Updated with final 2016 figures following Dec. 29 post: With the 2016 box office at $11.37 billion, the domestic theatrical marketplace is the largest we’ve ever seen it, with estimated admissions currently even with last year’s 1.32B.
Yet despite this all-time high, distributors and exhibitors want change.
After Sean Parker and Prem Akkaraju’s day-and-date Screening Room concept created ire among exhibitors and some filmmakers back in March, studios are now opening up to the idea of a premium VOD window. How’s that? Some majors — particularly those owned by cable companies, such as Warner Bros and Universal — believe there’s still money to be recouped on a film title. Their reasoning stems from the fact that the top 20 films repped close to 50% of the 2016 domestic B.O. Now, more than ever, mid-level movies are burning faster in the theatrical marketplace, and a premium VOD window would keep such titles alive before hitting a standard VOD/DVD cycle.That means more money, and potentially lower marketing costs.
With such big titles as Star Wars: Episode VIII, Justice League, and Guardians Of The Galaxy Vol. 2 on the calendar, sources tell Deadline they don’t expect significant movement in regard to premium VOD in the new year. However, a less contentious attitude with exhibitors at this year’s CinemaCon should emerge.
Capturing the lucrative millennial demographic continues to be a frustration for studio executives. While they can be counted on to show up during the opening weekend of a Star Wars or comic-book movies — i.e., close to half of Deadpool (47%), Suicide Squad (48%) and Rogue One (45%) opening-night crowds were comprised of 18-34-year-olds — they’re a group that decides quickly on social their opinion about a movie. When coupled with film-review aggregator site ratings (like Rotten Tomatoes), they can impact a pic’s financial fate. Overall, outside of tentpoles, they’re a difficult demo to pull into the theater, and away from YouTube and Netflix. Per the MPAA’s most recent annual report, 18-24 frequent moviegoers have fallen 34% since 2012 from 8.7M to 5.7M in 2015, while the 25-39 age group declined 25%, falling from 9.9M to 7.4M over the same frame.
“You have to get the movie in a place where it’s so strong and there’s so much heat behind it, that it’s going to overwhelm any negative reviews,” says Paramount’s worldwide marketing and distribution chief Megan Colligan in regards to a film’s campaign harnessing social and yielding B.O. results.
As distributors lean on exhibition to give way to a premium VOD window, theater chains may have actually solved the majors’ millennial problem: With premium, luxury seat venues.
More exhibitors are cutting their overhead by reducing the number of seats in their auditoriums and turning them into luxury leather recliners. In addition, lobbies are getting a makeover, liquor licenses are being added, and the multiplex is becoming a hip place to hang out. The result is higher ticket prices and concession revenue, as well as weekday capacity rates increasing from 20% to 40%. In addition, a multiplex’s landlord can assist in shouldering the $150K-$250K auditorium renovation costs.
In its recent shareholder call, AMC stated it invested $87M in reseating that produced cash-on-cash returns north of 25%, with per-screen attendance up 9% and per-screen revenue up 19%. By the end of 2018, the number of AMC recliner screens will increase from 1,550 to 3,350. Cinemark’s 1,000 luxury recliner auditoriums rep 22% of its domestic footprint with the average attendance in such hubs up 40%. Regal attributes an extra $23M in B.O. revenue during Q3 to its 900 recliner venues, which will number 1,200 by 2017. The average ticket price in such locales is up 8% with frequent sellouts.
Below, how those studios with more than 5% domestic market share stacked up between January 1-December 31. All box office figures courtesy of ComScore:
Source: ComScore
Disney
Walt Disney Studios, the envy of every major, owns industry domestic and global box office records of $3B (+32%) and $7.6B, respectively. Of the 27 films that grossed more than $100M this year (a total of $6.2B) Disney owned 44% of that figure. It’s an understatement to say Disney gets by with its powerful brands of Marvel, Lucasfilm, Pixar and Walt Disney Animation, but as one rival studio executive observes, “They’re attentive to them, and they know how to prime an audience” across their TV, radio, music and park outlets. This is evident in their latest Beauty And The Beast trailer drop which came close to a 24-hour record with 127.6M views (only to be beat by Uni’s Fate Of The Furious’ 139M). Rather than drop Rogue One trailers last December before Force Awakens’ mass audiences, Disney delayed them until March, so as not to confuse moviegoers on the pic’s timeline. In the end, Rogue One became the second highest grossing film of the year at $408.2M in 16 days, giving Disney the top three titles of 2016 with Finding Dory atop and Captain America: Civil War in third (see numbers below). Disney knows what it takes to survive in this fierce marketplace, and ensures they’re stoking the masses and critics alike. If there’s any lessons for Disney to learn, it’s that a title alone doesn’t create a stampede, i.e. Alice Through the Looking Glass which grossed 77% less than its hit 2010 predecessor and marked the studio’s third Memorial Day disaster after last year’s Tomorrowland and 2010’s Prince Of Persia. With Johnny Depp’s star on the decline, Disney marketing will need to work OT to ensure that Pirates Of The Caribbean: Dead Men Tell No Tales isn’t a stiff. Disney also missed the mark with adult fare like The Finest Hours ($27.5M) and The Light Between Oceans ($12.5M), but in their current tentpole sphere, it’s no longer their priority.
WB
With $1.9B, up 19% over last year, Warner Bros is relishing its second-biggest domestic annual haul. The studio prides itself on the success of a full-bodied slate of uber-tentpoles (DC universe), mid-level pics (Sully at $125M) and thrifty payoffs such as New Line’s Conjuring 2 ($102.5M) and MGM co-productions like Me Before You ($20M budget, $207.9M global). Worldwide with $777M-plus, J.K. Rowling’s Fantastic Beasts And Where To Find Them is a great start for a franchise, though domestic did alright with $225M. Many in the industry raise an eyebrow in regards to how WB spares no production and marketing expense, but the studio claims it’s their second-most profitable. Another feather for WB: It opened movies successfully at offbeat times of the year and broke records (as did Disney with Jungle Book), i.e. Batman V. Superman‘s $166M over Easter weekend, Suicide Squad‘s $133.6M first weekend in August, and Sully‘s post-Labor Day take of $35M. Next year, if WB can get both critics and the masses to embrace its future DC universe unanimously, then it could realize $1B hits like Marvel.
20th Century Fox
20th Century Fox at $1.47B is +3% (if you count Fox Searchlight then it’s $1.53B). The big takeaway for the studio is Deadpool, with rivals in awe of how Fox pushed the bar with a subversive superhero movie and campaign, opening to summertime figures of $132.4M in the dead of winter, and making it the second highest-grossing R-rated movie at $363M after Passion Of The Christ ($370.8M). Rival studio marketing chiefs extol Deadpool‘s campaign in how it became a dominant fabric of the culture, further bolstered by Ryan Reynolds’ authentic social media presence (read Fox’s grab at females by having Reynolds drop a Deadpool trailer on Twitter, defend his movie as a Valentine’s Day date movie during the season premiere of ABC’s The Bachelor). Another R-rated win for Fox was turning the Leonardo DiCaprio violent period film The Revenant into both an award-winning and B.O. success with three Oscar wins and $183.6M domestic, $533M global. Comedies were a struggle for Fox, as the genre has been for many this year, with Mike And Dave Need Wedding Dates ($46M) and Keeping Up With The Joneses ($15M) tanking. Better luck next year with more fanboy offerings such as A Cure For Wellness, the R-rated Logan, Alien: Covenant, War For The Planet Of The Apes and Kingsman: The Golden Circle.
Universal
With $1.4B, Universal is -43% from their banner 2015 of $2.44B. However, last year marked an ideal release calendar led by such hits as Jurassic World and Furious 7 which may not be realized for some time. Uni emphasized during CinemaCon that its Illumination label was a huge component of the studio, and that shows with Sing and The Secret Life Of Pets repping 35% of the studio’s 2016 till. That share will swell in years to come, especially with Uni’s purchase of DreamWorks Animation potentially rivaling Disney’s annual B.O. for its animated fare. From a profit standpoint, the studio gives props to Blumhouse, whose The Purge: Election Year wound up being the highest-grossing installment in their horror series ($79M domestic, $118.4M global). Pics to look forward to in 2017 include a slew of sequels: Fifty Shades Darker, The Fate Of The Furious, Tom Cruise’s The Mummy, Despicable Me 3 and Pitch Perfect 3.
Sony Pictures
Sony is -6% with $910.2M. Its highlights include a trio of cash cows spurred by digital marketing spend — Sausage Party ($97.6M), Don’t Breathe ($89.2M), and The Shallows ($55.1M). Their PG-rated female Ghostbusters reboot led by an R-rated team of Paul Feig and Melissa McCarthy was a bust at a cost of $144M before P&A; it grossed $128M stateside, $229M global. A sequel is TBD. The Jennifer Lawrence-Chris Pratt sci-fi love story Passengers was supposed to work, but will be lucky if it breaks even off…