Friday, 14 September 2012

You Asked For It!

Arthur Brandoch Darwin Petersen asked... 

How is this the worst box office summer in 20 years? Was The Dark Knight Rises not enough to float the boat? I guess Avengers was not part of the summer?
I think you answered your own question. Because for every mega-hit like The Dark Knight Rises and The Avengers there was like 5-10 films, many of them big budget wannabe-blockbusters that either flopped outright, or did well, but not great.

This is because overall ticket buyers are at their lowest number since 1993.

Fewer people are going to the movies and the problem at the root of it all is Hollywood's case of juvenile dementia

You see the prevailing marketing wisdom since the 1980s dictates that all sales pitches must be made to young people. Young people are only just setting their preferences for products and services. Thus if you market to them while they're young, they will be your loyal customer forever.

In the movie biz this translates into youth-oriented product placement in the sort of films that are believed to attract young people.

That means big loud movies with lots of special effects that that they hope kids will see repeatedly and buy all the related merchandise.

The problem is that these films have huge costs, that require huge, near record setting, ticket sales just to break even. And if the movie doesn't click big with the youthful zeitgeist, you can forget about selling the related merchandise.

No kid wants a toy or a t-shirt from a flop.

The other problem is that kids these days don't view movies the way my generation did. They have the internet, games, and online social networks to fill their time, are more jaded to deliberately targeted marketing campaigns, and don't really appear to appreciate the communal "big screen experience" the way older members of the audience do.

To alleviate the risks inherent in spending hundreds of millions of dollars targeting the most fickle facet of the population the studios do two things:

1. Cut back on the number of films they release each year so that they mostly release wannabe "blockbusters."

2. Put those blockbusters on as many screens as they possibly can. The average "blockbuster" mega-wide release of the 1980s played on around 2,000 screens. Nowadays they're playing on up to 4,000-4,500 screens, and all points of media are fully saturated with advertising.
This pic has nothing to do with this post.

This creates more problems than it solves.

If the movie doesn't become a smash on its opening weekend, the theaters are stuck with a film people don't want to see, and have to scramble to find something to take its place.

Also, audiences who aren't in the mood for a big FX-heavy sci-fi fantasy flick have a hard time finding alternatives because all the screens and ads are all about the blockbusters. So they stay home and watch the more mature and more often more entertaining offerings being found on television.

And that's how you have the worst Summer at the box office in almost 20 years.

Any more questions?


  1. Blast Hardcheese14/9/12 3:53 pm

    Okay, now I've read up and can put some details to my vague blatherings on the last post. It was worse than I thought:

    Total North American film sales for 2012 summer: $4.3 Billion, a 3% drop since last year.

    Total Attendance (actual bums in seats): 530 million, which is 4% down from last year. It's also the worst attendance since they started independent recording in 1993.
    The hits this summer were Avengers, TDKR, Magic Mike, and Ted. My completely arbitrary definition of a 'hit' is something that makes back on the order of twice its production budget. Keep in mind, the listed production budget usually doesn't include prints and advertising.
    The Ice Age and Madagascar movies were solid (made about 50%-60% over their budgets).
    'Brave' did...not too bad ($185M budget vs. $233M BO). The new Spider Man didn't lose money($230M budget, $260M BO). As for the rest, er...

    MIB3: $225M budget, $179M BO
    Total Recall: $125M budget, $58M BO
    Battleship: $209M budget, $65M BO
    Rock of Ages: $79M budget, $39M BO
    AH: Vampire Hunter: $70M budget, $38 BO
    Bourne Legacy: $125M budget, $104M BO total
    Expendables 2: $100M budget, $76M BO
    Snow White and the Huntsman: $170M budget, $155M BO (ooh, so close!
    The Watch: $68M budget, $34M BO

    That's a lot of money going out the door and not coming back in. Kind of brutal when it's laid out like that, yes?

    'Ted' and 'Magic Mike' are good cases for what you can do when you don't let the budget get away from you. Ted had a $50M budget with $217M BO. MM is the poster child for budget to earnings ratio, with a $7M budget and $113M BO.

  2. Blast Hardcheese14/9/12 5:14 pm

    Okay, a few more figures and then I'll shut up. If we treat the movie studios like one big amorphous blob, then the total (public) production budget for all of the movies I mentioned above is $2.35 billion. Their total box office take is just over $3 billion, or a 28% return on investment. Not too shabby...

    But wait! That doesn't include prints and advertising costs, remember? I couldn't find P&A costs listed per-movie, but consider that the prints alone for a 4,000 screen release cost something like $10M. One figure for average P&A of a major studio release was ~$35M (in 2006). Let's assume each movie I listed cost ~$40M in P&A. Now the total budget becomes something like $3.03 billion, and the total return on investment is...diddly squat. Or even a little negative.

    Of course, the studios aren't one big amorphous blob, so some did better than others. But you see the overall problem. Also, this is strictly theater BO take, and doesn't include DVD sales, etc. However, DVD sales are declining as well...

  3. You're forgetting our economy. Movies aren't cheap you cannot go to a movie for the price of netflix.