U.S. studios seek to satisfy foreign audiences’ desire for locally made films

Twentieth Century Fox’s biggest hit in Argentina this year wasn’t the popular Matt Damon space adventure “The Martian.” Nor was it “Maze Runner: The Scorch Trials.”

Instead, it was the Argentine crime thriller “El Clan,” which grossed $17 million in its home country and held the No. 1 box-office spot there for five straight weeks this summer.

Hollywood has made a fortune exporting its biggest, broadest-appealing blockbusters into countries around the world. But Fox’s success with “El Clan” shows why U.S. studios are going deeper into local markets abroad.

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American film companies are increasingly looking to producers and directors outside the U.S. to grow their overseas business as the international box-office grows. Executives want to tap into audiences’ appetites for films made in their own countries, in their own languages and with their own cultural tastes in mind.

They also hope to build relationships with popular and upcoming filmmakers that could see crossover success. Moreover, studios have to go the local route if they want to stay relevant in countries such as Japan and South Korea, where more than 60% of the box-office receipts come from homegrown films. In India, local movies make up 90% of the box office.

“The portion of the business that is local is so significant that you’re basically not in the business of moving those markets unless you’re in the local movie business,” said Tomas Jegeus, head of Fox International Productions.

Studios have been in the local movie business for years and have long thrown their weight behind foreign television shows, including international versions of American sitcoms. But in recent months, the film industry has witnessed a flurry of activity in the local-language sector.

In September, Warner Bros. and China Media Capital formed a joint venture focused on producing and releasing Chinese films. Warner Bros. last week assigned two of its executives to expand its local productions business.

Sony Pictures Entertainment recently hired former Fox International Productions head Sanford Panitch to grow its efforts in India and other emerging markets. And in November, Fox entered a pact with China’s Huace Media Group to co-produce movies. In addition, Fox International Productions last month entered a first-look deal with producers Paul Heth and Michael Schlicht to make movies for audiences in Russia.

A big driver of local language films is China, which is expected to hit $10 billion in annual box-office revenues in four years. Its growth is the result not just of Hollywood tent pole pictures but also of local movies such as this year’s “Monster Hunt” and “Lost in Hong Kong.”

Those domestic films benefit from quotas that restrict the number of foreign films allowed into the country each year under a revenue-sharing agreement.

“Many of the mid-level American films are not traveling that well, because the local movies are taking that part of the market,” said Richard Fox, Warner Bros.’ executive vice president of international. “We’ll always have the blockbusters, but people are very interested in their own cultures.”

It’s not just the Chinese market. Countries such as Germany, Spain, Mexico, Brazil and Chile are attracting increased attention from Hollywood.

Universal Pictures’ acquisition “Ocho Apellidos Vascos,” a romantic comedy released last year, became the second-highest-grossing film ever in Spain, behind “Avatar.” The company also has found success with “Hanni und Nanni,” a German franchise aimed at young girls.

“We’re really trying to do this in a supportive and contributive way,” said Peter Kujawski, managing director of Universal Pictures International Productions. “We are increasingly focusing on adapting local [intellectual property], coming in with our own areas of expertise and deferring nuance to local partners.”

Even Russia is showing signs of promise for the U.S., despite rising political tensions between Vladimir Putin and Washington.

Though Russian films make up just 15% to 18% of the annual box-office in that country, Fox says it sees an opportunity if Heth and Schlicht help them find the right projects for the world’s eighth-largest theatrical movie market.

“It’s a very creative market to be in, and that’s what makes it exciting,” Jegeus said. “There are some amazing filmmakers there. That’s on top of the obvious commercial opportunities.”

Heth and Schlicht’s producing credits include the World War II film “Stalingrad,” which became the highest-grossing Russian-made movie ever after its release in 2013. Heth, widely known as a movie theater entrepreneur, said successes like “Stalingrad” prove there’s a robust market for Russian movies.

“The most vibrant markets are the ones that have strong local production, as well as Hollywood product,” Heth said. “In the modern era, I’d say the top Russian films are right there with the top American films.”

Still, international productions remain relatively small business for the major studios. Fox International Productions movies have grossed $1.27 billion since the unit was founded seven years ago. That’s less than the global total box office of some recent worldwide blockbusters such as “Jurassic World,” “Furious 7” and “Avengers: Age of Ultron.”

It can also be difficult for major studios to figure out how best to approach the local language business, which varies from country to country.

However, studios have become more sophisticated in the way they work with local filmmakers and production companies, said Courtney Brannon Donoghue, a cinema studies professor at Oakland University who has written a forthcoming book on local language production.

“They’re very self-aware how they’ve been seen as homogenizing media content and dominating the industry,” Brannon Donoghue said. “This has been a slow, slow realization that they need to make culturally specific content for these audiences.”

One common tactic is to remake English-language films for local audiences. American comedies in particular have trouble translating overseas, and revamps can help them find fans in additional territories. A Chinese remake of the Anne Hathaway-Kate Hudson romantic comedy “Bride Wars” grossed $27.7 million there this year.

Fox is also considering foreign market reimaginings of movies such as “Spy” and “The Fault in Our Stars,” which did impressive business for the studio but didn’t travel well in Asia. Neither film was released in China.

But some executives say they’re less interested in repackaging English fodder for other countries than tapping into material sourced from overseas. Universal is releasing a German film about the life of Anne Frank in early 2016, for instance. And Warner Bros. is financing its first Korean movie. “Mil Jeong,” or “Secret Agent,” started production six weeks ago.

“It’s not about remaking Hollywood films,” said Sony’s Panitch. “It’s about organically sourcing local material.”

ryan.faughnder@latimes.com