We are living in bearish times. Equity markets remain in a funk. Deficits are handcuffing states and cities.
Hollywood has also caught the bear bug. Big movies, it seems, can seldom offer pleasant surprises. They either meet expectations or they disappoint.
It is the ultimate Wall Street revenge. Just as earnings news once caused stocks to swoon, films are being set up to fail.
This phenomenon is never more true than during the summer, which, statistically speaking, has arrived.
Box-office tracker A.C. Nielsen EDI has declared Friday the start of the season. The move extends the movie summer by two weeks, extra playtime that all but guarantees that last year’s summer mark of $3.7 billion in ticket sales will be eclipsed.
Why, then, are so few studio execs smiling?
For one thing, Hollywood is trotting out its usual array of wares that are hardly original. It’s a proven strategy, but numbing nonetheless. From top titles like “X2” and “Matrix: Reloaded” on down the line, virtually everything on movie screens this summer will feel familiar. You’ve either seen the previous movie installment, seen the underlying TV show, read the comic book or ridden the theme-park ride.
Another Pepto-Bismol factor is that this summer’s broader economic playing field has a few more gopher holes than last year’s. As detailed in Variety (April 28-May 3), studios, despite their solid results of late, are being held to unreasonable standards of profitability and efficiency by their corporate parents. The result: cutbacks in head count, production budgets, airline seats — whatever will salvage the bottom line.
Marketing departments have thus far escaped deep cuts; if anything, spending has continued apace thanks to burgeoning TV ad costs. Trouble is, expectations remain uncomfortably high. The congloms want bang for their buck.
Now that “Spidey” has scaled to $115 million heights, anything less could be construed as a disappointment.
One marketing exec shook his head at lunch recently and let loose with a whopper about “how much money Warner Bros. left on the table” on “Harry Potter 2,” which opened to a mere $88.4 million. Industryites similarly feasted on Sony/Revolution’s “XXX,” which turned a tidy profit after a $44.5 million bow. The culprit, by Revolution’s own admission: a slight overdose of hype.
In 2002, six pics from May through August opened to at least $50 million, a staggering sum in historical terms. Even if this summer can match that total, the studios will likely experience delayed gratification as profits are realized father downstream.
- Negative costs keep climbing.
The budget of “Terminator 2” was a scandal in 1991, hovering around $100 million. This summer, the $170 million “Terminator 3” leads a roster of at least eight pics costing more than the century mark. According to the Motion Picture Assn. of America, budgets reached $58.8 million in ’02, up 23% from the previous year. That takes a bite out of a big opening in a hurry.
One way producers and studios are combating the budget bulge is the shrewd use of CGI. Costs in that area have actually started dropping, and if you haven’t tied up too much of your budget in talent or a point-hogging director, you can actually escape the summer intact.
- The U.S. screen count has reached a plateau.
Throughout the 1990s, the number of screens nearly doubled as exhibitors bet big on the megaplex concept. Studios applauded because it gave their product a wider rollout and, thanks also to higher ticket prices, created gaudier opening numbers.
After a round of bankruptcies, theater circuits have calmed down. In 2002, the screen count returned almost to 1998 levels, dipping 4% to 35,280.
It is worth noting, however, that the number of megaplexes — ideal habitat for franchise pics — shot up another 10% in ’02.
In these rather daunting market conditions has arisen a new strategy: modest-budget counterprogramming. Rather than cede all the ticket sales to a single mega-title, budget-conscious and precisely targeted pics like “The Lizzie McGuire Movie,” “Down With Love” and “Alex & Emma” are going directly at “X2” and “Matrix 2” and “The Hulk,” respectively.
They are realistic enough to aim for the solid numbers turned in by “About a Boy” or “Shangai Noon,” two counterprogram attempts from recent summers. But at least there is a game plan other than that of the goliaths, whose more elemntal aims are to open on as many screens as possible and rake in the cash before audiences smell something.
Making money in the shadows of giants: It’s the only way to really find true satisfaction in the summer.