The Big Pictures: Sources of National Competitiveness in the Global Movie Industry

Abstract

This paper examines the global film industry through a detailed discussion of four national players (US, Canada, China, and Hong Kong). According to Porter, the international competitiveness of any industry cluster is shaped by four characteristics of the domestic market: demand conditions, factor endowments, firm rivalry, and supporting industries. The authors assess the film industry in these countries in terms of the four factors of national competitiveness and conclude that only the US possesses all of them at this juncture. Moreover, they propose that the exclusivity of US interests in the global distribution system creates competitive dynamics that neither Porter nor critics such as Rugman have fully explored. It is in this context that this paper discusses co-production as an alternative means for nations to develop⁄improve competitiveness through exploitation of overseas markets. Based on their analysis of the film industry of the US, Canada, China, and Hong Kong, the authors make the following observations: There is a need to increase the presence of Canada⁄Canadian film co-productions with other countries as there may be greater opportunities for large Canadian producers to leverage both their US connections and their home country's treaties to create a unique pool of film-making resources. The potential size of the Chinese film audience makes it attractive to other nations. However, the Chinese government's monopoly over film imports, pirated home versions, and denial of access to the official film distribution channels are major barriers to entry. Despite the massive historical price gap between domestic and foreign movies, box office figures would suggest that Chinese audiences prefer the latter. Another popular option is cheap, pirated home versions. Hong Kong's box office size, domestic box office share, and number of domestic productions have been decimated over the past decade and, hence, Hong Kong producers' main option is to find stronger opportunities in mainland China. Being the only external co-production partner nation of China and Hong Kong, Canada has in place the foundations for a powerful competitive position in these regions relative to other foreign entrants. According to the authors, further research in this field could include an analysis of coproductions within Europe or of emerging co-production blocs across other regions. For instance, Canada is currently in the process of concluding a co-production treaty with India which has the potential to clear barriers between the two powerful yet traditionally quite segregated film industries of the subcontinent and North America. This is indicative of the fact that the governments and the movie industries are gaining power to change the global competitive scenario in films.