultures. Of course, countries vary in the extent to which they emulate a US lifestyle and use consumer products that are seen as American in origin. People in other countries may also embrace other aspects of US culture – whether it’s rooting for golfer Tiger Woods or eating fast food. Consequently, we hypothesize that the higher the degree of Americanization in a country, the more likely a US film is to be successful there.

“Films had higher per capita box office receipts in countries that had more McDonald’s outlets per capita.”

Language is an important element of culture. It provides a cohesive bond among members of a shared language group, and it can also establish a major barrier between cultures. With film, language is important not only for effective understanding of the film’s content, but also because it is an important component of culture. In non-English-speaking countries films need to be dubbed or subtitled, which may diminish their effectiveness and impact. In some cases there may also be inconsistency between the scenario and the language spoken, for example when an American Western is dubbed into Mandarin. More importantly, one may expect speakers of the same language to have similar cultural beliefs, attitudes, and behavior patterns. So we hypothesize that US films are more likely to be successful in English-speaking countries than in non-English speaking countries.

It is also important to consider how different types of films will be received by different cultural groupings. At the extreme, Westerns are unmistakably American. Comedy tends to be embedded in a particular culture and appreciation of a particular type of humor. Notions of romance and courtship vary considerably from culture to culture and may not correspond to contemporary US mores. On the other hand, fantasy and science fiction are not necessarily anchored in any particular culture, although members of a particular culture may exhibit preferences (or dislike) for these genres. Since prior research on US films in foreign markets has demonstrated that genre has an impact on a film’s performance in different countries, we also set out to determine how well different genres translate.

In order to examine these hypotheses, we developed a hierarchical regression model specifying the impact of both film-level and country-level independent variables on box office receipts. The dependent variable consisted of foreign box office receipts in eight different countries for the top 50 US films between 1997 and 2002, compiled from Variety.com. (To place in the top 50, a film had to have a minimum domestic gross revenue of approximately $50 million.) Corresponding data for the same films were obtained for the eight foreign countries available on Variety.com (Australia, The UK, Austria, Germany, Argentina, Chile, Mexico, and Spain). These data were adjusted to per capita values and expressed as logs.

The independent variables consisted of two groups. The first group measured film characteristics, such as US box office revenue and film genre. The film’s genre was obtained from the Internet Movie Data Base. (Table 1 contains a listing of 12 of the genres. The 13th genre was crime.) The second group measured country characteristics – cultural distance, degree of Americanization, and language. Cultural distance was measured based on distance from the US on a composite index of Dutch management scholar Geert Hofstede’s four value orientations: Individualism/Collectivism, Power Distance, Uncertainty Avoidance, and Masculinity/Feminity. The degree of Americanization was assessed based on the number of McDonald’s outlets per capita in each country. (There is some precedent for using the presence of McDonald’s in novel ways. The Economist has found that the price of Big Macs is a useful measure of currency disparities and annually publishes its Big Mac Index.) All the films save two – “Chocolat” and “Crouching Tiger, Hidden Dragon” – were originally released in English.

 

Golden Arches

The results of our regression tests can be seen in Table 1. What do they tell us? As we hypothesized, cultural distance had a significant effect on the performance of films. The coefficient was negative (-0.157) and highly significant. Films released in countries that were culturally closer to the US were more likely to perform better. Conversely, films released in countries that were more distant culturally from the US did not perform as well.

Films had higher per capita box office receipts in countries that had more McDonald’s outlets per capita. The coefficient for the number of McDonald’s outlets per capita was positive (0.0399) and highly significant. And when films were released in other English-speaking countries, The UK and Australia, they performed better than when they were released in non-English speaking countries. Seven of the genres had a significant impact on how films performed in foreign countries. Action, Fantasy, Adventure, Animated, Mystery, and Horror all performed significantly better in foreign countries, while Family performed significantly worse. For the other five genres, the coefficients were not significant.

The combined effect of cultural distance and language suggested that it would be useful to analyze the data by three language groupings: English, Spanish, and German. And here, the genre effects revealed some important differences that were not evident in the all-country analysis. Genre effects were most pronounced in German-speaking countries, with nine of the 12 genres having a significant effect. In English-speaking and Spanish-speaking countries only four genres had an impact on performance and only one of these, Animated, was common to both.

The findings have a number of implications for studio executives and film distributors. For studios that work through independent distributors in overseas markets, enhanced knowledge of how a film is likely to perform in a foreign market can strengthen their bargaining position with independent distributors. For films that a studio distributes itself, the knowledge of likely performance can help it effectively allocate promotional efforts. It is particularly important to take into account the popularity of different genres. In English-speaking countries eight of the 12 genres enjoyed the same degree of success as they did in the US. Romance, Fantasy, and Animated films were more likely to be successful. However, as in Germany, Drama was less likely to be successful. In Spanish-speaking countries, Comedy and Family were less likely to be successful, and Animated and Mystery were more likely to be successful.

This research has broader implications beyond film. After all, films are not the only products laden with cultural content and symbolic meaning. Television shows, music, theater, dance, and opera are equally replete with cultural content. In addition, products such as sports, games, and household décor reflect strong cultural influences. Other products and brands, such as Coca-Cola, Marlboro, sushi, futons, and fish and chips, are all seen as symbols of the culture from which they emanate. The results of our study suggest that for an expanding range of products, the cultural context can be as important a factor to consider as price, design, or manufacturing cost.

C. Samuel Craig is the Catherine and Peter Kellner Professor of Entrepre-neurship, Media, and Entertainment, William H. Greene is a professor of economics, and Susan P. Douglas is the Paganelli-Bull Professor of Marketing and International Business at NYU Stern.

This research will be appearing in an upcoming issue of the Journal of International Marketing.