The American Film Industry

17. Hollywood's International Market

Foreign Markets 17THOMAS H. GUMC" Hollywood's International Market When the Supreme Court ruled in 1915 that "the exhibition ofmotion pictures is a business pure and simple, originated and conducted for profit," that was considered sufficient reason to refuse films protection as speech under the First Amendment. Today it certainly is obvious, as it should have been then, that film is not just an ordinary business, but one vested with social consequences because of its communicative powers. As such, film is a mixture of business and art. It is the commercial aspect of film, however, that establishes the priorities governing production decisions and is responsible for putting on the screen the shadows that captivate and mesmerize us. By being made in such an environment, motion pictures naturally support dominant thought patterns and are especially noncritical of the economic system that nurtures them. A unique attribute ofa motion picture is that virtually its entire cost is incurred in making the first copy. Duplicates require little additional investment, and wide distribution hastens the flow of revenue to producers who are obliged to repay loans from banks and financiers. BeThis article was abridged by the editor from a longer manuscript prepared especially for this collection. For more discussion on the subject of the film industry's worldwide operations see the following publications by Thomas Guback: The International Film Industry (Bloomington: Indiana University Press, 1969); "American Interests in the British Film Industry," Quarterly Review ofEconomics and Business 7 (Summer 1967): 7-21; "Film and Cultural Pluralism," Journal ofAesthetic Education 5 (April 1971): 3551 ; "Film as International Business," Journal ofCommunication 24 (Winter 1974): 90101 ; and "Cultural Identity and Film in the European Economic Community," Cinema Journal 14 (Fall 1974): 2-17. 463 Poster of Michael Todd's Around the World in 80 Days, shot in Todd A. O. (United Artists, 1956) 464 17. Guback: Hollywood's International Market 465 cause exported prints deprive the home market of nothing, while offering the producer a larger base on which to recoup his investment, it is not surprising that film has become a staple commodity in international trade. Foreign markets are essential because a nation with productive capacities beyond its own needs is compelled to dispose of its excess wares abroad. Hollywood, however, exports films not primarily because it has product surpluses but because high production costs have made it difficult to recoup investments from the home market alone. The exploitation of foreign markets by the American film industry requires attention, for it demonstrates that film, in addition to being a commercial enterprise, is also a conveyor of values and myths. Forging International Distribution Chains after World War I World War I was a dramatic turning point for the United States because it changed our status from a debtor to a creditor nation. Between 1915 and 1920, the leading European nations became debtors to the United States, whereas at the beginning of the century over $3 billion of American securities had been held in Europe. The war redirected the international flow of capital, as surpluses in Europe were shot away at the fronts and American capital in the form ofwar loans and goods was sent abroad. The motion picture was one product to benefit from these conditions . European film industries had either been disrupted or forced out ofbusiness, creating a vacuum into which American pictures flowed, often at alarming rates. In 1913, the last prewar year, some 32 million feet of motion pictures were exported from America; a decade later, the amount had more than quadrupled, and by 1925 it stood at 235 million feet. During these dozen years American film exports increased fivefold to Europe and tenfold to the remainder of the world, as the industry developed markets in the Far East, Latin America, and in a few parts of Africa. It was possible for American films to achieve this dominance because they usually were amortized in the home market, which had about half the world's theaters, and thus could be rented abroad cheaply. Such a policy, ofcourse, was a blow to foreign producers who suddenly found their own home markets glutted by American pictures. A result of the war, therefore, was that American distributors were able to gain control of the foreign field without competition. And by the time capital was once more available for production abroad, American films had obtained almost complete control of world markets. 466 Part IV / Retrenchment and Reorganization...