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October 19, 2005
The Niche Is Back- Part II
So, I was niche bitching…
Well, not really bitching about the niche-ing. I deeply believe that the niche is the future. The more choices, the more decisions, the more niches. The problem is that the industry still thinks in the blockbuster mentality, which is having a direct effect on how they approach the niche future.
And before I continue, don't get the impression that that I am angry, as so many are, at the industry for developing the blockbuster mentality. Firstly, I believe that there have always been a majority of crap movies. "The good old days" always have been and always will be "the good old days," generation after generation.
Secondly, the amount of money flowing through the industry is at an all-time high. And this is a business. Eleven years ago - and I am using 11 instead of 10 because 1994 was the peak of the home video era - Forrest Gump was the highest grossing film domestically, with $330 million and another $350 worldwide. Home Entertainment and other ancillaries may have generated another $150 million, returning a total of about $475 million to the studio. These days, the top movie of each year would be expected to gross at least $380 million domestic, another $500 million international, at least $300 million gross in worldwide Home Entertainment and another $100 million in other ancillaries, returning more than $750 million to the studio. Even using a 40% increase in ticket prices over that 11 years as a base, that is still a 42% increase in revenue for a blockbuster in that period.
A movie that dumps $750 million into a studio can not only look great, but covers a multitude of sins.
I hated The Day After Tomorrow, but Fox netted around $500 million on that film and turned a profit of over $250 million.
That rancid smash success occurred because Fox was capable of creating a wave - pun intended - that drove people into movie theaters to see the film. It was an event. It was an eyeful that people felt they had not before seen.
And here is where The Niche World changes everything… because familiarity breeds both core-group interest and contempt.
To wit, if Cabin Fever's $21 million gross is what makes your business feel good about itself, Ain't It Cool News is very important for you. If you need The Exorcism of Emily Rose's $75 million is what you seek, you need to target a bigger niche. And if anything less than The Grudge's $110 million is the only way you're going to get a bonus this year, you need to look wider still.
Now, ratchet it up.
You just spent $100 million on an action movie about a computer gone nuts in a nuke-carrying fighter jet from XXX director Rob Cohen and all you have to sell it is Oscar-winner Jamie "It's Hot" Foxx and Jessica Biel's upper torso. What will you do? What wiiiiill you do?
Stealth is a niche movie. The Island is a niche movie. XXX was a movie that found itself reaching beyond its niche… but XXX2 returned to the niche and found an even smaller niche by hiring a cast whose only saleable members were black. (Sorry if that makes you want to call the PC police, but it's true.)
Period movies are a niche (see: Kingdom of Heaven and Cinderella Man).
Meta movies are a niche (See: Bewitched)
Remakes are a niche (See: Deuce Bigalow: European Gigalow, Bad News Bears, The Longest Yard, Charlie & The Chocolate Factory and Herbie: Fully Loaded)
You can pull movies out of niche status. Herbie's business improved when parents realized that Lindsay Lohan wouldn't be having any "nip slips" in the movie, so it as safe for the kids. But Disney will make a lot more with a lot less effort on the niche cheapie Sky High. Charlie & The Chocolate Factory took a week or two to find a kids audience in larger numbers, as the fear of Michael Jackson themes subsided. Adam Sandler gave a reason to go to The Longest Yard other than in tribute to the original.
If you want to make a movie that isn't niche, you have to start with a very difficult challenge… appeal to children and adults without turning off either. If you can do that, you are probably not going to have a problem finding the niches in the middle.
But it's not easy. There is a reason why loud, heroic, slightly violent (but less violent than the news on TV) movies with a sense of humor always seem to be at the top of the box office charts. You can swing the metaphor a little. Lord of The Rings skews a little older than Shrek 2, but makes up for it with a more intense core and bigger international dollars… no Rings movie came within 15% of Shrek 2 at home, but each film beat Shrek 2 overseas by between $100 million and $250 million.
Among the highest grossers ever worldwide, you have to go all the way back to E.T. (#13) to find a single film other than Titanic that didn't pass $50 million by the end of its first weekend.
Only 16 of the 38 films in history that have grossed more than $500 million worldwide came out before 2000.
Only 3 of the 38 films were rated R - Terminator 2, The Passion of The Christ, and The Matrix Reloaded. (Is it a coincidence that all three films involve resurrection?)
But interestingly, the $400 million - $500 million worldwide ratio for R rated films leaps to 9 films of 33.
Niche.
If you need more than $500 million worldwide - which means a $200 million (or more) budget - you need a phenom, even more so if you want to make a niche movie there.
13 of the 38 $500 million grossers are sequels… which doesn't include the first of these films, whether Lord of the Rings, Harry Potter, Spider-Man, Star Wars or Jurassic Park (Shrek, T1 & M:I1 didn't get to these numbers)
The further you move down the all-time list, the higher the percentage of movies from before this millennium.
"Only" 30 of the 112 movies that grossed between $300 - $500 were released in the 2000s.
So… about 10 movies a year gross more than $300 million worldwide. Studios release about 150 movies a year. Do you like the odds?
So what do studios do? Well, they have spent more and more as the revenue base has expanded. But they are still making, for the most part, niche movies. There are $80 million niche movies that are dangerous and there are $35 million niche movies that are dangerous. But here is where you get into trouble.
The lowest grossing wide release by a major studio this year was Fox's Supercross, which had a flat tire with $3.3 million worldwide. Between there and Star Wars, there are 87 major studio releases (89 total) so far.
13 cracked $100 million.
32 were between $50 million and $100 million
30 were between $20 million and $50 million
14 didn't make $20 million.The money is in the middle class. The middle class is made up of niche movies.
And so the next big question… why aren't studios satisfied with successful niche movies?
The answer is that with a bigger revenue stream for the average movie, they are spending too much on each film and most certainly, on the marketing of those movies.
And that is why 2005 is The Year Of The Oversell.
What's being oversold? Tune in tomorrow for Part III.
