Is it better if a movie makes more of its revenue in the U.S.?
The highest profile example of a film that bombed in the U.S. but made tons of money overseas was The Chronicles of Narnia: Voyage of the Dawn Treader, which made only about $100 million domestically but made about $270 million overseas. And a similar thing happened with the previous Narnia movie, Prince Caspian. Another big film that made way more money overseas than domestically was Terminator Salvation.
So if a film does incredibly well overseas but flops in the U.S., does that make it a hit? As with everything else to do with box office, the answer is "it depends." But generally, domestic revenue seems to be be better for studios than overseas revenue, because the studios take a bigger cut of domestic revenue.
According to the book The Hollywood Economist by Edward Jay Epstein, studios take in about 40 percent of the revenue from overseas release and after expenses, they're lucky if they take in 15 percent of that number.
Domestic revenue just counts for a lot more than overseas revenue, says David Mumpower with Box Office Prophets:
The reason for this is simple. Collecting revenues abroad is a trickier proposition since the dollar fluctuates against foreign currencies. There are also tariffs from these governments in place in order to keep as much money as possible from leaving their countries and going abroad, which is an understandable practice. While the global conglomerates such as Fox, Disney and Time-Warner that run major Hollywood studios can secure sweetheart deals with various local governments, it doesn't happen for each film. As such, international box office revenue is much less reliable than in North America.
But still, overseas box office does matter, more and more. And stars who have a huge global following are more likely to open a movie than ones who are only famous in the U.S. just look at the fact that the world-famous Tom Cruise is still starring in movies, despite his ongoing backlash in North America. Mumpower points out that Cruise's Knight and Day only made about $76 million in the U.S., against a production budget of $117 million. But since Knight and Day made $262 million overseas, chances are it will end up being profitable once home-video revenues are factored in.
Adds Mumpower:
A shocking number of 2010 releases did better abroad than in North America, which makes sense when we consider population numbers. It's just a relatively new phenomenon for the industry. Avatar's performance is a great demonstration of global expansion. It earned $760.5 million domestically, which is (almost) a drop in the bucket compared to the $2.02 billion it accrued in international box office. Only 27% (i.e. roughly a quarter) of Avatar's box office was earned in North America. That's how important the global picture has become to Hollywood studios.
