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January 02, 2009
Box Office '08
The box office in 2008 was healthy. But it was a better year in the upper middle class than it was for the blockbusters… even if those are the only movies that the media wants to write about.
The billion dollar worldwide mark remains hard to reach. The Dark Knight hasn’t gotten there, though it likely will push itself over the top – it’s only about $3 million away – with a re-release later this month. Still, an asterisk. Just as Star Wars stands at #3 all-time domestically because of re-releases that pushed it above the current #28 its original release would leave it at, TDK’s billion will be much-touted and… well… asterisked. In fact, in the last five years, only Pirates of the Caribbean: Dead Man’s Chest (#2) got past a billion in its initial release.
But when your movie is in the over-$500m club, you’re doing okay. Details blur.
What really struck me, looking at this year’s numbers and year’s past, is that there is enormous elasticity based on what people want to see… and very little in the overall domestic market.
That is exactly what the studio parents want to see. Consistency. Predictability.
Journalists have become obsessive about reporting on the domestic box office. But the story of the film industry’s revenues is not in our theaters here in the U.S… it’s the things that American reporters really don’t have great and/or timely access to… international box office and DVD revenues.
DVD is already slipping in a real way. It has been for about 3 Christmases now (the holiday is the canary in the DVD coal mine), but the overall DVD numbers were boosted by strong sales of television shows. And now, after years of continued maturation of the segment and the exhaustion of most of the major library titles, television is beginning to slide too.
As I have written endlessly, the drop in DVD revenue is not a problem in and of itself. The sell-thru business created a huge burst of revenue that never existed before. The problem with the found money is, however, that it was spent and now, it is being spent even when it is not there.
Foreign box office is also showing uncomfortable signs of maturation as well.
All three superhero smashes in the U.S. failed to do the same amount, much less the expected more, overseas.
Indiana Jones IV, the top international grosser of the year, did less overseas than any of The Trilogy Trio of last year or the Potter. One seems silly complaining about $470 million at the international box office for any movie. But when this year’s #1 would have been #5 last year, you have to think about it.
The Dark Knight is the #2 international grosser for 2008, but while the film is an unquestionable cash cow, the mega-numbers that the #2 best ever domestic gross ($531 million) promised were not met. Last summer, Spider-Man 3 did $555 million overseas, 62% of its overall gross. TDK did $89 million less overseas, even though its domestic gross was more than $200 million higher than Spidey 3. Why? Critics (including me) will tell you that Dark Knight was a much better film and the serious tone of TDK seems much more “European.” Yet…
While Spider-Man seems to be above international disinterest, superhero movies in general are, like comedies, not a great bet overseas. Both Iron Man and The Incredible Hulk scored under 50% of their total gross overseas… even with the Euro-positive sophistication of Robert Downey, Jr. and Edward Norton.
Don't get me wrong. This is not a slap at these films. But when so many like to claim that these films are The Future, a little perspective seems like a good idea.
But stars still count big. Will Smith outdid Iron Man with Hancock by more than $40 million overall and over $130 million overseas. James Bond did almost 2.5x the business overseas as here. Cameron Diaz and Ashton Kutcher delivered $140 million overseas for their stupid comedy. And Sex & The City mirrored The Simpsons Movie of last year as a successful television crossover… not in the size of the hit, but in the 63% of its gross overseas compared to Simpsons’ 65%.
Final numbers are hard to read because of release schedules. The international box office year of 2008 is full of U.S. 2007 films and short on grosses from 2008 releases, even ones that have already turned up in many countries overseas. But last year’s international (American releases, foreign grosses only) vs this year’s international is down more than $650 million as of the end of this year. And Golden Compass (Japan and India were the two non-day-n-date internationals and represented about 12% of the international box office) and I Am Legend (about 50/50 on ‘07/’08 foreign grosses) were the only two December releases on last year’s list. So if you push that number down to just $400 million, still a down tick.
When you go back a few years, you see that foreign box office is also pretty much matured now. The big wave of theater expansion – often funded by US majors – has slowed and the failure to crack the Far East has not much improved. Since 2004, the magic number for the Top 10 movies seems to be about $3.5 billion. And this year, we are a little above that. Down from last year’s massive success ($4.4 billion).
This whole thing shifted dramatically in 2001 with Harry Potter and Lord of the Rings. In 1998, the Top 10 international grosser did $2.2 billion. In 1999, Star Wars: Episode One and The Sixth Sense pushed that up to $2.8 billion. But in 2000, it dropped back to $1.95 billion. The in 2001, Potter and Rings took that stat up over $3 billion for the first time. 2002… $3.4 billion. 2003… $3.6 billion. And we have hovered around there ever since. And Hollywood has felt compelled to keep up the pace and to try to surpass it.
The money is out there. But there just isn’t much of a way to push past this range of revenue. Last year, there were a record-breaking 3 films with over $500 million overseas, leading to a record $4.4 billion Top Ten. (The previous most such mega-hits in a year was 2, but usually just 1 or none… like this year). But it took the mighty, mighty power of two massive, incredibly expensive third sequels and Potter V.
DVD is stable. And Blu-ray still hopes to stabilize it further. But the dream of overstuffed DVD libraries being replaced with Blu the way DVD replaced VHS? Nah.
Domestic theatrical is also stable.
There is no half-billion leap in industry-wide international theatrical business or a multi-billion dollar leap in Home Entertainment revenues forthcoming anytime soon. Jeffrey Katzenberg can scream about 3-D all he likes, but I think every actual moviegoer I know easily intuits that his is not a serious game changer. It may be great fun and be a great alternative experience. But technology has never sold tickets (beyond the initial excitement about the potential… which has already passed with 3-D) and never will. And though it is less gimmicky, the same is true of home delivery of films. Yes, some version of home delivery of a very wide range of films, television, etc will come to pass in time. But the price point at home will be much lower than in the current theatrical-DVD-Pay-TV-Ancillary model.
In many ways, we are heading, quickly, back to the model that the studios had in the 30s-early 60s. Imagine getting two new movies, a news reel, shorts, etc every time you paid for a $10 ticket. Wait… that’s what Home Entertainment has, to some extent, already become. At that price. And getting lower daily.
There is nothing wrong with maturing business models. But the people in charge have to be mature enough to see the boundaries that are created by maturation.
In other words… the DVD/Foreign party is over.
The film industry economy is like the US economy, looking desperately for the next bubble. But there is no such bubble on the horizon. The future is flat and long and, who knows, maybe better for movies as a form.
It’s time to start seriously cutting back on the cost of movies, with few exceptions. Even the mega-blockbusters need to be pulled back into line. And marketing too. First studio to make an entire slate under $120 million, averaging about $50 million a picture, is going to do very, very well for themselves. And those who wait for the market to force them to do it are going to have a year or two that will, simply, put them out of business.
Happy New Year.
Posted by dpoland at January 2, 2009 10:38 AM
Comments
"That is exactly what the studio parents want to see. Consistency. Predictability."
This seems like a comment that deserves to be elaborated upon in terms of things beyond mere business.
Also, for my own clarification, what is it that's slipping re: DVDs - DVD revenues, or revenue growth rates?
Posted by: jeffmcm ![[TypeKey Profile Page]](http://www.mcnblogs.com/thehotblog/nav-commenters.gif)
at January 2, 2009 04:34 PM
An asterisk on the asterisk. The Dark Knight was never released in IMAX format in Brazil...but it is in conjunction with the US re-release. So if it does 3 million in Brazil, the asterisk will need an asterisk.
Any predictions for 2009? Film that I think will top $200 milliom domestically: Wolverine, Night at the Museum, Sherlock Holmes, Terminator 4, Star Trek, Up, Potter and Transformers 2.
Biggest box office flops? "Where the Wild Things Are's" reported budget is 80 million, but it's also supposedly way over. Avatar and GI Joe will be there due to their quarter billion dollar and 170 million dollar production budgets respectively. (and GI Joe will suck)
Dragonball and 2012 are other easy targets.
Posted by: EthanG at January 2, 2009 04:36 PM
"But the dream of overstuffed DVD libraries being replaced with Blu the way DVD replaced VHS? Nah."
Curious. Not ever or just not yet?
Posted by: Kristopher Tapley at January 2, 2009 05:22 PM
Very well said, Dave.
Posted by: KamikazeCamelV2.0 at January 2, 2009 06:02 PM
3-D "expert" Jeffrey Katzenberg has never actually released a 3-D movie, so I would ignore everything he says about the subject.
Posted by: Wrecktum at January 2, 2009 06:44 PM
Excellent summary. Especially the cost-conscious studio gaining the upper hand. And as for Blu-Ray, you're dead right. And the overseas issue gets more complicated when you factor the DVD market. Are packaged sales still even possible?
Posted by: Martin S at January 2, 2009 10:11 PM
Nice piece Dave. I'm still kind of in awe about how much Dead Man's Chest grossed.
Posted by: Monco at January 2, 2009 11:41 PM
Okay, it's killing me. Who is the person Roger Friedman says you were caught with at Entertainment Weekly?
Posted by: Art at January 3, 2009 05:02 AM
Isn't that a multiple-years-old debunked smear, from somebody with a grudge?
Posted by: jeffmcm at January 3, 2009 05:13 AM
Great piece; a nice start to the new year!
I liked particularly your point that many journos don't have access to DVD and/or overseas' revenues. Another thing that would most certainly help (in particular, because the shareholders are entitled), is the REAL BUDGET of films.
Hollywood has long since been one of America's greatest exports. Certainly in terms of politics and culture, perhaps its greatest. So, I am genuinely concerned that out of all the scandals and financial fiascos that have been revealed so far, not one meaty one has come from Hollywood. We all laugh and shrug and the "creative' accounting of the studios, but how long before Congress asks for the books to be opened? Hollywood has gotten so many tax concessions in so many States, and it is already protected in Trade Agreements.
Posted by: The Pope at January 3, 2009 05:55 AM
"An asterisk on the asterisk. The Dark Knight was never released in IMAX format in Brazil...but it is in conjunction with the US re-release. So if it does 3 million in Brazil, the asterisk will need an asterisk."
Not happening. It has no shot of doing 3m here in the whole re-release, let alone in IMAX.
Posted by: Filipe at January 3, 2009 11:50 AM
Art... Roger's response to this was, "This is a crazy person. I will fwd it to our lawyer."
The posting is, indeed, another variation on a series of e-mails that were also posted on TMZ message boards last year (or longer).
I never worked in the office at EW. I have never even set foot in the EW offiices in New York. I am not gay. I am not HIV-positive. Etc, etc, etc.
The whole thing is very odd. When it keeps coming up, I assume that it is someone out to create problems for Roger... who by the way, I consider an wet turd on the shoe of professional journalism. So no love lost there.
Last time, I ended up posting the thread in the blog to simply get past it. This time, the thread includes some nasty personal stuff about Roger that I don't have any way of confirming or denying in any real way. So I prefer just to stay out of it.
Many people - mostly other press - seem to like to lie about me. I don't quite understand it, but since I have felt free to have opinions about the work of others in public and have a profile myself, I have to accept that shit happens.
There are now three people who seem to spend the most time obsessing on me, two almost exclusively in private and one in public. I would prefer there to be none. One never knows what people will choose to believe.
I do not invest in people's personal stuff. I don't write about it. I do not talk about it. I do not think much about it. Everything I say in private about people's work, I have said or am willing to say in public and/or to the person's face. That is how I roll.
And on I roll...
Posted by: David Poland at January 3, 2009 12:30 PM
Want to hear something depressing?
The highest grossing film at the Thai box office in 2008 is The Mummy 3!!!
Posted by: ployp at January 3, 2009 07:08 PM
The Batman films have never made 50% or more of their gross outside of the U.S. That's just how it goes with the character. The jump from 166 foreign for Begins to 465 for TDK is impressive no matter how you look at it.
Posted by: Rothchild at January 3, 2009 10:42 PM
Let us also not forget that most of the moviegoing audiences in some parts of the world, simply do not get the Bat. If anything; he's more American than anything else. So he does not have the appeal Spider-man does. Why? Spidey is a universal story. While the Bat is a story only a bunch of gun loving paranoid whack jobs could love! WOOOOOOOOOOOOOOOOO!!!!
Posted by: IOIOIOI at January 3, 2009 11:47 PM
TDK could've easily passed that billion mark, without a reissue, if it had been cleared for release in China. (WB are claiming the decision was theirs, but nobody in their right mind believes that.) The three current members of the billion club all opened in China, although that was hardly the clincher for any of them.
Posted by: Bob Violence at January 4, 2009 05:31 AM
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