20 Weeks Of Summer: The New Normal?
It’s been a weird summer.
There have been 37 films released on 1000 screens or more. Only 1 of those films failed to get to $10m at the domestic box office. 33% of the films grossed $100m or more domestic. 43% of the films were between $25 million and $100 million.
The two grossers from non-studio distributors that were in that $25m-plus group were Earth to Echo (Relativity) and Chef (Open Road). But it is worth noting that Echo launched on 3230 screens and Chef, which launched on 6, never got to more than 1298 screens.
Indies were in the majority in the under-$25m group of 10 films (I’m including Expendables 3 and The Hundred-Foot Journey in the over $25m group). Two Lionsgate, two Weinstein, two from newcomer Clarius, one each from IFC, Roadside, and studio dependents Searchlight and TriStar.
Five films that launched in limited release (each under 7 screens) have gotten to $10m domestic theatrically. In 3 of those cases, distribution expanded at some point to over 1000 screens. The other two are Boyhood and Belle, neither of which has hit the 775 screen mark.
But let’s get back to the new normal…
Every single film in the domestic and worldwide Top Seven for this summer will have grossed at least $500 million and cost at least $150 million.
The only movie released this summer which cost over $150 million that won’t gross $500 million-plus is Edge of Tomorrow. It will “just” gross $370 million, which makes it the #9 film worldwide for the summer.
The film that stopped the string of $150 million-plus movies at the Top 7 domestically is 22 Jump Street, which was the biggest “cheap” hit of the year with $190 million domestic and $304 million worldwide on a studio-claimed $50 million budget. It beat worldwide #6/domestic #9 How To Train Your Dragon 2 domestically, though Dragon 2 did $235m more worldwide.
So there were 9 films costing over $150 million… and 8 of the 9 will have scored better than $500 million worldwide by summer’s end (Guardians is the one still working to get there).
Looking back at last summer, there were (at least) nine $150 million budget releases and the results look a little less attractive. Only 6 films got to $500 million worldwide last year. On the other hand, the highs were higher ($1.22 billion last summer to 1.05 billion this summer… and a 2nd film at $970m million ww to this summer’s 2nd best $744m).
But what corporate studios seek is not the maximum profit from movies, but the most stable business model possible that leads to predictable, repeatable profits.
This was the same issue with sell-thru DVD. By trying endlessly to frontload movies to maximize the first few weekends so that the DVD window could be shortened, they left tens of millions in theatrical revenue on the table… per big movie, not overall. Hundreds of millions each year. But the return from DVD was so massive that it became the much higher priority. The focus on increasing DVD sales, including quickly inflating marketing budgets, was first priority… until the bubble burst.
In Summer 2012, there were 9 movies with a cost of over $150 million. Only six grossed $500m ww or better. Again, the highs were higher (Avengers and Dark Knight 3), but three of those $150m+ movies made less than $400m worldwide… and one of them is getting a sequel!
Media keeps getting distracted by their perceived shiny objects – overall domestic grosses, individual achievements, and the $300 million domestic total that eluded every film this summer – and forgets what the reality of this business is. Making money. And not losing money. A big fat hit looks great on the cover of the annual report and can even drive revenue in other divisions. But corporations love stability… incremental growth… predictability.
But it gets better!
How many movies this summer do you suppose cost (at least, as admitted) between $50 million and $150 million? Five. Last summer? Nine. The summer before? Ten.
The four this summer were (from least expensive to most); 22 Jump Street, Planes: Fire & Rescue, Into The Storm, Hercules, Teenage Mutant Ninja Turtles. And the range of grosses on these films are from $94 million to $304 million. Two are guaranteed to be profitable, one is borderline but a merchandise franchise (Planes) and the only two where there is any real chance of a loss are Hercules and Into The Storm.
So… of all 14 films that cost over $50 million released by majors this summer, only two are likely to suffer small losses, Edge of Tomorrow and Hercules and one is likely to take a decent-sized writedown.
And films under $50 million?
The majors and their dependent arms released 20 such films. There are some money losers. But there are some cash cows too. The Fault in Our Stars, Neighbors, and Lucy. Blended and Tammy to a lesser extent.
There are some smaller budget films that will, indeed, lose money. But not a lot. And not the majority.
I must admit, I am still chewing on all of this. Has the industry landed almost exactly where it wants to be? Obviously, more is always better. But there isn’t any real pain at the majors this summer. And all of the majors have hits, with Universal being the only one not to have a $300 million ww movie… but making money on every film except Endless Love and the borderline A Million Ways To Die In The West, which was primarily funded outside of the studio and hitting well with Neighbors, Lucy, The Purge: Anarchy.
Have we come to the place where companies investing $300m plus in production and marketing can be comfortable that 88% of the films made at that price will return over $500 million at the box office alone? Because that’s a big deal.
Or is this summer an illusion, singing the siren song to drive big spenders to their doom? Remember, in the next three years, studios are planning 6 – 8 comic book movies every year with budgets in excess of $150m… and that is before getting to all the other big, expensive films in other genres, including 3-5 animated movies with these big budgets every year.
This is the question…
and the studios need gross revenue as much as they need profit. A $150M movie that breaks even pays for a lot more jobs than a profitable little movie.
Interesting thoughts. I think if there’s a lesson to be learned (and it probably won’t be heeded) it’s the same as in past years…don’t overload the schedule, and as you said, try to find a good equilibrium. That happened this year not because of initial planning, but because two mega-tentpoles fled the scene.
Of course this often happens (last year it was GI JOE), but A GOOD DINOSAUR was potentially the most expensive movie of the summer besides TRANS4MERS, and JUPITER ASCENDING is pegged right up there at over $170 million. “What ifs” are always dicey, but it’s not hard to imagine that DINOSAUR would have dragged DRAGON 2 into a breakeven or even money losing proposition that would have sent Dreamworks into an even greater tailspin than it’s experiencing. MALEFICENT wouldn’t likely have approached the heights it did in the Memorial Day slot. JUPITER would have almost certainly been a big studio bomb, and it would have turned HERCULES into a legitimate money loser, as well as scaring off LUCY from a late July opening and perhaps not allowing it the space to turn into the breakout hit it’s been.
So there were eleven $150 million films originally planned. But thank god for the studios that only 9 made it, as we would have had higher grosses overall but almost certainly 1 or 2 more films with big write-offs (or in Dragon’s case, perhaps, a result that would induce a major shakeup).
Summer 2015? I count 9 already (Avengers 2, Mad Max, Tomorrowland, B.O.O, Jurrassic World, Fantastic Four, Inside Out, Terminator, Ant-Man) with the distinct possibility of others (Assasin’s Creed, Pixels, and the gritty “Peter Pan: Origins of a Superhero”)
This analysis is useful and insightful, but it’s way premature to put a “New Normal?” headline on it. As you yourself have said over and over (such as regarding the false 2005 slump), one year is not a trend.
There will always be statistical noise in these sorts of numbers, and the way noise works is that once in a while you randomly get something that looks remarkable.
If the next couple summers land in the same place, okay, then we can talk about a new normal. But even then, the one thing you can rely on is that there will be another new normal soon to follow.
The virtues of cash flow when you’re speaking of tens of millions of dollars…
David,
I promise I’m not questioning your reporting, but I’m curious where you get the budget numbers. I understand “Studio released budget” is not, how do you say, factual. I worked at a studio for many years, and I’ve seen some ludicrous claims of “well it only cost blank.” However, I’m curious where your figures are coming from.
Tuck – I am not trying to report box office numbers in this piece. There is obviously some give, potentially. I just took the Box Office Mojo numbers, which are, it has seemed over many years now, pretty much what the studios are floating out there.
I have, mostly, lost interest in the argument over whether the alleged numbers are factually accurate. The numbers are so big now that it is somewhat beyond the point. This piece is about the overall idea of where we are, not the specific revenues from the studios.
Obviously, there is another story altogether on the financing of studio movies and who is paying for what.
Sam –
First, there was a question mark. Things obviously change.
But more to the point, this is not an analysis trying to figure out what box office revenues mean in the minds of moviegoers. Those are almost always utter bullshit.
But the push by studios to commodify the film business is not new. And the logic behind the big spends on so many movies makes little sense from a straight business perspective. Big risk, rarely huge reward. So what is driving them? That is what I am considering here.
Any thoughts on Warners’ attempt to completely rebrand “Edge of Tomorrow” for its upcoming bluray release? Aside from being surprised that studios still care about bluray, the film must actually be pretty close to hitting the black since otherwise they wouldn’t even bother with trying to get more people to just give the film a chance.
Nice, insightful piece. I also enjoyed Et’s very good points about not overloading the schedule. Good stuff.
I struggled late June all the way to July 4th to see anything of merit at the pictures. That was an especially shitty period for a moviegoer unless you enjoyed seeing TRANNIES 4, TAMMY and the like.
Worst July 4th weekend ever.
At the risk of stating the obvious, the split with exhibitors, which varies from international market to international market, is a huge factor in what can and can’t make a studio comfortable with grossing 500 million worldwide on a 300 million expenditure. And that is a complicated pie to slice. The lazy man’s divot is to simply assume that half of what a film grosses doesn’t go to the studio that makes it, which is why that “only” on EDGE OF TOMORROW actually matters quite a bit. The all important Chinese market, for which Hollywood studios are willing to submit their films to intrusive censorship bodies they would decry at home, operates on a 75/25 split, with the 75 percent going to the Chinese exhibitor. And this is an improvement over the historical split, which was 87/13 until a renegotiation in 2013. Love you David, but any suggestion that 300 mil to get 500 mil global is sustainable seems dubious at best, at least to me.
Hey Ray –
As I have written repeatedly, the Chinese gross is really an asterisk situation. $300 million to get $500 million is not sustainable. But it’s not putting anyone out of business either. And %500 million is the bottom in my hypothesis, not the target. If you look at this summer, the Top 10 summer grossers all cost $150m or more and all buy one grossed over $500m. 8 of the 9 were over $600 million. Top 5 and maybe Top 6 (we’ll see where Guardians lands) were over $700 million.
Edge of Tomorrow is the only loser this summer – as noted in the piece – amongst the big movies. And China is, in that case, only responsible for $65m or so of it’s gross. So it is not the most extreme example of China numbers being misleading. Transformers 4 is still the biggest film of the summer with adjusted numbers, but you can lop $150m – $200m off their gross when adjusting its reality for the distributor when comparing it to films with less of a Chinese influence.
My point is, this is not a banner year. But the corporate bosses corporatized studios are not looking for banner years. They are looking for safety and balance from their glamour divisions. Movies are a part of a much bigger portfolio and with rare exceptions, don’t move the overall company meter much. But they don’t want to be embarrassed by flops, because those are public events which erode overall confidence, even if they don’t really affect the overall business very much.
Look… I spent a lot of time being yelled at for talking about movies costing $200 million not being profitable at $400m ww.
I spent a long time, back in the day, being yelled at when I was the only one talking about movies grossing $100m and still being flops.
And now you are arguing the other side of that. Great. Happy to have you aboard.
Last summer was a much less happy summer than people in the media claimed. Movies like WWZ and Man of Steel were much less revenue-positive than the sales pitch that people bought. This summer, Godzilla is borderline profitable and will have a sequel. Last year, Pacific Rim… which was powered to a sequel in no small part by Chinese grosses. (And the Chinese thing, by the way, is more than just revenue now… it’s about building the bridge to huge numbers of dollars – in and out – for many decades to come)
I have argued for years now that the downside on Marvel, long-term, is that their low end is $150m in production and if they see a dip at any point, especially now targeting 3 films a year, they could melt down in a hurry.
But if 1 of 10 big movies lose money and a couple more are marginal, those are odds the studios will keep playing.
My fear is, as I have expressed before, that if they keep raising the number of these high-priced films in a limited number of genres, the trends will change and there will be some massive losses. And if, say, 3 land at one studio in one 18 month period, it will threaten the future of that studio.
So… I think we actually agree. Love you too.
I will admit it’s a fascinating theory–that of the 300 million dollar programmer, to use the old studio term for the safe bets they used to place when they controlled the entire pipeline back in the 1940s. They have a similar degree of control now of course, without ownership of the physical screens, brought on by the modern publicity blizzard/saturation booking combo platter. Anyhow, that’s why I always catch up with HotBlog–to challenge my assumptions, and visit with an old pal.
Be well bro, and thanks for the detailed response.