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10 Jul 2007 00:00
A cheeky, speaking vegetable is just weeks away from bounding on to Chinese cinema screens. When The Magic Gourd opens at the end of this month, the Chinese-language film will mark a departure for Walt Disney and a step-change in its charm offensive in emerging markets.
The Magic Gourd is Disney’s maiden co-production in China and, if all goes to plan, it will be the first of many locally made, Disney-branded films around the world.
Thomas Staggs, chief finance officer, has earmarked $100-million for locally made films. That may seem like peanuts for a group with annual revenues of more than $34-billion but Staggs stresses it is a clear commitment to TV shows and feature films not made in the United States.
Unveiling the plans on a trip to London, he refused to divulge details of what will be made where. But he hinted at a string of indigenous films and television shows in both emerging and developed markets.
Wherever it is—and he mentions “capabilities in South America”—the locally made, Disney-branded strategy is motivated by two business benefits.
“We make our brands more releÂvant to the local market. If you produce in-market it gives you the opportunity to produce something that is going to be resonant in a different way than the simple export programme,” says Staggs. “And we also give ourselves access to a broader marketplace. If you go round the world, local content can be anywhere from an important part of total media consumption to a dominant part. In some markets like China you can get much greater distribution of a film made in the country for that country.”
Film companies have had an eye on the global marketplace for years. David Miller, entertainment and media analyst at the brokerage Sanders Morris Harris in Los Angeles, highlights studios’ use of foreign actors and storylines that boost a film’s Ârelevance for non-US audiences.
The point to bear in mind as a filmmaker is where the market is growing fastest, he says. “How these films play internationally is far more important than how they play in the United States. In terms of overall screen count, here in the US we have about 32Â 000 movie screens and that number hasn’t really changed in about six years. But the number of screens abroad is going up fairly dramatically in places like Russia, Vietnam and China.”
Disney’s latest Pirates of the Caribbean instalment, At World’s End, epitomises the attempt to achieve global appeal. It features scenes in Singapore and an international cast and characters. What is different about The Magic Gourd production is its attempt to wholly serve one big market.
The tale of a young boy who befriends an enchanted gourd is based on a classic Chinese novel by the children’s author Zhang Tianyi. Featuring a soundtrack by the Chinese pop star Baby Zhang, it was a co-production with the state-run China Film Group and the Hong Kong-based Centro Digital Pictures.
Media experts highlight other reasons for local co-productions beyond what Disney calls “resonance”.
Joseph Lampel, a film industry expert from London’s Cass Business School, said Disney’s Chinese venture was no surprise. “The Chinese government strictly controls theatrical release of foreign films into the domestic market,” he says.
“Disney is therefore unable to fully leverage the powerful synergy between theatrical release and merchandising, which it uses elsewhere. A co-produced film with Chinese content allows Disney to combine its technical skills with local content. This has the double advantages of neutralising restrictions on theatrical release within China, and increasing appeal to the Chinese market.”
The US entertainment group is keen to flag up that whatever it launches in developing economies, it has reached a scale where it has a clear advantage over rivals. It is making the most of the appeal of Disney products, whether it is films, toys or theme parks, says Andy Bird, head of Walt Disney International. So even when a film or character is locally made, the company’s strategy relies on that creation bearing a clear Disney imprint—The Magic Gourd is described as featuring “all the classic Disney storytelling elements”.
“That ability to drive our different businesses under a common umbrella sets us aside from our peers and also allows us a degree of flexibility when we create our market entry strategy,” says Bird, who is charged with growing the business outside the US.
“Unlike other media companies that are largely focused around television and film, we do have many other strings to our bow ... we can look at the infrastructure and architecture of a particular country and work out the best way of entering it with the various businesses that we have.”
In India, Disney’s focus so far has been on television. Last year it became the country’s leading children’s television group after acquiring the teenagers’ channel Hungama.
In Latin America it has created local versions of TV shows such as Desperate Housewives. In Korea, it is trying to tap into the rapid evolution of mobile video. Russia also offers big opportunities in mobile because, like other emerging markets, there is a limited fixed-line infrastructure.
“In these markets you see a leapfrogging of technology at a far greater pace than you see in developed markets,” says Bird.
More than eight decades after Walt Disney sold his first cartoons, the company is present all over the world in various guises. But Disney still feels it has more to do, even if the finance director is trying to temper the excitement somewhat.
“We want to move with measured impatience,” says Staggs.—Â
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