Why Studios Must End Their Mega-Budget Obsession

Summer Bombs 2013

BOX OFFICE EPIC FAIL: Costly misfires pile up in crowded season: 'After Earth,' 'White House Down,' 'Lone Ranger,' 'Pacific Rim,' 'R.I.P.D.'

While the movie industry is on track for a record summer box office, there’s blood on the streets of Hollywood.

The swing-for-fences strategy adopted by most of the majors can pay off big when it works. But judging from the hundreds of millions in red ink spilled by the studios between late May and this past weekend, it can also be a blueprint for disaster.

The overcrowded summer of 2013 will likely be remembered more for its costly misfires — Sony’s “After Earth” and “White House Down,” Disney’s “The Lone Ranger,” Warner Bros./Legendary’s “Pacific Rim” and Universal’s new release “R.I.P.D.” — than for its predictable hits, which include “Iron Man 3,” “Man of Steel” and “Despicable Me 2.”

Steven Spielberg and George Lucas look awfully prescient with the predictions they made last month during a panel discussion at the USC School of Cinematic Arts.

“There’s eventually going to be a big meltdown,” Spielberg forecast. “There’s going to be an implosion where three or four or maybe even a half-dozen of these mega-budgeted movies go crashing into the ground, and that’s going to change the paradigm again.”

SEE MORE: George Lucas & Steven Spielberg: Studios Will Implode; VOD Is the Future

That paradigm, the filmmaker explained, is that the studios prefer spending $250 million on a single movie and letting more quirky or personal films migrate to video-on-demand.

The tipping point of Hollywood’s latest blockbuster-obsession appears to have begun in the fall of 2011, after a string of pricey tentpoles, among them “Tower Heist,” “Immortals,” “Jack and Jill” and “Happy Feet Two,” flopped at the box office. This summer’s slate was put in motion before any of the studios’ could even consider a course correction, if indeed that is what they are thinking.

One studio executive pointed out that most of the movies this summer were greenlit 18 months to two years ago, and that any less profligate strategies won’t be evident until next summer at the earliest.

Today, studios routinely spend north of $400 million to produce, market and distribute their big-event films around the world. And they’re making more tentpoles each year. The 12 top-grossing films each year make up about 75% of domestic ticket sales, according to a recent analyst report from Cowen and Co. Although the international market, which now accounts for about 70% of worldwide box office revenue, is in a growth mode, the North American market has remained relatively flat over the past decade. The question: With big- budget event movies cannibalizing each other, will the overseas market grow fast enough to make up for the collateral damage?

“At some point, things have to change,” said entertainment attorney Fred Bernstein, who was president of Columbia Pictures from 1994 through 1997. “I don’t think the audience is necessarily as expansive as it needs to be to absorb all of the studios only making $200 million dollar special effects-laden extravaganzas.”

Even with growth regions like Asia and Latin America, and the seemingly voracious appetite for American movies in many parts of the world, the studios must figure out how to make movies more economically, and get a handle on escalating production and marketing costs, which continue to squeeze already thin profit margins.

Jean-Luc De Fanti, managing partner at Hemisphere Media Capital, which co-financed such big budget films as “World War Z,” “The Smurfs,” “Men in Black 3” and “The Adventures of Tintin,” said fiscal control is imperative.

“There is a global market for big movie content, but it has to be made at more reasonable costs,” maintained De Fanti. “I don’t think the international marketplace is immune to the issue of overcrowding, particularly when the releases are so close together.”

Glut on the Horizon

What’s more, overcrowding isn’t poised to get any better in the foreseeable future.

In 2015, between May and August, the studios will release just as many — if not more — high-profile sequels, reboots and tentpoles. It is expected to be one of the most pricey, loaded summers in decades, with the likes of Disney-Marvel’s “The Avengers” sequel, “Age of Ultron,” Fox’s “Independence Day 2,” Disney’s “Pirates of the Caribbean 5,” Sony’s “The Smurfs 3” and Paramount’s “Terminator.”

“This summer certainly showed that the summer alone cannot sustain this number of tentpoles,” explained Paramount vice chairman Rob Moore. “The one thing that everybody has to re-evaluate is looking at the calendar and discussing when you have the best shot at being successful during non-peak times.”

SEE ALSO: Comic-Con: Why Superhero Movies are Here to Stay

Historically, studios have turned to dates earlier in the spring to avoid overcrowding (a la the first “Hunger Games” and “Alice in Wonderland”), and some observers predict the same will happen in the next two years. But there’s little wiggle room, as some months always seem to be bad for tentpoles (think January/February, September/October).

One of the most startling revelations about this summer’s duds is how accurately they were predicted. Cowen and Co.’s May 3 report forecast that at least four big-budget action adventure movies would fail, and analyst Doug Creutz modeled five: “Lone Ranger,” “White House Down,” “World War Z,” “After Earth” and “R.I.P.D.” “World War Z” was the lone outlier—just by the skin of its teeth.

The summer’s congestion not only resulted in some epic failures, it also stunted several of the season’s more successful entries. Consider “The Hangover Part III,” whose $350 million worldwide gross was far less than its two predecessors’ respective takes of $587 million and $467.5 million. Even “Man of Steel” didn’t live up to the grand expectations of Warner Bros.’ former film chief, Jeff Robinov, who greenlit the movie and predicted that the Superman pic would be the most successful in the studio’s history.

One Flew Over

“World War Z” was the only big summer film so far to kickstart an original franchise, with a second installment already in the works and potential for a third.

Studios are showing no signs of letting up on their big franchise bets. Neither are their investors.

“For me, the business of tentpoles is about generating franchises,” De Fanti said. “The more tentpoles that are being made, the more risky the first installment of a potential franchise is going to be. That’s why I think everybody needs to be asking hard questions about what is a real tentpole and what is a faux tentpole.”

Studios in general must do a better job of weighing the commercial potential of their big bets vs. their cost, said De Fanti.

In Disney’s view, “The Lone Ranger” was the perfect “IP” — Hollywood’s overused term for intellectual property — to exploit. But some observers believe the studio grossly overestimated how today’s audiences would receive it, despite Johnny Depp’s role as Tonto.

Some analysts are predicting the pic, which cost more than $250 million to make, could rival the $200 million write-down Disney took last year on “John Carter.”

Gauging the level of audience interest in a particular subject matter — be it original or not — is something studios have always been eager to nail down early in the development process.

Piedmont Media Research has begun to work with studios testing a film’s concept and correlating that to its box office potential. For instance, as early as February, the newbie company predicted “R.I.P.D.” would be one of this summer’s biggest flops. The film, which opened with a dismal $12.7 million domestic, earned a composite score of just 137, according to Piedmont’s consumer engagement rating system; a film needs to score at least 250 to be successful at the box office, according to Piedmont prexy Josh Lynn.

“Instead of throwing money at a film or an actor and hoping for the best, there is a better, more analytic way to determine beforehand if a film is worth making, and at what specific dollar value,” Lynn said.

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  1. Matthew Chapman says:

    Special effects boosted superheroes are gods in a secular world. It’s a “miracle” they’ve lasted so long. The novelty of violent idiocy has worn off. Back to brilliance.

  2. Judith says:

    As a writer, I have said this for years, but people thought I was just being envious of not having a deal. Really, that was never it. I am very diverse in my movie taste. I like some blockbusters, but not the same thing over and over and year after year. Enough with the Sequels, Book Adaptations and Comic Book movies. It really is enough already. I mean movies, take a look. Movies, like The Conjuring, The Purge, Fruitvale Station, and Kevin Hart’s Let Me Explain had much, much lower budgets and are still going strong. The Audiences of today want balance. Some blockbusters, some romantic comedies, drama, thriller, horror, fantasy, indie films, etc. Execs, listen to the writers and their audience. We do get it and can get things back on track. And at $14.50 for a movie in NYC, they may want to listen. Remember what has happened with the music industry. Just saying.

  3. Steve says:

    I doubt things will ever change, because talent, agents, etc., will always want their cut, and will always want to make as much money as possible. The focus should be on the shareholders who take the risk, but that’ll never happen.

    If Hollywood really wanted to shake things up, it would accept lower revenues per film but make more films. Hollywood does not want to accept that, and mostly, stars/agents who get percentages of films always want big opening weekends (which drives up marketing costs as well).

    The only possible solution I see is to pay talent big fees upfront and then eliminate all profit participation. In this way, every big-budget bet will at least see the investors keep whatever comes in. So, instead of, say, paying Depp $25 million against a big percentage of the next Pirates, why not pay him $60 million? Increase the budgets, but let Disney decide what it spends on marketing, and let Disney be able to do what it wants with the film — give it to Disney Channel, ABC for free, etc., without worrying about sweetheart deals.

  4. It’s not all about flops or money but only the hollywood concensus, all theses movies are into the same moral and esthetic norms, even movie titles are in the norm. By the way, it’s nearly 2015 and i’m waiting for Jaws 19…

  5. Mike Branson says:

    The problem is not how a film performs at the box office. The problem is the that media is way too eager to label a movie a flop. This article is a perfect example of this, the fours movies mention, only one(R.I.P.D.) is a flop. WHD is getting a bad rap, because these throwback action movies are not blockbuster movies of late, WHD is performing at the B/O like similar movies. AE, WHD and PR are doing very good overseas.

    Back in May, Star Trek Into Darkness was also label a flop by the media after opening weekend, the media was talking crap saying it won’t do 200 million domestically. Well as of today it’s at 225 million domestic and 449 million worldwide.

    It unfortunate we have a lazy and ignorant media that too eager to dwell on the negative and can’t or won’t look at the positives.

  6. 1. Lumping Lone Ranger, White House Down, RIPD, After Earth and Pacific Rim in the paragraph and labeling them all “flops” is pretty ridiculous. In terms of cost vs. return at the BO, After Earth is a relative hit compared to RIPD. Both cost $130 million. RIPD has taken in $20 million worldwide. After Eart is just over $235 million worldwide. Granted, AE has been out since June. But since most of the BO take comes in the first few weeks of release, RIPD isn’t likely to come close to cracking $100 million globally. If AE stopped making money this second, it’s still three times better on return than RIPD. AE certainly isn’t making money for Sony, but if we are going to call it a flop (which it seems to be), then an entirely new term is needed for the performance of a film like RIPD. Mega disaster? Mega flop?

    At the end of the day, at least Pacific Rim and AE will have made more in total BO sales than their production budget cost. RIPD, Lone Ranger and White House Down all have budget costs that exceeded their BO take. Breaking even or coming close to break-even is one thing, but a massive loss is quite another.

    2. Tracing the roots of this ongoing “flop” problem from the films above to late 2011’s Jack & Jill, Tower Heist, Immortals & Happy Feet 2 is just shoddy reporting. As others have mentioned in comments, Jack & Jill, Tower Heist and Immortals all cost roughly $80 million to make, far from a tent-pole budget (which none of these were). Immortals earned over $225 million globally, or three times the estimated $75 million budget. Tower Heist & Jack and Jill both cost more and didn’t take in even double their budget at the BO. And since Immortals ended up selling fairly well on DVD & Blu-Ray, it turned a decent profit and made money. Comparing Immortals to the other two movies and (once again) lumping them all as bombs is just not accurate. Happy Feet 2 was the only one mentioned with a large $135 million budget and it’s BO take of $150 million clearly makes it the biggest bomb in this group by a wide margin. If those other films are flops, Happy Feet 2 is (like RIPD) in a different class of bombs altogether.

    3. And if you are going to bother wasting all this ink talking about when this “tipping point” of major tent pole flops began, how the article was able to get published without mentioning the truly notable flops that came just a few months later (John Carter and Battleship)? Both of those films cost over $200 million. Battleship cost $50 million less than John Carter’s $250 million budget and earned just over $300 million compared to John Carter’s $285 or so BO take. Since Immortals outperformed both of these movies and actually made money, why is mentioned at the top of an article about flops and labeled as notable example of a flop when John Carter is only mentioned in passing toward the end and Battleship isn’t mentioned at all. Really?

    3. The marketing research & analyst firms were portrayed as incredible sages with prescient predictions. Please. Can we not pat a firm on the back for making predictions that a competent studio executive should and could have called out to prevent a green light in the first place? A Will Smith movie that doesn’t showcase Will Smith in a movie by a director known more for flops based on a story that he and Will Smith just thought up are all reasons that scream “don’t spend $130 million” on this! There was little chance this would be anything BUT a flop. Treating it like a tent pole and releasing it at the start of a crowded summer season only ensured it would be an even bigger failure. How did this seem like smart investment to anyone?

    RIPD is based on an obscure Dark Horse comic many geeks haven’t even heard of, yet they cast Ryan Reynolds, the star of a comic flop they have ALL heard of in Green Lantern. Great casting choice. The script came from writers with no notable track record. The premise was so similar to Men in Black or Ghostbusters, they would have been better off making it a film that fits into one of those existing franchises. They could have been agents from a division of MIB that deals with ghosts. Whatever.

    With Lone Ranger, what was Disney thinking? Just because it was the same team behind Pirates didn’t mean the success would be duplicated in Lone Ranger. These guys made a movie about a character that was their childhood hero. It was a movie they wanted to see as a kid, not what kids (or anyone else) wanted to see in 2013. Spending $75 million on a gritty, dark and violent Lone Ranger with Depp playing the lead would have been a much more interesting concept, not to mention less of a risk.

    On paper, Disney thought the ingredients that made Pirates work would also make Lone Ranger a hit. It’s as logical as thinking the same ingredients of a great chocolate cake can also make for a great apple pie. Not only are way too many studios sold on this logic, they then throw obscene amounts of money at it. The mere fact that movies like Jack & Jill or Battleship even got a pitch meeting seems ridiculous. The fact they got made, however, raises questions about the mental health of the people who singed off on such decisions.

    Studio executives need to get out of the creative process. Yes, it’s showbusiness, but its clear the less important the “show” becomes, the greater the “business” suffers. Employing formulas and business models to dictate what gets made needs is totally driven by a bottom line corporate profit motive. Each movie is its own story. Focus on one formulas to tell a good story and you will have a hit. Use a formula that worked on one and developing it into a model to churn out franchise tentpoles is a concept that is the king of all flops. It’s really not shocking that the flop of a model produces so many flop films. Frankly, I am more shocked that there haven’t been more.

  7. Mike Branson says:

    Studios now are owned by lagre cooperations that’s worth tens of billions, so what if they lose a few million on a couple of movies a year.

  8. I am truly happy this issue has made the trades, but its not a new concern at all. This financial reality of the industry is especially true when someone well below the line like myself has been noticing and writing about this exact issue for a while at great length. Most recently in a Word Press post updated a week ago entitled ‘There’s a Bubble Growing in Hollywood.’ I can only hope the eventual result is that there is a greater variety in stories and films being released. As I’ve said to many critics of the business, Hollywood isn’t creatively bankrupt, its just become incredibly risk adverse to creativity. And that’s a shame when there are so many wonderful stories and films that deserve to get made — and for much less than $150mil.

  9. FilmNut says:

    Here’s a thought. Write a great story and throw out the playbook on the cookie-cutter model. Special effects are an important aspect, but if the story is good people are more likely to be forgiving on that front, and more willing to go again and again.

  10. MrFurious says:

    There is no reason why a Lone Ranger movie needed to cost $250 million to make. None.

    One thing Hollywood needs to do is stop paying actors $20 million. It’s an insult to all the people that actually have to work for a living, plus no one really gives a crap who is starring in a movie anymore. For every hit with stars like Will Smith and Johnny Depp and Arnold Schwarzenegger and Angelina Jolie there’s a huge flop. The days of the Hollywood Superstar are over. Thanks to all the invasive media, we get to actually know these douchebag celebrities and hate them. They’re no longer icons to us. They’re whiny, attention starved brats that make more money in a day than most of us will make in our entire lives. I’ve worked my ass off since I was 15 years old and yet I have less money than that fat, moronic, hillbilly kid, Honey Boo Boo. It makes me sick. The only time that we care about celebrities is when they are going off the rails. We love it when people like Lindsay Lohan and Charlie Sheen end up in the gutter. It feels like karmic justice.

    • Jake says:

      You have to look at actor’s salaries relatively. Yes, if you just look at the amount, $20 million to star in a movie is ridiculous. But when your realize that movie has the potential to earn billions of dollars, $20 million isn’t all that much, and is a more than fair salary. If you slash actor’s salaries, then that money is just going to go to someone at the studio, as I highly doubt they would spread the wealth around to anyone other than themselves.

      Of course, they could always switch to a profit percentage deal where an actor gets bonuses based on how well a movie performs, but that still wouldn’t satisfy people like you who would only look at the total salary and would still complain actors are paid too much. Hollywood doesn’t have the best reputation for accurately reporting profits either due to “Hollywood Accounting.” So actors might not want to even accept a profit percentage deal because they don’t trust the studios.

      • Joe Smart says:

        Hollywood talent doesn’t get net profit percentages like you are talking about anymore because of incidents like Paramount claiming that Forest Gump and Coming to America didn’t make money and Fox claiming that Alien and Aliens didn’t make a profit. Talent gets a percentage of the gross now, usually after the grosses reach a certain level. The studios actually brag about grosses and they are harder to manipulate so people are much more likely to get their money under the current system. It also allows for movies like The Purge and Insidious to get made for virtually nothing because the actors and directors are all working for the union minimum plus a percentage of the gross if the grosses hit an agreed level. It’s a better system but can result in stars making bucketloads of cash if a movie becomes huge (most of Robert Downey Jr’s 50 million dollar payday for The Avengers was the result of gross profit participation–it would have been cheaper to pay him 25 million up front and Keneau Reeves reportedly made 150 million dollars from the Matrix trilogy for the same reason). If a studio thinks a movie is going to be a hit and has a big star a lot of times they would rather pay 20 or 25 million dollars to the star upfront and avoid gross profit participation completely. But if the movie flops it can look pretty bad.

  11. Quigley says:

    Money is, of course, a huge issue. Few films, if any, warrant the kind of dough being spent to make them. But the real issue is the films themselves. Do they look good? Are they good? Is it something I want to see? Do I want to spend the price of a ticket for this? If directors and writers could remember the time when movies were fun to watch and didn’t try to “say anything,” we’d have better summer movies. The summer movie season is supposed to be fun, and fewer and fewer filmmakers seem to get that. If you want to say something, save it for the end of the year. There’s a time to be serious and a time to be fun.

  12. Anthony Olson says:

    The problem wasn’t that the movies that tanked were mega-budget, it was that they were released too closely together or were just plain bad. This Is the End and Pacific Rim, in my opinion, would have done much better in a less crowded time of year. Whoever decided to release White House down a few months after Olympus Has Fallen is a f*cking idiot. The Lone Ranger was a terrible idea (another great Johnny Depp passion project after the disappointing Dark Shadows) that suffered from being put through the Bruckheimer / Disney big budget schlock machine. When I see the Disney logo above a live-action title I can count on it being a fatuous piece of crap. And finally, the dumbest green light of the season award goes to the moron who thought that letting M. Night Shyamalan direct a Jaden Smith vehicle that used Will Smith as an accessory was a good idea. M. Night Shyamalan is the definition of box office poison and I think it is safe to say the world is sick of the ego- and nepotism of the entire Smith clan. Big budget blockbusters are here to stay (who doesn’t want to see Superman vs. Batman or the Avengers 2?) they just need some smarter people in Hollywood deciding which ones to make and when to release them.

  13. Mike Branson says:

    Every major business operation is globally not domestically. These high budget films are made for an international audience, not a domestic audience. Overseas is where the studios make most of their profit.

    In the USA it is illegal for a studio to own a theater, but overseas it’s not. Theaters in most countries are owned or part owned by the studios. So the studios are taking nearly 100% of the gross overseas. This is how they can afford large budget movies.
    Plus the tax incentive that given out by some countries and states helps cut the budget.

    Don’t be fooled, these big budgets films is not hurting Hollywood.

    • Jester says:

      Oh yeah? Well YOURS BRAINS IS NOT KNOWING what IS talking ABOT. =0

      Studios are essentially floating on credit. A film needs to make back at least three times it’s production budget to begin to BREAK EVEN! Let alone make a profit. And if you look at worldwide grosses for the above films, they aren’t doing that! You have to factor in marketing and advertising costs, and paying back investors with interest, etc.

      Most movies, even ones with more modest budgets lose money from the actual screening run. That’s a fact. Studios are staying afloat by relying on residual and ancillary income (toys, book deals, graphic novels, TV spin-off rights, DVD’s, etc.) They figure if they lose $150 on film they will, given enough time, recover their losses.

      It’s a bubble, Einstein. And this is a grave Hollywood has dug for itself. The reason these films play well overseas is because they are homogenized, culturally/ethnically sterile pieces of kitsch. Characters and plots are simplified into a black and white caricature of real life. “We’re the good guys, and they’re the bad guys! Use brute force and explosions to stop them!”

      There’s a lot of honest cinema concerned with the human condition coming out of Europe and elsewhere abroad. (These aren’t “quirky”; Americans have just forgotten what art looks like, and how it can hold poignancy for their lives.)

      Hollywood will implode. Europe is the future of film (and no 3D glasses required!)

  14. Good comments here. In addition to the point about Pacific Rim not yet premiering in Japan, it should be noted that films with portions of the story set in other countries or otherwise not so Ameri-centric (Pac Rim, WWZ, After Earth) will tend to be easier to market and have more appeal outside the U.S. And of course, action and sci-fi travels better than comedies.

    A lot of these flops seems to derive from either Hollywood mistinterpret data, shameless pandering or seeing trends where none exist. Are we g

    • chrisallen3000 says:

      Sorry. Are we going to see a lot more horror films with moderately recognizable stars now that The Conjuring is a hit? Probably. When I saw the trailer for R.I.P.D., I wasn’t so bothered by its similarity to Men In Black as the idea that based on all evidence to the contrary, a studio thought Ryan Reynolds (Matthew Perry with abs) and Jeff Bridges had the ability to sell summer blockbuster tix. It’s not about their talent; it’s just above their weight class.

  15. Donella says:

    Sorry to screw up the flop narrative, but Jaden Smith’s sophomore effort as lead actor, After Earth, is at $235 million worldwide and counting on a $130 million budget. It opened #1 in China and still sits on top of the second-largest movie market for the second week.

    This accomplishment even in the face of early, often, and relentless religious bigotry, Scientology smears, and nepotism accusations.

    Revenue for After Earth has surpassed The Day the Earth Stood Still and is approaching The Pursuit of Happyness $303 million worldwide. However, I believe After Earth will top out closer to the take for Oblivion $285 million worldwide.

    • Are you Jaden’s publicist? $235 million world wide on a $130 million production budget and, conservatively, an additional $150 million advertising spend means this film is a HUGE flop. Not close to breaking even. Not a franchise film with the ability to make money back from huge DVD or rental revenue or licensing AE t-shirts and so forth.

      And China? Please. Only 10 films ever showing at one time in China. After Earth was the only major US release since MOS back in June. Gi Joe Retaliation hit three times AE in China on opening weekend. Many major films never get shown in China, at all. All that you mention isn’t an accomplishment at all. If anything, the accusations of “relentless religious bigotry” and “Scientology smears” should have cause it to earn more money because such controversy makes people want to know all the fuss is about. That didn’t happen, I suspect, because most people didn’t know about them. Yes, everyone knew this was Will Smith’s kid. Most didn’t make accusations of nepotism because it’s such obvious nepotism that making an accusation isn’t needed. It its nepotism, plain and simple. This is America and no one cared. We love Will Smith. If his kid can entertain us, great…we welcome nepotism in that case.

      Please never compare Jaden’s BO “success” to his Father again. Pursuity of Hapyness only cost $55 million. It was not a tent pole movie and earned more than many that are. It also garnered critical acclaim and Oscar attention. Suggesting that AE is some how on par with it because it might come close to it’s global BO take is offensive.

      Thanks for the ridiculous comment. It made me laugh.

      • Um, way to avoid everything I mentioned. Don’t accuse me of spreading false information when you spread PR nonsense that doesn’t pass the smell test.

      • Donella says:

        Are you Jaden’s accountant?

        Are you Sony’s accountant?

        How have you arrived at the figure of $150 million for advertising?

        Is this a number you created from blog post assumptions or did Sony report $150 million advertising to you personally as a fact for public release?

        Because if not, then you are spreading false information and should likely not do that.

    • The Chad says:

      It’s a double sided coin. Because the foreign market tends to rake in more money than the domestic, they tend to dictate what gets made and our tastes don’t always jibe. The other side is that domestic film makers tend to focus on domestic numbers to dictate success. Even if a movie makes its money back worldwide, if it did bad domestically (Like After Earth) it’s still considered a flop.

    • Max says:

      Of that $235 million worldwide for After Earth, the bulk of it stays with the theaters. Plus, the $130 million budget does not include the $80 million or more that was spent on advertising. So it really cost closer to $210 million, if not more. It’s not a Lone Ranger-sized flop but it’s still a flop.

      • Donella says:

        I’m familiar with the $130 million production budget, that number is publicly available.

        But this individual blog post is the first report of $80 million spent on advertising that I’ve seen. Elsewhere, in another blog post someone else has just speculated $150 million in advertising. These numbers are creations which is likely why they diverge so widely.

        Definitely, you should cease reporting the advertising budget since you don’t know for a fact what the advertising cost for After Earth is.

  16. Jordan says:

    The lesson Hollywood needs to learn here isn’t to make cheaper movies. It is to make GOOD movies. This, I would think, is obvious.

  17. Jordan says:

    This is the same thing going on with game studios too. When EA says that Dead Space 3 needs to sell 5 million copies to be profitable, somewhere, the spending is out of control. Everyone sees one or two examples of a movie or game that was a hit, and they decide that this is what every other IP needs to be. And while there are some big tentpoles I want to see like Pacific Rim (Giant Robots fighting Giant Monsters? I’m in!), there’s a lot that I have no interest in.

    • The Chad says:

      You’ve pretty much hit the nail on the head. It’s the lazy direction marketing has come. It’s more about money than quality. The 1% do the hard work of coming up with ideas, and the other 99% jump on it like ants to a picnic when it’s successful. The problem is that it’s just as much originality that draws people to a movie, not just the premise. We live in a society where most people want to bank off of other’s success.

  18. Typodrive says:

    There are two positives to this whole thing, Maybe the morons in charge of producing these stupid movies will either wake up or be replaced, and maybe this means that the targeted audiences are finally maturing away from this mindless crap.
    The sad reality is that, overall, comic book stories, sequels and remakes still make pretty good money at the box office.
    My wife and I used to go to the theaters twice a week. In the past few years we might go once a month.

  19. Yes, and the framework used today to better determine beforehand if a film is worth making is called ‘Lean Filmmaking’. It is the inevitable future :)

  20. Steve says:

    Typical narrow-mindedness as no exec recognizes the obvious that the flops all had story problems. 25 tentpoles a year could make money if they had engaging characters, fresh voices, and no plot holes or stupidity,

  21. Barry Ratcliffe says:

    Actually that is not accurate either. It is the studios and the unions running the theaters out of business. Some of the films pay a small percentage the first week, sometimes 0 to the theaters, that is why you have the stupidity of $10 popcorn. And the theaters are driving us away with ridiculous prices and studios are running the small theaters out of business by forcing them to go digital at a cost of $80,000 per theater. And small films have not chance because of the fee of $800 per theater to simply run the movie. Between the unions and the crooks at the box office, good films are rarely made or seen!

    • What unions are involved, in any way, with what happens a the major theater chains?? The theaters don’t have a unionized workforce.

    • Jon says:

      Barry I would dearly like to know the true facts here.Are we really saying the theaters take zero of the box office after one week? And of course a good cut of the first week might be a lot of money. Is there any source which would tell us the true facts, I have seen several widely varying accounts of this butsurely the more powerful chains can cut a better deal than that? You keep hearing how large chains are refusing to run such and such a film to get better terms so how can their baragaining position be as bad as you are saying?

  22. Zach says:

    A lot of you talking about making their budget back on some of these flops, are you factoring in that the theaters take half of what is grossed? In other words, $100M film makes $200M at box office…the theaters take half therefore the studio barely broke even…just on the budget to MAKE the film. Not factoring in ad/marketing.

  23. Jon says:

    Everton. I totally agree with you re ‘Pacific Rim’. The money is clearly on the screen there and there is still China and Japan to go. In my view it will work better in those markets than ‘Man of Steel’, which still awaits Japan but superhero movies haven’t been doing so well there.

  24. Jon says:

    There are a few inaccuracies in the article though what it says is pretty interesting. One I would flag up is ‘Man of Steel’ where if anything it understates the problem. . According to Forbes (and I believe them) it needed to take $800m to make any profit at all. Warners indeed, as the article says, expected a billion and it is still languishing around $630m world-wide, a vast fortune for some movies but not when they cost upwards of $225m to make, even before marketing. It will go up a little but probably not enough to get near the 1980 ‘Superman 2’ (which cost far less) and it will never in a million years catch up with the original 1978 Christopher Reeve ‘Superman’. Check out the adjusted all-time chart on Mojo if you don’t believe me. ‘Man of Steel’ was originally 200 but now seems to have dropped off altogether.

    .

    • Yes, but MOS also makes tons of money via licensing deals, pre-sales, rentals, disk sales, comic book sales, video games. and so on. Talking about movies making back their money back and limiting it the BO take ignores the extremely major point that a film like MOS will make profits for WB that dwarf profits even if it hit $1 billion at the BO.

  25. jedi77 says:

    Let’s get our facts straight. At least 2 of the movies mentioned as “pricey tentpoles” from 2011 were 75 million$ films which made between 78 and 83 million$ in the US alone. How can “Now You See Me” from this summer be a sleeper hit at a cost of 75 million and a US boxcoffice revenue of 114 million if these other films are such massive failures?
    Immortals made its money back worldwide. Tower Heist not so much. But neither of these films were tentpoles, just like Now You Se Me was not a tentpole picture.

  26. Joe Smart is right. This article is very myopic and misses the point entirely. Leaving aside this summer’s shameful trade glee in joking for films to fail; the fact remains that there are more than enough hits here to make the failures a pain, not a death knell. Even the Hangover 3, which yes made less than the others (and who thought it wouldn’t?) made a tidy box office profit. The other films mentioned have international grosses still to come. Once again Pacific Rim has earned $110m and has yet to open in Japan & China, logically presumed to be the film’s biggest markets, by a distance. It is by no means outlandish to suggest that this film could $300m international with ease, and even $400m IF the Chinese and Japanese really take to it.

    The lesson here is not that tent-poles will be seen as the wrong way forward (and I argue that the small films made instead idea is moot; these films do get made and people will watch what they like. The After Earth situation is also spurious, as that film did not suffer from schedule conflicts, it suffered from a strong dislike for Shyamalan, from the media & public more than any other problems. (Also evidenced by the Scientology smolescreen.)

    • David says:

      And that’s funny, because Shyamalan’s name wasn’t a part of the promotions, or any of the posters and trailers of the movie.

  27. Ariadne says:

    Studios do not need money to make a great film, they need a great writer, a great cast, a great director and great sound. Cases in point: Womb, Never Let Me Go, Perfume, and a favourite super low budget comedy, easily the funniest film I’ve seen in years: For a Good Time, Call (and yes, this one was made on a budget of 1.3 million). Hollywood must bid farewell to over-priced low-skilled actors and actresses and slash their bloated parasitic bureaucracy.

  28. Frank says:

    Pacific rim was number one this week internationally with Asian countries still left for it to premiere in, so why is it on the same list as Lone Ranger and RIPD? Oh right because variety has been OBSESSED with the narrative that it was a flop even before any marketing money was spent.

  29. People have changing what they want to see – too many films are laced with so much violence, weapons, killing, fast, flashy, noisy – it’s all too much for the human psyche to take with these endless types of film – Hollywood needs to include uplifting films, after years of this trendy it has come to an end. That’s why I don’t waste my time or money with films that take me down, mentally and emotionally… and others are feeling that way too.

    • jedi77 says:

      Yes, that’s why Iron man 3 made 1.2 billion, right?
      Nothing has changed, we’re just tired of watching bad films, violent or not.

  30. Mike Branson says:

    These budgets aren’t really that high when you take in the account the tax incentives.
    White House Down was filmed in Montreal with tax incentives from federal and local government equaling a 66 million dollar payback to Sony Pictures. The actual budget is 84 million, not the reported 150 million. If I can find this information, why the author couldn’t?
    Please in the future do some research before writing an article.

    • Ismael says:

      There is something wrong with your numbers. Can you give up your source(s)? A 66 million incentive on a 84 mil production budget is a huge escalation from the high end incentive packages.

  31. The months you mentioned as being big problems with tentpoles can be profitable for sensibly-budgeted pics. (And possibly pay off big for a sequel.)

    January: Probably the only big month where tentpoles can be a very hard sell, especially with Christmas holdovers and winter weather most likely to hamper box office numbers.

    February: Valentine’s Day/President’s Day weekend can pay off big for counter-programming releases like “Shutter Island”, “Hannibal”, 2009’s “Friday the 13th” remake and “Safe House.”

    September: Sony Pictures sees a money-making opportunity with releasing their animated films in mid- to late-September now after the first “Cloudy with a Chance of Meatballs” and “Hotel Transylvania” made over $240M worldwide apiece.

    October: Audiences want something other than scary movies and Oscar contenders during that time. “Red” was a sleeper hit with $199M. “Puss In Boots” did extremely well when it came out late October 2011, with $554M worldwide. And even though it wasn’t a $100M tentpole, “Taken 2” made an impressive $376M last October. To be fair, the latter two were either spinoffs or follow-ups to previous films, but my point stands.

  32. Craig Weisz says:

    How about spending more money on the scripts to begin with. A great story need not require quite so ridiculously expensive a production.

  33. cadavra says:

    SPEND LESS! Why is this such a difficult concept to comprehend?

  34. Mike Branson says:

    Who cares how much a studio spends on a movie, it’s not our money. If you don’t like big budget movies than don’t go see them.
    The media is too quick to label a movie a flop after the first weekend. All of these films are doing very good overseas.
    But we got a lazy and ignorant media who only want to focus on the negative.

  35. Richard says:

    So, once again, Hollywood is dying! WRONG. Once again, as in every Summer season, the poorly written, blatent knock-off or same type of film was just released have failed. And yes, the same was written about Hollywood then.

    The author needs to do his research. Spielberg and Lucas are NOT visionary. They were heads of billion dollar companies and got reports predicting hits and misses for Summer 2015 in 2014.

    BTW…
    All the negative box office predictions for GI Joe and WWZ were based on script issues. Hasbro agreed to reshoots on GI and Paramount executives bit the bullet for major reshoots on WWZ.

    Disney had given the LR director final cut. They already knew well before release it film would suffer worldwide because of its story.

    So… Hollywood is not dying! Once again, the had hits and misses LIKE THEY ALWAYS DO. Unfortunately, the author of this article forgot to do his research.

  36. Bill Lundy says:

    To me, the scariest part of this article comes at the very end, when they talk about using market research to determine whether or not to even make a film. Where does that leave us as artists or technicians if our ideas are being squashed before we even have a chance to create them? Would we have a “King Kong,” a “Star Wars”, or a “Lawrence of Arabia” if this approach had been taken back in the day? The studios need to rein in their costs and allow filmmakers a chance to create, and yes, be allowed to fail if necessary. Even though “Pacific Rim” (which I thoroughly enjoyed) has been deemed a flop, I applaud WB and Legendary for allowing Del Toro the chance to do it – and yes, it would’ve been nice if he could’ve done it for $100 million less, and I bet somehow it could have been.

    • Marco Johnson says:

      Bill Lundy-

      If Pacific Rim could have been done for $100 million less, don’t you think it would have been? Your assumption is that the studios are either lazy or dumb. Consumer research makes perfect sense. If you can determine beforehand that no one has any interest in John Carter, you won’t make it, let alone for $250 million.

      Using a tool like that is actually perfect for artists- if the money men are ok with the concept for a film, and at a given budget level, based upon smarter predictive modeling system, the artist has the ultimate ok to write whatever the hell they want within given parameters of quality (don’t write a shitty script), because the investors already know that the concept is something worth making, and likely to make X dollars. It’s a business. There is art involved, but if you want to spend $100 million on a blue screen for 4 hours, put your own money into it.

  37. Greg says:

    Please update your teminology, $200MM is no longer a tentpole movie – it’s just “a movie”. A tentpole movie, today, would cost about $400MM. A circus tent only has 2 tentpoles, so let’s not overuse the word.

  38. Vajayjay says:

    This from a trade rag that relentlessly bashed for blood the Lone Ranger before opening day was finished. A western is a tough sell and Johnny Depp has oversold himself as Jack Sparrow. To lump Lone Ranger, a good film, with several big budget syfy-type movies is bonafide ignorance. Why Bruckheimer didn’t cast a hot female(s) character in the mix is shameful – unsure what demographic they was shootin’ for. Lone Ranger is well done I saw it 2x’s.

  39. harry georgatos says:

    At the end of the day with all these box-office failures this summer and last summer the most important aspect to a film is the script. The scripts to all these duds panders to not so smart teenagers. These tentpole pictures have to work from every demographics. It has to appeal from teens to adults. Scripts are dumbed down to appeal to only teens and that’s a big mistake. Instead of concentrating on huge cartoon action set-pieces every ten minutes in the plot it might be good to develop interesting characters and story leading into eye-popping action. Scripts nowadays seem like they come out of computers instead of the imagination

    THE LONE RANGER could have been made on a $80million budget similar to Martin Campbell’s superior ZORRO movies and made a nice profit for the studio. Franchise pictures can be made on modest budgets and score big at the world wide market. Unfortunately the problem stems from the first building block which is the script. The scripts are just not good enough! The ideas and concepts are out there but have poor development with not so promising writers been paid too much money and then writing crap!

    • With respect to Johnny Depp I found his costume and makeup ridiculous, it was a turn off, his Indian character was more like a buffoon which is disappointing for Tonto.
      Don’t forget these mega movies will do very well on DVD. There were too many Superhero’s to see, not enough space to anticipate the next one.

  40. Spike says:

    Author of the article: you’re right on! Glad you’ve said what you’ve said. I agree wholeheartedly. Their model has to change.

  41. mj says:

    i’ve given up on summer pictures no matter who is in them. they are loud, annoying and unintelligible. they are typically full of brats texting and yammering. and typically they are overpriced and just plain bad. If I want to be treated like a herd animal I’ll fly.

    They need to get a clue in the studios. They are alienating people faster than they can raise the price of 3-D futures. One of these days they will find themselves out of business if they don’t start looking to reach people older than 10.

  42. Kenmandu says:

    World War Z “just got by by the skin of it’s teeth”–so where is the logic in making episodes 2 & 3 of the same already been exposed and now totally predictable concept? The main problem is that Hollywood is now all about accountants and Wall Street suits and their bottom-line thinking.

  43. Is It Good For The Tribe says:

    Crap sells (Fast & Furious)…but only so much (After Earth, RIPD/Men in White, Lone Ranger, Pacific “Horrid Story & Dialogue & Writing” Rim)

    IRON MAN 3
    MAN OF STEEL
    DESPICABLE ME 2
    STAR TREK 2

  44. Joe Smart says:

    I think this article misrepresents what Spielberg and Lucas were saying–which wasn’t that studios need to be budget conscious because, obviously, neither of those two guys are in a position to say that with a straight face. They were saying audiences should expect to pay more and more to offset the costs of those pricey pics–which is not going to happen. Their comments are only prescient if you take a portion of them out of context like this writer did.

    • jedi77 says:

      George Lucas has always been, and is famous for being ,very budgetconscious.
      So he actually could say that with a straight face.

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