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November 18, 2005Hello, my name is Harry Cash…
This weekend should be the biggest box office weekend since mid-July. The weekend should beat the 2004 number, even if Potter is a little off of the last November opening to $80 million, Walk The Line opens at $15 million and the rest of the Top Ten drops 50%. That would put the Top Ten at about $145 million.
The record for the Top Ten in the third weekend of November is $160 million for 2002's Potter/8 Mile/Santa Clause 2 weekend and is likely to remain the record holder after this weekend. But it is going to be a very strong start to the holiday movie season.
This year, is just under 4% behind last year's at the box office if you remove the anomaly of The Passion of The Christ. And this year has a real opportunity to catch up, since last holiday season (Nov/Dec) was the weakest since 2000. With no Harry Potter film and no Lord of the Rings, that wasn't shocking.
The best holiday movie season to day was 2001's season of the first Potter ($318m), the first Rings ($313m) and Monsters, Inc. ($255m), plus Ocean's Eleven and A Beautiful Mind. It was the only holiday season ever with two $300 million grossers and the only season ever with three films that would gross over $200 million.
The big question this year is not the muscularity up front, with the likely 1-2-3 being Kong, Potter and Narnia, though perhaps not in that order. But what about the films after that? There have been seven $100 million-plus titles every holiday season this decade, except when there were eight last year, perhaps inspired by the lack of any one $300 million movie.
Chicken Little is the first sure bet to join the Top 3 in that hope for seven. And at this point, it seems that only Walk The Line and Fun With Dick & Jane have real shots at the nine-figure mark. Munich and Cheaper By The Dozen 2 could make it, but Munich will have to be very entertaining, however serious, to do it.
The anxiety over the success of those smaller hits is greater than usual because of the industry-wide paranoia about the current state of the box office… though the real anxiety is about DVD revenues flattening, which few journalists bother to look at.
In today's Risky Business column, Anne Thompson writes:
"What makes 2005 a watershed year is that the message of the marketplace, where the boxoffice is down some 8% over last year, rang loud and clear. And the smartest people in Hollywood are scrambling for answers. (The others are insisting that nothing is wrong.)"
Well, I guess I am one of the others. But I am heartened that Anne has to stoop to misstating what so many people who have their hands on the money are saying. No one has ever said that "nothing is wrong." In fact, I have been loud and boringly repetitive in writing about the dangers of a shortening Video/DVD window for years now, always pointing at 1989's Batman as the start of the trouble.
I wrote about this long before the sell-thru DVD became the standard and the cash cow. The massive success of sell-thru DVD, which was one of the rare overall cash flow expanding events in the history of the business, covered the problems that the home video business had found itself facing.
The circumstance was not unlike the internet boom making up for the Reagan deficits, the economy expanding so much because of something that had nothing to do with the tax changes that created the deficits, that people and markets forgot that deficits were a dangerous thing.
The shortened Home Entertainment window continued to erode the box office. People created tiers of movies. There were "must sees" and "can wait for DVD" titles. Nonetheless, people still kept going to the movies.
In 2005, the bubble burst. But the playing board had shifted significantly.
Sell-thru DVD had become the tail wagging the dog, generating about 40% of overall revenues with seemingly little comparative risk. But the DVD market had become so competitive and there was so much money that DVD marketing budgets started to compete with the marketing budgets for theatrical releases. These increased marketing costs were eating into profits.
So a logical numbers person looks at the table. Domestic theatrical marketing costs, say, $50 million for a major release and makes $75 million, with only $41 million coming back to the studio. In many cases, foreign is a non-issue, as deals are split and someone else gets to win or lose overseas. And DVD costs $20 million to market, grosses $135 million, and returns $80 million.
Who the hell needs that ridiculous theatrical release? It's not even breakeven and we made $60 million in profit in the DVD release.
But it is a trick. Three Card Monte for the movie business.
Let's all get out our copies of Malcolm Gladwell's "The Tipping Point" and turn to Chapter Six for the happy and then sad story of Airwalk.
Airwalk was a very hip skateboarding show company that started in the mid-80s and had consistent sales revenues in the low teens in millions. In he mid-90s, they started a heavy advertising campaign focusing on the hip, while also expanding their line to other active lifestyle shoes. Within 3 years, sales grew by more than 10 times to $175 million.
This success led to an effort to expand the market, doing deals with major shoe retailers at lower price points to try to entice people with less money to live the hype. By the end of the decade, Airwalk was filing voluntary bankruptcy with more than $100 million in debts.
What happened to Airwalk is that they changed the meaning of their product, devaluing its uniqueness by destroying their prestige with high end clientele - even though the high end product was still of the same quality - by selling more low end stuff, the low end being a far more competitive market.
Indeed, I am not saying that "nothing is wrong." What I am saying is that the very things the industry is worrying about today has been caused by the "solution" that has been pursued for years. If the shortened window has helped to get us here, to a worried place, where should be go? Further down the tunnel, of course!
Of course, no one can prove what will happen in a New Movie Order. Betting big with a pair of deuces in Texas Hold 'Em could lead to a third deuce and a win on "the river." Or you could lose, as you will 96% of the time.
What the big problem is that a significant percentage of "smart people" in the film business are forgetting that the allure of movies is a lot more complex than going where the most money is this year. What item do most people mention when they talk about McDonald's? The French Fries. So why doesn't McDonald's stop futzing around with all that other stuff and just sell fries? Because they aren't insane.
Just think of how many people would like to sit in their hotel rooms while visiting New York and watch the latest Broadway show on their hotel TVs for only $20. What a bargain!
Why is Spago still open if Wolfgang Puck is selling frozen pizzas to millions? Even more nutty, why is this guy still catering the Oscars every year? It can't be very profitable.
Thompson also proposes that studios should only make tentpoles while their Dependent arms should handle "middle product." But this is to presume that anyone could have sold Elizabethtown to more than it grossed via big Paramount. Only six Dependent releases grossed more than Elizabethtown this year. (March of the Penguins, The Constant Gardener, Hostage, The Brothers Grimm, Shark Boy & Lava Girl, andSin City) Only Constant Gardener was a thoughtful film made primarily for adults.
Yes, if Cameron Crowe were willing to make Elizabethtown for $25 million, it would have been a much better investment. Duh!
Yes, movies are too expensive. And so is marketing. Duh! Duh!
The real story is that making and selling movies is a shitty business. Has been for a long time. It was in the 1920s when Warner almost went under before The Jazz Singer.
We will get our real trial of Anne's theory when Fox Searchlight gets back to work and releases a somewhat insane 17 movies next year. (I believe they hit that number with yesterday's addition of Phat Girls.) Nancy Utley is the best non-Weinstein marketer in the Dependent world. (So good that one of her employees is rumored to have been tapped to take the Paramount Classics publicity job even before a marketing topper is set.) But releasing 17 movies in one year… it strains logic… unless they are going to Miramax it and release/dump 6 or 7 titles.
But the suggestion that you can put a major studio's project under the Dependent banner and that will trick talent into taking paycuts is absurd. See The Family Stone… made by Fox and Fox 2000 after Searchlight (and others) passed for under $20 million with no one getting full quote. If the movie underperforms, the problem will not be the budget. Nor will it be on Walk The Line, which was made by big Fox for under $30 million. Nor will PT Anderson, who made Punch Drunk Love on a tiny budget for an Adam Sandler movie and has not been funded by ANYONE since, mostly because of his stubborn arrogance about the running time on Magnolia. (Punch Drunk Love was his low-budget concession. Ha ha.)
Moreover, Focus Feature has made movies in the last 18 months more expensive that either The Family Stone or Walk The Line. Budget tops at Searchlight seem to be rising. Paramount Classics will be spending more than ever. No one knows what the New Miramax will look like.
The Independent Spirit Award is now to be awarded by films that cost less than $20 million. $20 million!!! "They should do it at an indie price." And an indie price should be $10 million. But what is an indie price now?
And who is showing restraint? The Weinsteins, who agreed to limit their investment in any specific film to under $40 million as a condition of raising funds? That's $40 million. But that is now restraint for the Dependents.
Everything needs to be on the table. Any new idea is possible. Costs must come down, before, during and after production.
As Roger Ebert says about the length of movies, no good movie is too long, no bad movie is short enough. No movie that is highly profitable was too expensive and no movie that loses money was cheap enough.
Studios can make movies at the price of The Grudge. Screen Gems does it four or five times a year. And then, as with The Grudge, the key is selling the crap out of them.
Trust The Man is a mediocrity, but it is a cheaper mediocrity to pick up than making Laws of Attraction was, yes. The question is, for both films, can you sell a Julianne Moore romantic comedy? So far, the answer has been 'no." And it will cost Searchlight the same $10 million - $15 million to market the film that it cost New Line.
Even going up a level, Must Love Dogs is only a moderate success with a $45 million gross. Yes… more so if made for $20 million. But the real question is, "should anyone make a romantic comedy ever again?"
If indeed, as Anne states, "the heads of the studios are paid to figure out where the market is going and what audiences want to see two years in advance," then the owners of studios are stupid asses. A good movie or a great marketing campaign creates the market. There are exceptions, trends that change. But mostly, no. Elizabethtown needed a movie star or two to do more box office than it did anytime you made it. Cameron Crowe's highest domestic grosser without Tom Cruise is $33 million. If you're not in profit at $30 million on a Cameron Crowe movie without a major box office star, don't make the movie. It's not big studio or small studio or brain surgeon of any kind.
On this flip side - and it kills me to write this - Rob Cohen's last two films had no major stars and both grossed over $140 million domestic and over $200 million worldwide. So if $100 million domestic is enough to make the movie profitable, Stealth is a reasonable risk. If he made you money making shit before, why not try again? (I would not do it, but you get my point.)
Any sane person wants to support Cameron Crowe's efforts as a filmmaker and to see Rob Cohen flipping burgers somewhere, far away from a movie set. But the business of show is not sane. Never has been. Movies don't get made on a continuum. Each has a life of its own. There is no easy answer. At least, that's what smart people think.
