Overseas demand fuels growth for L.A. motion picture industry.

Motion picture executives say that cutting the number of major releases will be a high priority next year. And yet, here in Los Angeles, they are expanding their studio facilities as fast as they can.

A shortage of production space has prompted Wait Disney Co. and Warner Bros. in Burbank, as well as Universal Studios Inc. in Universal City, to seek approval for huge expansion projects. The first two already have started construction, while Universal is waiting for the go-ahead from local officials.

Meanwhile, Roy Disney-owned Shamrock Holdings, based in Burbank, announced in November that it would build a $77 million production facility on 22 acres in Manhattan Beach. And fledgling studio DreamWorks SKG is constructing a state-of-the-art animationfacility in Glendale, as well as wrapping production on its first motion picture releases.

Such development reflects the importance of the movie business on L.A.'s economy, especially as the entertainment industry has grown to global stature.

Improvements in broadcast technology around the world, construction of new movie theaters, an international crackdown on pirating and the opening of enormous markets like China to American films - all are factors leading to fundamental changes in the way Hollywood operates.

This year, some studios will make nearly as much in foreign box office sales as they do in domestic box office (which consists of ticket sales in the U.S. and Canada).

For example, Disney announced on Dec. 18 that it had passed the $1 billion mark in international box office sales for its 1996 releases. Only a few weeks earlier, the company had crossed the $1 billion mark domestically.

In 1997, expect the foreign box office for many studios to equal or exceed the domestic tally.

Paradoxically, the push for more global sales comes at a time of growing disenchantment over the high number of features being released by the big studios.

"There's too much product chasing not enough eyeballs" is a common refrain in Hollywood.

Disney's decision last summer to shut its Hollywood Pictures division and cut its 1997 film output in half was seen as a watershed event that would lead to less releases industry-wide.

Disney won't be alone in cutting production. The merger of Turner Broadcasting System and Time Warner Inc. led to the disintegration of Turner Pictures, and Turner-owned Castle Rock Entertainment will see production slashed next year now that it's part of the Time Warner empire.

But new entities are emerging that will likely take up most of the slack. DreamWorks will launch its first motion picture releases in 1997, and Dutch entertainment giant PolyGram N.V. is preparing to become a full-blown movie studio.

The result is likely to be just as many releases next year, if not more, as there were in 1996. They will just be made by a new cast of characters.