Leave it to a bunch of sour pickles –specifically, Dark Phoenix, Men in Black International, and Godzilla: King of the Monsters– to spoil headlines about the true success of the summer box office.
There’s been a lot of news that the season’s theatrical business is back in the toilet, and overall, that’s false, with ComScore showing that the period of April 26-July 7 has grossed $3.03 billion, close to even with the same period a year ago ($3.04B). Last summer ended with a near-record$4.8B. Even before this weekend through July 4th, summer 2019 was close to equal, with 2018 starting with the last weekend of April with $2.8B.
For exhibition, summer started the minute Avengers: Endgame pumped out the biggest domestic opening of all-time at $357.1M. We said this two summers ago, and we’ll say it again: There is no way that the theatrical business in the U.S. and Canada is broken after exhibition worked overtime to deliver an opening of that size.
Says ComScore Senior Media Analyst Paul Dergarabedian, “The traditional summer time frame is seemingly no longer carved in stone with corridors and quarters becoming more relevant in terms of defining the success or failure of any given season. For example, with a film like Endgame this year and Infinity War last year contributing hundreds of millions of dollars before the official summer start in early May, it begs for a re-evaluation and re-contextualization that shows that the summer of 2019, despite having its share of ups and downs is actually on par with last summer at this point. Not exactly a gloom and doom scenario when framed in this light.”
Any signs of weakness this summer boils down to bad dating or bad films, which frankly no one feels the need to leave their house for and spend $15+ a ticket. If summer was down in the double digits, then there would be concern that audiences have abandoned moviegoing. 2019, for the period of Jan. 1-July 7, is at $5.977B, -8% from the same period a year ago. But there’s a lot of ground to cover in the next six months, with The Lion King, Hobbs & Shaw, It: Chapter 2, Frozen 2, and Star Wars: The Rise of Skywalker, etc. on the horizon in order to meet or exceed last year’s record of $11.9 billion. And if we miss it with $11 billion-plus, hell, that doesn’t mean that exhibition is turning off the lights for good.
If there’s a takeaway from this summer so far, it’s that brand alone —X-Men, Godzilla, Men in Black, Secret Life of Pets–doesn’t sell tickets. Great stories and a vibrant, renewed sense of vision for dusty franchises does sell tickets. Hello?! The movie is called Aladdin, it’s the live-action remake of a 1992 animated film by director Guy Ritchie, and in its 7th weekend, the film hasn’t stopped, with a domestic running total of $320.8M. Wait, what about Toy Story 4 opening up to $120.9M, less than Incredibles 2 and Finding Dory? As we wrote, Disney left some cash on the table by not playing Father’s Day weekend; plus, the film was part 4 in a franchise, nine years after its last chapter, not part 2 like those other Pixar movies. Plus, it’s the best debut in the pic’s 24-year old franchise. What studio wouldn’t want this opening??
Yes, counter-programming has been largely challenged. But much of that has to do with the lack of crystal-clear, high-concept pics which exhilarate a core demo. Mid-budget original films aren’t dead; there just hasn’t been a Baby Driver, Girls Trip, Crazy Rich Asians or The Meg yet.
When it comes to the collapse of counter-programming at the summer B.O., each title can be blamed for its inherent set of particulars. Who wants to see a Charlize Theron-Seth Rogen screwball comedy (Long Shot at $30.3M)? Not many, because Rogen is the maestro of anarchistic comedies.
Who wants to see an indie-looking rebellious teen girl comedy with fresh face stars (Booksmart at $21.4M)? Not many, because they felt they saw it before with Superbad. Perhaps the stakes offered weren’t worth the $15 ticket at the cinema?
Amazon’s Late Night looked like a TV movie, and the company over-spent on it at Sundance at $13M. But they tried to make it work with stateside P&A estimated at $35M. The film, through no fault of its own, was inherently challenged with its TV theme before it hit marquees.
And, oh, no, Paramount’s Rocketman has slowed down after a solid $25.7M opening and may not cross $100M at the domestic B.O. Why isn’t it Bohemian Rhapsody? For several reasons, and Paramount was always aware of this, yet rallied behind the movie anyway. Bohemian Rhapsody succeeded with $903.6M at the WW B.O., as there was a pent-up demand to see a movie about a legendary rock star, Freddie Mercury, who has been dead for the last 27 years. Rocketman wanted to be a warts-all biopic and also boldly embrace its LGBTQ subject matter (which didn’t play in flyover states) in ways that Bohemian Rhapsody did not. The result is $174M WW, and we’re told by finance sources that the pic can still be slightly profitable, with a production cost of $40M before P&A. Rocketman‘s legacy in cinema history can still be raised with a year-end awards season campaign.
The indie box office is another story, and the dynamics of what is considered to be a success nowadays has changed from what it is was years ago when Miramax and Weinstein Co. were around. We also haven’t had any lightning bolt docs yet like last summer. It’s true, it’s significantly harder to cross fiction pics over. Much of that has to do with Rotten Tomatoes being the Roman Emperor at the B.O., with a thumbs up or down, do-or-die power. Indies used to be able to open in NY and LA and put up a great gross, with fancy pull quote ads in The New York Times. They could still make their bread even with bad reviews. With Rotten Tomatoes around, every one knows an indie movie is a stinker when it opens. Note that platforming isn’t the answer to great B.O. success for indie fare. A distributor only platforms when they know they’ll have great audience reception and the critical reaction to back it up. Whenever they go wide, it’s matter of economics and the fact that they have to make their money back ASAP. If some of these counter-programming pics platformed, there’s a great chance they would make less than what they made by going wide. Plus, increasingly, platforming is a distribution tactic for awards season fare in a crowded awards post August corridor.
Yes, there is something to be said about Disney and Fox controlling 53% of the domestic B.O., with a combined $1.6B. Disney alone minted $1.5B, +6% from the same period last summer, with Warner Bros.’ $360.4M a distant No. 2. Endgame, at close to $847.8M during that time, reps close to a third (28%) of summer’s business versus Infinity War, which drove 22% of the April 27-July 8 domestic box office. The Disney factor is on every rival studio executive’s mind. However, with the Disney+ debuting in November, they believe largely this is the most fiercely competitive year against Disney (even though they’ll win annually at the B.O. for years to come), as their entire slate of Frozen 2, Star Wars, Avengers: Infinity War, Captain Marvel, Aladdin, Lion King, etc. is in itself an advertisement for the streaming service.
Another indication that the theatrical business is thriving: International continues to improve and is the majority of theatrical’s business. Because of this, the studio co-financing landscape has changed. Specifically, studios such as Warners, Fox, Paramount and Sony have moved away from de-risking via exclusive, comprehensive, long-term co-financing deals. A major reason for this shift is that international theatrical revenues have grown dramatically in recent years due to the emergence of middle classes globally and the rise of multiplexes built to serve demand. Another factor is robust growth in ancillary markets. Studio license fees in OTT and SVOD are up in the double-digit percentile range in the past two years, per finance sources, with multi-year international television output deals for the majors increased significantly due to intense competition for content in all major territories.
The cumulative impact of these favorable conditions? Studios have less need to de-risk and give away profit. For the most part, the reduced risk deals, where studios give away upside from franchises in exchange for greater downside protection, hardly exists.
And those sinking exhibition stocks? Wall Street is betting on streaming over theatrical at this minute. We’ll see how this whole streaming craze plays out a year from now and whether it implodes. Netflix will lose Disney and Warner content to those studios’ respective services. Exhibition stocks are also getting hammered due to their respective chain’s debt. Exhibition is essentially making a better runway for its future, with their big sofa chair remodeling. AMC will eventually pull back on its debt and pay it off. Not to mention, analysts are easily swayed about headlines about….declining box office.
Most studio execs believe that theatrical is still king, and just like it survived the booming eras of TV, VHS, and DVDs, they’re betting it’s the winner in the long run against streaming.