Wednesday, April 5, 2017

Week 7


1.      List 5 advantages Hollywood has over local film industries in other countries.
2.      How does the US use Free Trade Agreements to help Hollywood?
3.      How do American movies drive US cultural imperialism?


See discussions, stats, and author profiles for this publication at:
Cultural globalization and the dominance of the
American film industry: cultural policies,
national film industries, and...
Article in International Journal of Cultural Policy · September 2014

…the expansion of media culture industries in other countries has to be
seen in the context of the continuing dominance of American media culture.
Banerjee (2002, p. 517) states: ‘The USA has emerged as the most powerful player
and clearly dominates the world’s cultural industries’. This is particularly true in
the film industry.2 Using data from 2002 to 2007, Fu and Govindaraju (2010,
p. 223) found that countries are increasingly importing American films. The annual
World Box Office Top 20 consists of American films and a few US co-productions
(European Audiovisual Observatory 2010) (see Chart 1).

The dominance of the American film industry is generally explained by three
factors: (1) the enormous concentration of talent and economic resources for the production of film in the Los Angeles region (Hollywood) (Scott 2002); (2)
the advantage of the huge American market that offers economies of scale, ensuring that cultural exports can be sold at rates well below the cost of production for smaller nations (Van Elteren 2003, p. 173); and (3) a widespread and effective distribution system for American films in the USA and in many other countries that effectively excludes foreign films from the US market and ensures the success of American films abroad (Scott 2002).

Scott (2002, p. 958) attributes Hollywood’s competitive advantages to ‘a dense
agglomeration of firms and workers and associated institutions’. This production
system has two major components, one devoted to the production of very expensive
blockbuster films that are marketed globally and another devoted to the
production of relatively low-budget independent films which may or may not be
distributed abroad. A few American conglomerates produce the most expensive
films and provide financing and distribution for films made by small independent

These elements exist in an institutional environment and regional context which
provide filmmakers with ‘strong competitive advantages in the form of increasing
returns to scale and scope’ and which function as ‘a seedbed of creativity and innovation for the industry’ (Scott 2002, p. 965).

Among all film-producing countries, the USA is unique in the average cost of
films. The average cost of films produced by major studios is close to $100 million
while the average cost of independent films is less than $40 million (European
Audiovisual Observatory 2006, p. 37).4 By comparison, the average cost of a
British film is $13.3 million (Brunet and Gornostaeva 2006), of a French film, $5.1
million (European Audiovisual Observatory 2010, p. 23), and of an Egyptian film,
$1.3–$5.5 million (European Audiovisual Observatory 2010, p. 61). Table 1 shows
the disparity in production costs between North America and other regions. The
high production costs of American films are necessitated by their use of a star
system and their emphasis on increasingly elaborate special effects.

Although many American films are very profitable in the USA, foreign markets
have become much more important, as the costs of making films have increased. In
2005, 61.3% of Hollywood’s box office receipts were derived from foreign markets
(MPAA 2006, cited in Gao 2009). US firms have the advantage of working in the
principal international language, English. Typically, about one-third of a US film’s
budget is devoted to advertising and promotion, including an emphasis on
film branding which includes product placements and products that are widely
marketed through commercial tie-ins and cross-promotions (York 2010, p. 3).
Scott argues that, without its effective and unparalleled distribution system, the
production system in Hollywood would be much less successful than it is. The
system relies on extensive networks of regional offices in the USA and abroad,
marketing and distribution involving intense publicity campaigns and
exhibition in many different theatres simultaneously (Scott 2002, p. 969). The
absence of comparable distribution systems in the film industries in other countries
prevents them from competing effectively in the USA and elsewhere. The
American market for foreign productions has been described as ‘impenetrable and
unattainable’ (Brunet and Gornostaeva 2006, p. 61).

Another factor in the global dominance of the American film industry is the role
of cultural policy. As will be discussed in a subsequent section, the continuing
success of Hollywood films in the face of increasing competition from other countries
is at times the result of a fierce battle between national cultural policies, one
which Hollywood, supported a system of Foreign Trade Agreements, negotiated by
the American government, usually wins (see below).


Cultural policy is an important element in the global dominance of the
American film industry. The goal of the American government’s film policy is to
eliminate film quotas in other countries so as to ensure that their film markets are
open to American films. At the beginning of the past decade, UNESCO (2000,
2005) recognized the exceptional nature of cultural goods and affirmed the right of
nation states to implement policies that protect and provide cultural expression in a
Convention on the Protection and Promotion of the Diversity of Cultural
Expression (Jin 2008). While European countries, particularly France, strongly
supported the convention, the USA refused to sign it and vigorously lobbied
against it (Jin 2011).7

The American response to the UNESCO convention was an increase in the use
of Foreign Trade Agreements on a one-to-one basis with other countries. FTAs are
intended to eliminate film quotas and promote exports of American films to other
countries. The American government’s reaction to the UNESCO convention and its
use of FTAs reflect the enormous importance that the American government
places on its film industry. Cultural industries, such as film, music, and television,
are major sources of American exports (Jin 2011).

While negotiations for the UNESCO convention were taking place, the
USA was beginning FTA agreements with more than 20 countries, including
Morocco, Columbia, Australia, Israel, South Africa, Malaysia, and Korea (Jin
2011). In some but not all of the countries that signed FTA agreements with the
USA, their domestic film markets declined rapidly, as shown by the market share
of local films. This was particularly true in small countries with relatively small
film industries, such as Canada and Australia, which were no longer able to
adequately protect their industries.

The USA also pressured South Korea to reduce its quota system for foreign films
that had been in existence for several decades as a condition for starting negotiations for a US-Korea FTA (Jin 2008).8 In spite of strong opposition from the film industry, the government halved the quotas because it expected other industries to benefit from other aspects of the FTA.

The effects of American pressure to cut screen quotas vary depending upon
the economic and cultural contexts in different countries. In the early 1990s,
when screen quotas were cut in Mexico as a result of the NAFTA Treaty with
the USA, the number of films produced in Mexico declined from 100 in 1992 to
14 in 2003. The market share of Mexico’s film industry was 7.5% in 2009. In
Korea, the short run effects of cutting the film quotas in 2006 were very negative.
The film industry lost money in subsequent years but, in 2009, it once again
became profitable. Six Korean films were among the country’s top 10 films (see
Table 2). The Korean film industry survived the change in screen quotas because
of the huge market all over Asia for all forms of Korean popular culture (known
as the Korean Wave), including film, in an economic and cultural context where
emerging countries are expanding their economies and their populations are starting
to have disposable income for various forms of consumption (Shim 2006; see
also Keane 2006).

Some critics see films as another form of cultural imperialism. Since Hollywood has attracted global audiences, it has made important modifications. Of the past two decades, references to American culture are less specific, while themes and motifs of other cultures are more prevalent, making the film appeal to audience on the global film market (Crane, 2014). And while Hollywood has made these modifications to diversify its content, the American film industry still faces scrutiny for not being diverse enough, as exemplified in the #OscarsSoWhite movement during the 2015 Academy Awards. Because of it’s lack of diversity and global influence, the Hollywood film industry potentially has the ability to homogenize global cultures, and therefore the industry acts as a cultural imperialist (Crane, 2014).

The United States is not just a political hegemon, its pop culture is also hegemonic (Wagnleitner, 2001). Ideals that the United States holds to be true are eventually adopted by lower tiers and subordinate countries. For instance, the American view of development as fast, progressive, and industrial, leaves little wiggle room for other countries influenced by American pop culture to create a national identity or perspective themselves (Su, 2011). On top of this the hegemonic devices used in the film industry function to contain social change by absorbing stories (that should be told in different perspectives) into its core ideological structure, “giving the appearance of addressing calls for social change, while simultaneously legitimizing dominant ideologies for the viewing public,” (Cooper, 1999).

While Hollywood has made modifications to their industry to be more specific about other cultures, Hollywood is also modifying the cultures within the movies to encompass American ideals. Take, for instance, the Disney Princess movie, Mulan (1998). Before the United States even produced this film, the Chinese folk tale had already been the subject of operas, television series, and three films. When Disney production started, “American-style individualism was inserted in the story, transforming a shy, demure heroine into an outgoing and tomboyish girl… the story although set in China, is resolutely modern and American,” (Crane, 2014)