Hollywood Clings to Sequels Despite Diminishing Returns

Teenage Mutant Ninja Turtles: Out of
Courtesy of Paramount

As the dismal performance of “Teenage Mutant Ninja Turtles: Out of the Shadows” reminds us, movie sequels can be a dicey proposition. But there are about 30 notable franchise pictures slated for this year, of which a little more than a third had been released through May. Thirty-five percent of Q1 box office revenue came from sequels, but the number likely will rise later in the year, when most blockbusters come out.

Hollywood’s reliance on franchises has increased dramatically in the last 15 years. But box office data highlights the risk associated with pursuing endless sequels: A majority of franchises head downhill after the first movie.

Using data from Box Office Mojo, I categorized the top 100 films from each of the last 15 years, according to whether or not they were sequels (defined as movies in a franchise that aren’t the original, includingtraditional sequels, reboots, and remakes). The percentage of revenue from these movies has risen sharply, from less than 10% in 2000 to almost 50% in 2015. The number bounces around from year to year, but it’s clear that the trend is upward.

The big question is how sequels perform relative to the originals in the franchise. When we analyze box office receipts (adjusted for inflation) for the last 15 years for the 50 franchises that include three or more films, we find that almost half had steady downward grosses from the first through the last, while another 10% went mostly downward, with one or two exceptions.

Only three franchises saw steadily rising revenue from each film to the next (“Toy Story,” “The Lord of the Rings,” and “Captain America”). Another 10% rose from the first film to the second, then fell steadily. Fifteen saw uneven performance across the series, including big names such as “Star Wars” and “The Fast and the Furious.”

The analysis gets more interesting if you separate the top 50 franchises over the past 15 years into two tiers. All three of the steadily growing franchises made the top 25, and just 32% of those fell steadily after the first film. But among franchises 26-50, more than half fell with each successive film, and almost two thirds fell either throughout the run or after the second film. In other words, properties that start with smaller hits tend to fall off more quickly, while the bigger hits hold up better through their sequels.

Despite the evidence, the studios continue to bet on the franchises that deliver these diminishing returns, investing on the basis of lower risk. In the meantime, of course, moviegoers are subjected to more of the same, while increasing amounts of original content never see the light of day.

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  1. Craig says:

    In your initial graph you show the revenue from sequels. Have you factored in the percentage of top grossing films of the year are sequels? Perhaps the revenue is more because sequels are the ONLY big movies being release. Audiences will still pay to see movies they are not interested in and do not enjoy if given no other options.

  2. The this is, i think, not in dynamics of falling or rising of box office, but in absolute margin values. If they get 100 mil of clean revenue on first installment, 80 on the second and 60 on the third – it’s still profit.

  3. Damon says:

    To me it really depends on the motives of the film company. If they produce movies just for a money grab to try to profit from the 1st movie success then its almost always going to be worse and the audience will notice. Now if they give it time for a good script and director for that script then it has a chance to be just as good or better than the 1st film.

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