GLOBALIZATION AND THE RISE OF ACTION MOVIES IN HOLLYWOOD

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What has caused the influx of superheroes such as The Avengers and The Justice League in Hollywood in recent years? Leung and Qi (2021) empirically show that globalization plays a huge part, especially with the emergence of the Chinese market in which Action movies face fewer cultural and language barriers. 

The movie industry experienced two tectonic shifts in the past two decades. First, action and adventure movies have become dominant in the box office, and their box-office market share went from less than one-third in the late ’90s to almost 60 percent in 2019. Second, Hollywood has become increasingly reliant on foreign markets. The US share of the worldwide box-office revenue has declined from 60 percent in the mid-1990s to less than 40 percent in the present day.

In this article, we explain these parallel developments in the movie industry. In particular, our work shows that Globalization and the growth of international markets have significantly contributed to the rise of action movies in Hollywood.

China’s emergence in the movie market epitomizes the growing influence of international markets. Hollywood movies started to enter China officially in the mid-1990s. In November 1994, The Fugitive, starring Harrison Ford, was the first to be released in China. In 1995, only six US movies were released in China. While the Action movie True Lies was the most successful Hollywood film in China that year, the Oscar-winning drama Forest Gump was a relative failure. Even for True Lies, the gross Chinese box office revenue of $12.3 million was inconsequential, compared to the worldwide gross of $365.8 million.

From 2009 to 2019, the number of Chinese cinema screens has grown from 4,723 to 69,787, an almost fifteen-fold growth. With such an explosive increase in demand, China has become the second-largest market for Hollywood movies. Nowadays, at least 10 percent of Hollywood’s annual gross box-office revenue comes from China. China has become a prime export destination, especially for blockbuster Action movies. For example, the Chinese box-office revenue of Avengers: Infinity War (released in 2018) was $360 million, more than half of the North American revenue.

Compared to US audiences, consumers in foreign markets have a stronger preference for Hollywood Action and Adventure movies over other genres (e.g. dramas and romantic comedies). Intuitively, Action movies face fewer cultural and language barriers. Films are inherently cultural, and their perceived qualities are subjective to consumer preferences and vary across countries and cultures. For example, 12 Years a Slave, a biographical period drama set in the US Antebellum South, won the Academy Award for Best Picture in 2013 but had hardly any presence in East Asian countries. In contrast, Iron Man 3, a super-hero action movie released in the same year, was more popular overseas, and its gross box-office revenue in the international markets was twice as much as that in the US.

As the international market becomes more important, Hollywood studios reallocate budget investments from Non-Action to Action movies to satisfy the international audiences’ tastes. In recent years, Action movies typically spent a significant fraction of their budgets on expensive special effects using Computer Generated Imagery (CGI). For example, the Marvel Studio’s The Avengers, released in 2012, had a budget of $220 million, of which more than half (approximately $120 million) were on the special effects. The fantastic visual imageries are the common thread of all these new modern Action and Adventure films. The Quidditch games in Harry Potter, the Battle of Mordor in the Lord of the Rings, and Avengers battling Thanos in the Marvel Cinematic Universe, all have dazzled the audiences with tremendous Computer-Generated Imageries. Intuitively, a higher budget investment in CGIs can significantly increase an Action movie’s perceived quality in international markets. However, raising budgets by the same amount to hire dialogue coaches may have a much less effect on the perceived qualities of dramas or romantic comedies.

Based on our model estimation, the reallocation of resources from other genres to Action movies disproportionately favors international consumers, especially in Asia. However, while producers increasingly tailor their products to attract international consumers, domestic consumers can be worse off. Our results illustrate a potential downside of Globalization, and a disproportionate increase in one type of cultural product can raise consumer welfare in some countries at other regions’ expense.

About the article

Leung, T.C., Qi, S. Globalization and the rise of action movies in Hollywood. Journal of Cultural Economics (2022). https://doi-org.eur.idm.oclc.org/10.1007/s10824-021-09438-z

About the authors

is Associate Professor at William and Mary University.

is Associate Professor at Wake Forest University.

About the image

From Forrest Gump Movie by Thank You (22 Millions+) views (CC BY 2.0)