What a year of mixed signals at the U.S. box office. The latest film in the “Star Wars” franchise may have been the top grosser of 2005, but it was an unexpected crop of pics that turned the most profit.
In terms of grosses, “Saw II” and “The March of the Penguins” didn’t make the top 10. But in comparison to their costs, those films were goldmines.
“Saw II,” a Lionsgate release, grossed $86 million — or roughly 21 times its production budget of under $4 million. If “King Kong,” for example, had made 21 times its production budget, that would be box office of $4.2 billion. However, the pics with double-digit profit indexes could never be pricey tentpoles, but are likely to be lower-budget titles.
Compared to other seasons, when micro-budget indie hits like “Napoleon Dynamite” or “The Blair Witch Project” trod new creative ground, many of the top 2005 titles fit more traditional niches.
Variety determined the top profit-makers of 2005 by looking at a title’s U.S. box office cume compared to its production budget.
Determining profitability is an inexact science, since studios and indies won’t confirm budgets or P&A costs. And domestic theatrical is just one slice of the profit pie — some of the most profitable pics also reap riches in ancillary markets: for instance, “Napoleon Dynamite” raked in another $120 million on DVD.
There’s another question: profitable to whom? On “Star Wars: Episode III — Revenge of the Sith,” producer George Lucas will get much of the revenue, while 20th Century Fox gets the smaller distribution fee.
In terms of gross players, Tom Cruise and Steven Spielberg were surely big beneficiaries of “War of the Worlds’ ” half a billion gross — leaving a lesser share of the wealth for Paramount and DreamWorks.
The profit-sharing pie grows even more fragmented as studios take on major co-financing partners. Warner Bros. Pictures will split earnings from both “Batman Begins” and the upcoming “Superman Returns” 50-50 with Legendary Pictures.
Of course, a studio can’t function without expensive tentpoles, but the most profitable pics provide a few instructive lessons.
Tapping a well-defined audience — such as young horror and comedy fans — is one road to profits, as “Saw II,” “The Exorcism of Emily Rose,” “Wedding Crashers” and “The 40-Year-Old Virgin” showed.
Just as effective is supplying pics to underserved audiences. Parents were desperate for something uplifting to watch with their kids, propelling docu “March of the Penguins” near the top of the list, while black women were thrilled to find a pic they could relate to in Tyler Perry’s “Diary of a Mad Black Woman.” The same niche-targeting tactic propelled “The Passion of the Christ” into heavenly profits in 2004.
Meanwhile, auds snubbed a long list of sequels, remakes (think “Bewitched”), big actioners and historic epics.
As studios warily begin a new year, keeping production costs lean and acquisitions on the cheap may be the only way they can minimize their risk in the face of evaporating auds, shifting tastes, rising P&A costs and the wilting of the DVD salad days.
“Smaller budgets make economic sense. Generally speaking, everyone is still trying to spend a lot of money, but throwing money at a film’s problems won’t solve anything,” says Lionsgate Films Releasing prexy Tom Ortenberg.
Determining profitability on tentpoles — which generally proved strong performers in 2005 — is trickier. Tentpoles drew most of their profits from overseas B.O., DVD and other ancillary revs.
Warners’ “Batman Begins” was the only tentpole release of 2005 that earned more in the U.S. than overseas. For most pics, the U.S. has become a supporting player; even worse, a lackluster domestic bow can result in damaging headlines and perception problems.
Looking at the spectrum of most profitable titles, it’s hard to say which pics are sure things:
- Auds fell hard for “March of the Penguins,” which Warner Independent Pictures and National Geographic bought at Sundance for a mere $1 million and then spent another $600,000 on a new musical score and Morgan Freeman-narrated script. Docu, which took in $77.4 million in the U.S., made 22 times its budget of $3.5 million.
How much will WIP actually see? WIP will have to deduct $25 million in P&A costs, and then return a share to the French producers and sales agent Wild Bunch, as well as splitting U.S. revs with National Geo.
- “Crash,” one of the few indie dramas to click this year, made more than eight times its $6.5 million budget, grossing $53.4 million. Lionsgate Films paid $3 million for North American distrib rights.
- “Diary of a Mad Black Woman,” which Lionsgate produced, made 10 times its production budget of $5 million, although it was largely shunned by critics. Pic grossed $50.4 million.
- Johnny Cash biopic “Walk the Line” landed stars Reese Witherspoon and Joaquin Phoenix, but still only cost $29 million. The Fox 2000 film has grossed $82.6 million to date.
“I think this list shows that the film industry can continue to be very profitable for a long time to come with a little creative thinking,” says one studio exec. “There are a number of ways to distribute movies that don’t need to gross over $150 million to be profitable.”
But trimming production costs will require a fundamental change in thinking by the majors, which have filled their slates with A-list stars commanding top dollar, expensive directors who often are difficult to control, lavish sets, elaborate special effects and expensive action sequences.
Just ask Sony, which suffered a miserable 2005, releasing a string of high-budget films that failed to catch on, including actioners “Stealth” and “XXX: State of the Union.” The studio spent at least $85 million on helmer Nora Ephron’s “Bewitched,” which grossed only $62 million.
Sony’s Christmas comedy “Fun With Dick and Jane,” which opened with $24 million over the four-day holiday weekend, cost at least $100 million to make, thanks in part to costly reshoots and other overruns.
In the past, studios have spent big money for comedy stars like Jim Carrey and Will Ferrell. But “Wedding Crashers,” toplining Vince Vaughn and Owen Wilson, and “The 40-Year-Old Virgin,” starring Steve Carell, proved that studios don’t need the priciest talent to make laffers work. “Virgin” grossed $109 million, more than four times the $26 million U paid to make it.
Warners now is spreading the word that it will be driving tougher deals with the highest-paid actors and that, considering the precarious state of movie biz economics, stars will have to accept the fact that they can’t get the price they’re used to commanding. At least not in an age where a flock of penguins and a sadomasochistic horror pic can steal the show.