Economic prophets divine pic profits
During a year of extremes at the worldwide box office, domestic totals are running more than 6% ahead of 2011, while a tally of year-to-date overseas grosses from the six majors trails by almost 4%. But with the media focused on hits and misses, subtlety and nuance have been overlooked — and perception is sometimes at odds with profitability, even for people in the film industry.
There are other films in Hollywood history that show misperception is nothing new. Consider 1963′s “Cleopatra.” That pic ultimately made its money back, cuming nearly $60 million with a budget estimated at $44 million. Even 1995′s “Waterworld” — a perceived disaster then and now — managed to shore up $264 million worldwide. The pic cost $175 million. In both cases, aftermarkets pushed the films into profitability, if just barely.
A quick quiz: How do clunkers like Disney’s “John Carter,” Universal’s “Battleship” or Warner Bros.’ “Wrath of the Titans” stack up against some of the all-time losers?
In truth, while none has performed up to the studio’s hopes, the three films collectively have earned $890 million at the global box office, meaning they are nowhere near the industry’s all-time biggest debacles like “Heaven’s Gate,” which earned just 8% of its production budget at the B.O. (see accompanying chart).
The misperception of a film’s success or failure is usually based on faulty thinking, centered on its domestic opening. A few decades ago, opening weekend was the key indicator in the life of a film. Now, it’s interesting, but far from conclusive evidence. Yet in the flashpoint world of entertainment media, many reporters and executives still predict a film’s eventual success using this outdated methodology.
Most B.O. watchers are aware of the year’s bona fide blockbusters (“The Avengers,” “The Hunger Games,” etc.) and sleeper hits (including “Ted” and “Magic Mike”). But some of the most profitable titles are flying under the radar, including Fox Searchlight’s “The Best Exotic Marigold Hotel,” whose beefy profitability ratio outweighs its image as a little charmer: The pic has earned more than $130 million globally from a budget of $10 million. Ditto Universal’s sturdy franchise installment “American Reunion,” which cost $50 million and has grossed almost $235 million worldwide.
“Marigold Hotel,” from Participant Media and Imagenation Abu Dhabi, began its international run nearly three months ahead of the U.S. rollout, where it bowed May 4 and has cumed $45 million. (Its best overseas territory is the U.K., which co-produced the film, with $32 million.)
Similarly, the level of success for “American Reunion” is below the radar of many bizzers. The pic proved there’s still steam in the franchise, especially at foreign wickets, where it bagged $178 million. Pic’s domestic tally stands at $57 million.
Two family films likewise stand out because of their boffo international runs: Fox’s “Ice Age: Continental Drift” and WB-New Line’s “Journey 2: The Mysterious Island.”
“Continental Drift,” which the studio says cost $95 million to produce, has surpassed $600 million internationally, making it the third-highest grossing animated film ever overseas, behind “Toy Story 3″ ($648 million) and “Ice Age: Dawn of the Dinosaurs” ($691 million).
As Fox did with “Drift,” Warners launched $79 million live-action “Journey 2″ early overseas; during the first quarter, that translated into an international take of $226 million. “Drift” so far has grossed almost $720 million worldwide; “Journey 2,” $330 million.
Studios would not provide marketing figures, but even if a pic’s production costs were doubled to account for marketing, these titles — along with “Titanic” in 3D, which certainly cost more than its $18 million conversion fee to market — would have been profitable.
For “Titanic” 3D, Fox handled overseas distribution, while Paramount released the pic Stateside, where it floated to a decent $57.9 million. But the real waves were made internationally, as China alone contributed a massive $146 million. In total, the conversion grossed more than $345 million worldwide, with Par and Fox splitting the pie.
On the profitability scale, the year’s battle of the Snow Whites — Relativity Media’s “Mirror Mirror” and Universal’s “Snow White and the Huntsman” — silenced those who doubted whether the two could coexist in the marketplace.
Both benefited by targeting different auds. “Mirror Mirror” bowed March 30, aimed squarely at families, and cumed $176 million globally — not too shabby for a film with a reported $85 million (minus marketing) budget. “Huntsman,” though darker-themed, with a marketing campaign aimed at teens, was aided by a summer launch and grossed a higher total, $388 million worldwide, although it had a much steeper pricetag, $170 million.
Moreover, “Mirror Mirror,” as well as “American Reunion” and “Journey 2″ have been able to boost their bottom lines with early ancillary profits, like DVD, video-on-demand and merchandising tie-ins.
For the year’s biggest misfires, ancillary will help in the long term, though theatrical success is usually the essential piece for establishing the aftermarket price point and creating a merchandising blitz.
“John Carter,” which reportedly cost Disney around $250 million to produce, made $282 million worldwide — not enough to move much Mars-themed merch, and with marketing factored in, a disappointment for the studio. But it was labeled by the media as one of the Mouse’s costliest films. How quickly we forget. Last year’s Disney red planet-set pic, “Mars Needs Moms,” cost $150 million and grossed just $38 million worldwide.
Though still a costly venture for Universal, the $209 million-budgeted “Battleship” made enough overseas ($238 million) to keep it from the list of all-time B.O. clunkers. It doesn’t even rank as this year’s worst. Warner Bros. suffered an equal doozie with “Wrath of the Titans,” which cost $150 million to produce (and reportedly the same to market, though still more than “Battleship”) and topped out at almost $305 million globally.
That said, the disappointment of “Carter,” “Battleship” and “Wrath” seems mild compared with the industry’s biggest bombs. For example, 2002′s “The Adventures of Pluto Nash” cost $100 million and returned just $7 million worldwide.
Several on-the-fence films this year have gone undetected, including Fox’s “Abraham Lincoln: Vampire Hunter,” and Par’s “The Dictator” — both of which have outgrossed their budget so far, though not by much when adding in marketing costs.
Only time will tell whether 2012′s iffy offerings will become profitable. In the meantime, some added perspective should help shrink the extremes.
Rachel Abrams and Marc Graser contributed to this report.