Just in terms of gross revenue created by the major studios in worldwide theatrical releases in 2014, the numbers were up for three studios… three studios’ numbers were down. (This is with a significant amount of money still to come in from this year’s releases, but not enough to materially change the analysis in this piece.)

Of course, this is a silly way to try to analyze the studio business. But given the eternally falling sky that media luvs to describe, it might be a startling reality for you, dear reader.

Moving on… One of the three majors that were “down” in 2014—Universal—has stated on the record that 2014 was the most profitable year in the history of the studio. How is that when their theatrical gross dropped from $3.5 billion to $2 billion? Well, they released three fewer films, the films they did release cost less to make and market, and in 2013, Universal had six films that probably lost money when all was said and done, led by big write-downs for 47 Ronin and R.I.P.D., soft numbers on Oblivion, Riddick, About Time (domestically), and pick-up Kick-Ass 2. In 2014, there were no films with budgets over $70 million, no significant writedowns, and 3 surprisingly strong (though not massive) hits at the top of their chart.

Another (Disney) is down because their two annual Marvel movies were surprisingly strong hits, but came up $373 million short of 2013’s duo, there was no Pixar movie ($744m in 2013), and the massive success of Frozen ($1.27b) will not be matched by Big Hero 6 (but note that BH6 is nowhere close to the end of its international theatrical cycle, sure to add another $200 million or so). These shortfalls alone add up to a rough $1.3 billion. That’s still $300 million short of 2013’s remarkable year for the studio. But there are also no big losers like 2013’s The Lone Ranger. And there were two fewer high-ticket theatrical releases in 2014, saving the studio at least $100 million in marketing costs, even though Buena Vista released three more movies in 2014 than in 2013.

The third “down” studio is Warner Bros and it really does feel like 2014 was an off year at the studio. They had the only film in all the industry to cost over $150 million to make which didn’t gross at least $500 million worldwide (Edge of Tomorrow). They had a legitimate bomb in Transcendence. They had two other movies on the larger side (Godzilla and 300: Rise of An Empire) that came up well short of expectations and if not small losers, were certainly not significantly profitable. There were a series of films with moderate budgets that also underperformed (Into The Storm, Horrible Bosses 2, The Judge, Jersey Boys, This Is Where I Leave You, Blended, Winter’s Tale). There were a few highlights. Hobbit 3 is on its way to $850m-plus worldwide. The LEGO Movie was a big surprise hit, generating $468 million in box office and spawning a franchise and reinvigorating the toy line. Annabelle was a cash cow. Tammy turned out to be one of the studio’s moneymakers this year. And WB has international on Interstellar, which is 2.5x domestic on the film and growing. But overall, this was not a good year for the studio. And you can’t blame the musical chairs in the executive offices, as most of these films were greenlit by the old team of longstanding.

As for the studios that were “up”…

Fox was a bit off the trend of conservative spending, both at other studios and at their own studio. In 2013, the most expensive non-DWA budget (as reported) was a reported $120m for The Wolverine. in 2014, there were 4 non-DWA films at the studio with bigger budgets than that. This paid off with a $700m-plus grosses on X-Men which grossed 63% more than any previous film in the franchise, perhaps breaking through to something more in line with the rest of the Marvel Universe, and also with Dawn of the Planet of the Apes, which grew 47% from the first film in the rebooted franchise. The other two bigger spends, Exodus and Museum 3, could both be losers in the end… waiting on international. Or both could be breakeven or a little profitable. It really depends on the rest of the world. And neither has really rolled out wide. But there are also a series of smaller budget large contributors: Gone Girl, the massively profitable The Fault In Our Stars, Rio 2 (very profitable because of international), The Other Woman, Let’s Be Cops (which delivered $127m against a $17m budget and a tight marketing budget)… and that’s not even taking Fox Searchlight’s great success with The Grand Budapest Hotel into account. I believe it is “only” the studio’s second $5 billion year worldwide (including Searchlight), the only other coming when Avatar contributed $2.8 billion towards that lofty watermark all by itself.

Paramount had nine releases in 2014, just as it did in 2013. The big difference is that in 2014, it had a Transformers movie, which the studio owns outright, so it is much more profitable than, say, two split films. Transformers: Age of Extinction grossed $547 million more than last year’s top Paramount movie (World War Z), almost exactly doubling its gross. This year’s #2 is Interstellar, which Paramount is splitting with WB, but even if you take away the international on this Nolan film from Par, the year is still up overall. Teenage Mutant Ninja Turtles, which was rebooted under Michael Bay’s supervision, did just under $500m worldwide, which is more than almost anyone expected. The one big disappointment was Jack Ryan: Shadow Recruit, though it was only a small loss thanks to a relatively tight budget. The studio had double trouble with the two Jason Retiman releases that both stiffed at the box office. But even with that handicap (nothing crashed in ’13 like Men, Women & Children in ’14), the year was up for the studio and surely more profitable.

Sony was up for 2014 in overall gross when you just count Columbia and Screen Gems, which are the two divisions that fund (as of this year) in-house production. Sony Classics was down, but the entire drop can really be attributed to the difference between this year’s Woody Allen movie and last year’s Woody Allen movie. And Sony Classics had only domestic rights on both films. Moreover, with some awards movies in play, there is a very good chance that SPC will make up some of that difference as 2014 films continue to play in the next couple of months.

In many ways, Sony has become the “norm” for studios. They are really chasing the middle. Take away Spider-Man from the top of 2014’s line-up and these last two years don’t look dissimilar. The loss of Spidey would make 2014 down compared to 2013, but not when it comes to profitability, because in ’13 Sony had two expensive losers in After Earth and White House Down, while in ’14, the only film in which the studio invested more than $70 million (before marketing) was Spider-Man. At $50m – $70m, Sony had profitable hits with 22 Jump Street, The Equalizer, Fury, and Monuments Men, with Annie looking like the only one in this price range that might lose some money. It wasn’t a great year for Sony (and losing a solid earner in The Interview didn’t help). It was a bit like The Amazing Spider-Man 2, their big grosser. It was the #6 grosser of the year with $709 million… and is seen as a disappointment. The film is an earner… but the serious profit is in the next few hundred million… and it didn’t get there.

THE WORLDWIDE NUMBERS

I have made a simple little chart that pretty clearly reminds us that nothing is terribly clear.

This is each major studio and what their gross theatrical gross was against last year’s numbers. Domestic first, then international. See if you can spot a trend onto which you can hang your hat. (And note, again, that these numbers are skewed hundreds of millions, overall, against this year, as last year’s numbers include the total grosses for all of the films from each studio.)

Dis Down 20% Down 41%
Fox Up 72% Up 65%
Par Down 13% Up 55%
Sony Up 14% Up 9%
U Down 33% Down 51%
WB Down 18% Down 28%

See the trend?

Of course you don’t… because there is no clear one. There are 7 “up” categories to “5” down… not decisive. The most severe downturns are in international… but so are the most severe upturns.

And most importantly, none of these gross numbers tell you much of anything about profitability.

How about this stat. How many movies did the studios release in 2014 vs 2013?

The broad answer is, “no change.” But the detail shows that each studio had a plan.

Dis 3 fewer movies
Fox 3 fewer movies
Par no change
Sony 2 more movies
U 2 fewer movies
WB 3 more movies

I tried to start this conversation in August. And then again in September. Those pieces are both stat heavy. But I find that people would prefer to discuss their feelings about what is happening in the movie business rather than what is happening in the movie business. Whether it is the mythology of the ascendance of Television over Movies or the odd truth that the film business hasn’t actually abandoned the non-teen movie, but that worldwide box office combined with CG has changed what the broadest mass appeal films are, it seems easier to be pissed than deeply informed.

The most endangered group in the film universe remains the major motion picture exhibitors. Studios and (more to the point) corporate parents have been trying to shorten the theatrical window for decades now, really since the launch of VHS. And little by little, there is damage done. I’m not sure how many people covering box office professionally today remember when all the chains went bankrupt and rebuilt their theaters into multiple smallish rooms with big screens, better sound, and 250 – 450 seats, allowing for the current norm of having enough screens to expand a highly anticipated opening from, say, 3 screens to 6 or 8 or 12 for a few days so that demand can be satisfied. In indulging the distributors in this way, exhibitors pretty much ended the Sell Out for a wide release film, meaning that almost no one has to wait more than an hour from the time they want to see a new movie until the time they can. But this wasn’t enough of a concession for distribution. The foolhardy demand for day-‘n’-date, if ever allowed as a norm, will end up shuttering a large percentage of the screens in the country. It’s not a mystery. Look at how great day-‘n’-date has been for independent theatrical.

127 movies released in 2014 did over $10 million (as of this writing). 27 of those were independently distributed, the highest ranking being Open Road Films’ The Nut Job, a cartoon, with $64 million domestic. 8 Lionsgate/Summit, 5 Open Road, 5 Weinstein, 4 Relativity, 2 Freestyle, 1 each from domestic Attractions, Clarius Entertainment, and IFC.

How many of these films went out day-‘n’-date on VOD? Zero.

Was the highest grossing day-‘n’-day and date VOD release this year Radius/Weinstein’s Snowpiercer, which brought in $4,563,650 in theatrical, generating an additional $6 million and change in VOD?

No.

There were two weeks of theatrical with no VOD before they made the film available for download. The film grossed $2 million on just 250 screens. And it made another $2.56 million in its next 105 days in release.

It’s hard to come up with a clean comparison because of the wider-than-normal but limited release in those first two weeks. But how about The Skeleton Twins, which made $1 million in its first 14 days, didn’t go to VOD, and then made another $4 million in its next 35 days, outgrossing Snowpiercer even though it was a much smaller, less marketable movie.

So what are the highest grossing films that went VOD day-‘n’-date? The Interview, which is a clear freak, still at just $3.8 million after 8 days. And Veronica Mars, the TV show spin-off that famously Kickstarted, which did $3.3 million.

The highest non-freak day-‘n’-date VOD that I know of is The Trip To Italy, which did $2.9 million in theatrical.

The VOD revolution will clearly not be televised… no one can afford the rates.

The theatrical business is not going away unless the distributors decide to force the issue and kill it. So far, it has been remarkably resilient when faced with paradigm shifts. It’s not the newest toy on the block. It isn’t the most convenient way to sit around and watch new entertainment. But it is an important part of the revenue stream of studios. It is not the exclusive stream, as it was four decades ago. But it is very, very significant. It isn’t the baby, but it is the lungs and the left limbs… so studios should be careful before they throw out the bathwater.

Happy New Year!

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