2010 saw fewer films, but more pop with 3D

In looking at the box office for 2010, it’s clear that numbers don’t tell the whole story.

Final figures for domestic B.O. are due this week, since the three-day weekend of Dec. 31 will be counted for 2010; international actuals also will arrive this week. So far, box office seems to be chugging along at a steady pace, down less than 1% from the 2009 record-setting tally as of Dec. 27.

But, in fact, those “steady” numbers disguise major upheavals within the industry. The seeds were planted for changes in moviegoing and movie presentation that will affect the industry in 2011 and beyond.

This year’s domestic box office posed burning questions about theatrical windows and 3D sustainability without providing many concrete answers.

Thanks to more media outlets and online marketing, there is increased box office awareness. But most of those B.O. pundits tend to concentrate on domestic opening weekends, which are actually just a small part of the overall picture. Pics like “Shrek Forever After” and “Grown Ups” proved it’s not always important to start with a bang, but that the ultimate test is steady legs — or as the studios like to call it, playability.

And B.O. cumes can be misleading, depending on films’ budgets. The real question is profitability, and 2010 offered sharp examples of positive budget-to-gross ratios (e.g., “The Expendables”) and negative ratios (“How Do You Know”).

There are other key areas indicating big shifts.

A year where less was more?

Even with fewer studio releases (110 vs. the previous year’s 121), 2010 stayed in step with 2009’s tally. But the box office was buoyed by the $477 million earned in 2010 by 2009 holdover “Avatar,” while increased prices in 3D tickets also provided a key boost. Though admissions were down 8% at the end of the summer, the 2010 drop is expected to end up between 4%-6%, based on year-end projections.

Still, most studio execs aren’t complaining about the year’s perf. In fact, several highlights proved that less was more, as cheaper summer pics helped line studio pockets, while less-than-stellar openings didn’t necessarily lead to smaller cumes.

In terms of profitability, Lionsgate offered several examples of smart ventures, with “The Expendables” grossing $103 million domestically and “The Last Exorcism” nabbing $41 million. Both pics far surpassed what Lionsgate paid to acquire them — $15 million and $1 million, respectively. Even with marketing and other costs added in, the pics were hugely profitable for Lionsgate.

Paramount’s “Paranormal Activity 2,” with higher production costs than the first microbudget effort, took in $85 million at the domestic B.O., more than recouping its estimated production budget of $3 million and the studio’s marketing costs.

On the other hand, with hefty pricetags, Disney’s “The Sorcerer’s Apprentice” and Sony’s “How Do You Know” rank as two of the year’s more dubious misfires.

Still, those studios had their share of hits; namely “Alice in Wonderland” and “Toy Story 3” for Disney, and Sony’s string of summer performers, including “Grown Ups,” “The Other Guys,” “The Karate Kid,” “Easy A” and “Salt.”

Based on B.O. performance of the past few years, midrange films — those costing upwards of $60 million or “the type of movie that fed the distribution pipeline for all these years,” according to an insider — will struggle to be greenlit. Instead, studio execs will look for lower-budget pics with specific appeal like teen comedy “Easy A” or chillers like “The Last Exorcism” to fill their slates, along with the usual four-quadrant blockbusters.

The specialty biz saw a slowdown this year, as more commercial fare like “The Social Network” and “The Town” appealed to broader adult audiences. Indies had their star players, too, including Focus Features’ “The Kids Are All Right” and Music Box’s “The Girl With the Dragon Tattoo,” as well as year-end fare “127 Hours,” “Black Swan” (both from Fox Searchlight) and the Weinstein Co.’s “The King’s Speech.”

The list of hits points to sturdy legs at the multiplexes, where plenty of pics never landed the No. 1 spot but went on to see fantastic results.

Animated fare, led by “Toy Story 3,” “Despicable Me,” “Shrek Forever After” and “How to Train Your Dragon” proved most potent over the long haul. Toons typically have long legs, though this year’s animated powerhouses, boosted by 3D, seemed to vastly overshadow most live-action tenderfoots.

A year with muddied windows

For most bizzers, one of the biggest advantages of 3D was its reinforcement of the theatrical experience — at least until 3D TVs really take off.

The irony, however, was that Disney’s 3D “Alice” started a simmering feud between studios and exhibitors about a proposed shortened theatrical window. Just prior to “Alice’s” worldwide launch March 5, Disney announced plans to release the 3D fantasy on DVD only 12 weeks after the film’s theatrical bow, instead of the standard 16 weeks.

While the Mouse House ultimately compromised on a 13-week gap (“Alice” hit DVD shelves June 1), the shorter-than-usual theatrical window not only left an opening for other studios to follow suit but also left several questions unanswered until early 2011.

The issue around windows that’s gaining most traction is the prospect of premium video-on-demand releases becoming available shortly after theatrical bows. Paramount execs said in December that they wouldn’t look to premium-priced VOD bows. Other congloms like Time Warner are considering the idea, but not without first addressing which films to release, at what price and what length of window after the theatrical bow.

In June, the National Assn. of Theater Owners made its opinion clear about shortened theatrical windows when it placed an ad in the trades — including the June 16 edition of Daily Variety — describing shortened windows and price points as “a potentially destabilizing change in the existing windows platform.”

Consumers are increasingly interested in viewing titles at home on VOD, with nine of the top 10 pics on VOD available day-and-date with their retail DVD releases. Only indie distribs have jumped into releasing their films simultaneously on VOD with a theatrical release, with IFC, Magnolia, Oscilloscope and Tribeca Films seeing promising results from early VOD bows.

Looking forward, moviegoers likely will have more ways than ever to watch films, but studios may continue to make fewer of them. This slimmer model leaves potentially bigger pieces of the pie for those in the market in any given frame, and spreads the wealth to smaller sectors.

A year in 3D, full-force

In 2010, 3D hit its stride, and garnered plenty of headlines, both for and against the technology. There were 23 wide 3D releases in 2010, more than doubling 2009’s count, while the biz saw a 127% hike in North American 3D screens as of Dec. 6, from 3,556 to 8,069.

The top 10 earners in 2010 included six 3D titles, led by Fox’s “Avatar,” “Toy Story 3” and “Alice in Wonderland”; 3D toons (Universal’s “Despicable Me,” and the DreamWorks Animation duo “Shrek Forever After” and “How to Train Your Dragon”) rounded out 2010’s highest-grossing pics.

Whether this suggests that moviegoers embraced 3D as the preferred format, or that studio tentpoles saw boosted sales from higher 3D ticket prices, 3D became one of the year’s hot topics as average ticket prices rose and 3D shares continued to fluctuate. The format fueled the biggest hike in average ticket prices since 2001, which jumped to $7.95 after the first quarter vs. the comparable period’s $7.35.

Those prices have been declining, however, as 3D shares taper off. NATO reported the average domestic ticket price at $7.85 by the end of the third quarter.

“Avatar” and “Alice” ignited aud interest in the format, with the films’ 3D shares (83% and 71%, respectively) far outweighing subsequent releases like “The Chronicles of Narnia: The Voyage of the Dawn Treader” and “Yogi Bear” (whose 3D shares hovered in the 50% range). But those latter two pics tapped fewer 3D screens, competing with other year-end 3D titles like “Tangled” and “Gulliver’s Travels.” “Tron: Legacy” (which earned 82% from 3D in its opening weekend) benefited from added Imax screens, with Imax contributing a bigger share of the pic’s total opening gross than it did even for “Avatar.”

“Good movies still find their way to the top,” notes Imax prexy Greg Foster. Thanks largely to 3D, Imax is on track to double last year’s market share, with totals that should reach north of $500 million.

The rush of 3D product further squeezed available 3D screens — 2010 saw the first weekend with two dueling 3D wide releases (“Tron” and “Yogi Bear”). “Gulliver’s Travels” launched Christmas Day, securing just 958 3D locations, compared with 2009 holiday entries “Avatar” and “A Christmas Carol,” which both had slightly more than 2,000.

But the lack of screens was only part of this year’s 3D equation.

“The upside for a (successful) 3D movie is higher than 2D, no doubt about it,” Foster says. “But if a 3D or 2D movie doesn’t work, it really doesn’t matter what dimension it’s in.”

3D retrofits, including “Clash of the Titans” and “The Last Airbender,” had critics questioning the ethics of 3D pricing, asking whether execs were concerned more with raking in extra coin than putting out a quality product. Warner Bros. earned positive press when it decided to forgo a 3D version of “Harry Potter and the Deathly Hallows: Part 1,” citing the lack of time needed to finish the 3D satisfactorily as its primary reason.

Warners execs may be regretting the loss of 3D coin, even after a boffo $273 million domestic take for the 2D “Hallows,” as the studio plans to go forward with a 3D version of “Hallows: Part 2,” just one of 2011’s 31 pics so far slated for 3D.

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