By now you’ve probably heard that summer movie attendance reached the lowest point in the past 20 years (and indeed, this past weekend saw the worst total gross among the top 10 in at least four years). This may come as a surprise to you, but it actually fits into the historical pattern playing out before our eyes. Declining domestic attendance is the new normal and we should all get used to it.
Every year the MPAA publishes Theatrical Marketing Statistics. The 2011 report is here and the graph below shows how domestic box office attendance has fared since 2002 (hint: quite a lot).Although attendance is down in 2012, domestic revenue is up +4.7% year to date (YTD) from 2011 but below 2010’s numbers. This is the number studios point to, regardless of the trend in lower ticket sales. They only care about their bottom line, which is why they pad it with higher ticket prices and additional format surcharges (IMAX and 3D for instance). Take a look at the graph below to see how 3D price fluctuations padded overall box office stats in 2009 (10%), 2010 (21%) and 2011 (18%).
In addition to raising ticket prices, studios are ever increasing their reliance on foreign box office receipts to offset domestic declines. Global box office hit $32.6B in 2011, which is up 3% over 2010’s total and up 35% over five years ago. It is poised to go up again this year at the expense of the domestic market.
Of the top 10 films in global box office (so far) in 2012, only "The Hunger Games" (59.5%) and "Ted" (56.2%) can claim to have made a higher percentage of total grosses at the domestic box office. If you expand that number to the top 20, only "Dr. Seuss' The Lorax" (63.5%) is added to this group.
On the flip side, you have the likes of "Ice Age: Continental Drift," which took in a whopping 81.2% of its $828.5M global cume in foreign markets. That is good enough for third place worldwide, but drops to tenth place on domestic charts with $156.1M. "The Amazing Spider-Man" took in 64.6% of its worldwide gross in foreign markets. "Men In Black III" had 71.2% and "Snow White and the Huntsman" had 60.6%.
Another stark example is "American Reunion." It floundered domestically ($56.7M) but somehow excelled internationally ($177.9M) bringing the total to $234.7M worldwide. That’s a mind boggling 75.8% of total box office from foreign markets for a trite and derivative sequel. If you wondered why we needed another "American Pie" movie, you now have your answer. Hollywood no longer makes movies for America. It makes movies for the English-as-a-second-language crowd. So while domestic box office continues its death of a thousand cuts, foreign markets like China, Brazil and Russia are on the rise.
With all that being said, here’s a brief recap of how 2012 has played out so far.
First Quarter 2012 (Jan-March)
Through the first quarter of the year domestic box office was up +23.7% over 2011 and down -2.1% from 2010 ("Avatar"). This was due to some early break out hits and strong hold over performances of 2011 titles like, "Mission: Impossible – Ghost Protocol," "Sherlock Holmes: A Game of Shadows" and "The Girl with the Dragon Tattoo."
The first week of 2012 saw the “found footage” horror flick "The Devil Inside" take in $33.7M from 2,285 locations. The film became the third-highest January opening of all time and even more impressive is the one million dollar production budget. Also impressive: the -76.2% second week drop, due to an “F” CinemaScore and a bad ending.
"The Devil Inside" paved the way for other strong found footage performers in this quarter. "Chronicle," the $12M found footage super-hero flick, made $22M its opening weekend and goes onto $126.6M worldwide. "Project X" pulled in $21M its opening weekend and became the third-straight found footage film to debut over $20M in 2012. It had a $12M budget and grossed $54.7M domestic, $46.2M foreign and $100.9M worldwide.
This quarter also showed the strong results of "The Vow" ($125M/$196M worldwide), "Safe House" ($126.1M/$202.4M), and "Journey 2: The Mysterious Island" ($103.8M/$325.8M). All three movies out-perform their expectations and ‘Journey 2’ finishes with 68.1% of grosses coming from foreign markets, aided by 3D surcharges.
"The Vow" was the first film to cross the $100M domestic threshold. The audience was driven by women (72% its opening weekend) and was sustained through the Valentines Day holiday. "The Vow" is, sadly, the best Screen Gems opening ever with $41.7M. This breaks the record set by another Channing Tatum movie from 2010, "Dear John." This was 2012’s first look at Tatum, who has had a very good year.
Tatum’s other Q1 release, "21 Jump Street," took in $36.3M from 3,121 locations its opening weekend. It became the highest grossing “R” rated comedy released outside of the summer (ever). It took in $138.4M domestic and $201.5M worldwide. Tatum also led the male stripper cast of "Magic Mike" (also “R” rated) to $113.1M (domestic) over the summer on a miniscule $7M indie budget.
The end of Q1 brought us "Dr. Seuss' The Lorax," "John Carter" and "The Hunger Games." ‘Lorax’ had a solid opening of $70.2M and goes on to $214M domestic and $337.1M worldwide, paving the way for strong animated releases that helped to bolster theaters throughout the soft summer.
"John Carter" was the first major bomb of the year, taking in $30.2M from 3,749 locations as it débuted in second place behind the second week of "The Lorax" in week two. It would only manage $73M domestic but does a robust $209M foreign for $282M worldwide. That’s an amazing 74.2% of total grosses from foreign markets. Disney takes a big loss on this runaway production, but it does show the vitality of even lesser Hollywood products on an international scale. Regardless, "John Carter" never really had a shot at breaking even, given how much they spent to finish it and how bad it ended up being.
The end of March closed out on a high note, with "The Hunger Games" taking in $152.5M its opening weekend. It is now Lionsgate's highest-grossing movie ever and the highest grossing film ever to début in March, as well as accounting for 37.4% of all domestic box office in that month this year. It’s currently the third highest grossing domestic movie of the year ($407.9M) and fifth highest worldwide ($685M). It held the number one spot longer than any movie this year with four straight weeks through April.
Regardless of the quality of the movies (or lack thereof), the domestic box office was +14.7% ahead of 2011 and -2.5% behind 2010 as it approached summer.
Summer
The summer movie season runs from May through the end of Labor Day in September. This year, during the summer season the gains made earlier in the year slid, due to several underperforming films in addition to Paramount removing "G.I. Joe: Retaliation" from the slate.
Total ticket sales this summer are estimated at 533.5M, which was down -4% from 2011. Total 2012 summer box office is estimated at $4.28B, down -2.73% from 2011. Last year, summer ticket sales hit a record $4.4B. Until 2012, every year, for the last seven years, box office revenue went up during the summer.
If you include the first four months of the year with the summer totals, we see YTD percentages over 2011 fall every month of the summer: April (+14.7%), May (+10.5%), June (+9.6%), July (+6.3%) and finally August (+4.3%). As September begins, YTD revenue totals are -0.3% behind 2010.
Memorial Day weekend is a perfect case study for what went wrong this summer. Sony's "Men in Black 3" took over the No. 1 spot from "The Avengers," but the Top 12 films were off -31% from the previous year and overall domestic receipts were the lowest since Memorial Day weekend in 2001.
"MIB 3" did good business with $178.5M domestic, $445M foreign and $623.5M worldwide. That makes it the weakest of the franchise in domestic box office but highest grossing (unadjusted) worldwide. It sits as the sixth highest grossing movie (worldwide) so far in 2012. "MIB 3" is another troubled production, however. It started and stopped so many times that there is no way to know how much went into producing it or how diminished the returns really are. It’s still an impressive haul for a project many people thought was doomed. Sony is probably relieved to get it off the books.
"The Avengers" was the champion of the summer and kicked it off with a record-breaking $207.4M its opening weekend. It set a new all-time opening weekend record, beating last summer’s "Harry Potter and the Deathly Hallows Part 2" ($169.2M). It goes on to shatter other financial benchmarks as well, such as fastest to reach $100M, $150M and $200M domestic. It is already the fourth highest grossing film of all time in the U.S. (unadjusted) and Disney's biggest movie ever (unadjusted). It grosses $620.6M domestic, $882.3M foreign and over $1.5B worldwide. This single movie represented 15.2% of all domestic box office during the summer period.
Outside of the big comic book movies — "The Avengers," "The Dark Knight Rises" ($424.5/$577.7) and "The Amazing Spider-Man" ($260/$735.3) — animated features paced the summer. "Brave" ($232.2/$469.8M), "Madagascar 3" ($214.8/$602.8M) and "Ice Age: Continental Drift" ($156.3/$828.7M) all do very well. A movie starring an animated bear, "Ted," opened with $54.4M from 3,239 locations, making it the highest debut for an original “R” rated comedy. Ted racked up $216.3M domestic and $384.7M worldwide.
Ted was bumped up two weeks to take the release date formerly occupied by "G.I. Joe: Retaliation." This was also a boon to "The Amazing Spider-Man," which opened without direct competition from another franchise movie a week earlier, which would have been the situation had Paramount stuck to their guns. "The Amazing Spider-Man" goes down as a successful reboot, but it is worth noting that is the worst performing movie in the franchise, even with 3D added into the equation.
Two big summer releases, "Battleship" and "Dark Shadows," fall into the "John Carter" trap. Like the earlier film, the bulk of their grosses are from overseas and the films cost too much to make and market. "Dark Shadows" does $79M domestic, $236.5M worldwide but on a $150M plus budget. "Battleship" does $65.3M domestic, $237.6M foreign and $302.8M worldwide.
"Battleship" was yet another movie with a complicated budget situation –its ability to turn a profit was severely hindered by throwing money at production related problems, hoping they go away. This is ironic from a studio that claimed to want to avoid costly films with limited appeal. As we saw with other high profile blockbusters, this often leads to a diminished return on investment, and a terrible film overall.
We saw the same thing happen to the "Total Recall" remake. It failed to find an audience with $57M domestic, $98.7M foreign and $155.7M worldwide. It’s tough to make a blockbuster without stars and Hollywood did a terrible job manufacturing them this summer.
Even the profitable ‘Bourne’ franchise fell short. "Bourne Legacy" made just over $100M domestic, but only generates $159.6M worldwide (and counting). That makes it the lowest grossing film of the franchise, despite being the most expensive to produce ($125M). ‘Legacy’ led a soft August month, down -16.7% from August 2011 and included the worst performing box office weekend of the year, until the one just gone, anyway.
Eleven movies made over $100M this summer, below the 18 movies that did so in 2011. ‘G.I. Joe’ would likely have crossed that threshold as well. Both "Ted" and "Magic Mike" are included in this group and both were independently produced and financed.
Other weak summer releases include "Rock of Ages" ($38.5M/$50.1M), "That's My Boy" ($36.9M/$49.4M), "The Watch" ($33.5/$42.6M) and "Abraham Lincoln: Vampire Hunter" ($37.4M/$90.6M), none of which connected at home or abroad.
Diminished Returns
They say that familiarity breeds contempt and that seems to be the theme here. The majority of the summer releases were retread ideas and it looked as if a saturation point has been reached.
By throwing money at poorly developed, easily recognizable, ideas that appeal to international audiences, studios have run into a wall of diminished returns at home. This is sad, but to be expected given the global business model that studios operate on.
Despite the general perception of the film industry as a hit-or-miss kind of business, the success for the industry as a whole resides in a diversified slate, not just one or two movies that drive all box office. The success of smaller and middle budgeted movies helped to save the studios from an embarrassing summer. I just hope the studios realize this before committing unlimited funds, to half-baked brands, without any recognizable talent.
The fall and winter release calendar is strong. Many established franchises are likely to perform well: "The Twilight Saga: Breaking Dawn Part Two," "Skyfall" and "The Hobbit: An Unexpected Journey" (in 3D) come to mind. Disney will be a big player with 3D re-releases in "Finding Nemo" and "Monsters Inc." and also a new animated original, "Wreck-It Ralph" (also in 3D). Other potential rainmakers include "Les Miserables" and Tom Cruise’s next franchise, "Jack Reacher."
It will be interesting to see how the small and medium budget films perform and which awards season contenders connect at the box office.