Reactionary Causes

I Don't Blame You for Not Going to the Movies

Studios spend more, audiences spend less, nothing but crap hits theaters

state-of-moviesAt the time of publishing this piece, the RottenTomatoes score for Sam Raimi's Oz the Great and Powerful, which opens in theaters this Friday, March 8, sits at 72%. I can tell you right now, by Friday that number will drop and will most likely join the green splatters you see to the right.

Speaking of which, what you see to the right are the RottenTomatoes ratings for this past weekend's Box-Office Top Ten (March 1-3) and just below that the MetaCritic.com ratings for the films currently in theaters. If it wasn't obvious, a red tomato signifies a film with largely positive reviews on the RottenTomatoes scale.

When it comes to MetaCritic, the higher the number the better and a color coded number in the green is what you really want. Out of the 22 films on the MetaCritic list, only one reaches that level and, to no surprise, it's the best film of 2013 so far (yes, my opinion), Steven Soderbergh's Side Effects.

Yes, it's the doldrums of the first two months of the year and yes, I'm sure you could go back over the past couple years and I've probably written similar articles, but during today's podcast our Box-Office Draft Challenge got me to thinking.

We're currently wrapping up our Winter 2013 draft, in which my podcast co-host, Laremy Legel, and I each selected ten films opening in the months of January and February. We take the reported budget, multiply it by 2.5 and that is the number our films must hit at the worldwide box-office in order to break even. The person whose films make the most money, wins.

If you're wondering about that 2.5 multiplier, it's clearly not scientific, but it's meant to take into account not only production budget, but marketing costs, prints, studio/theater splits and international distribution rights. As far as we're concerned, it's close enough even though it's obvious not every film is the same and studios don't always bear the brunt of the burden. For example, Warner Bros. spent something like $20 million to purchase rights on Cloud Atlas so that $102 million budget wasn't exactly all theirs to earn back.

Now lets take a look at the current results, which show neither Laremy or I have actually selected ten films that total enough money for us to break even. In fact, we are both more than $300 million in the hole. Only five films out of the 20 selected have managed to make a profit based on our formula.

Here's the current state of our draft as of the publishing of this post:

Laremy's Picks
Movie Date Budget Box-Office Current Total
Promised Land Jan 4 $15m $7.5m -$29.9m
The Last Stand Jan 18 $45m $31.3m -$81.1m
Movie 43 Jan 25 $6m $23.1m $8.1m
Hansel and Gretel: Witch Hunters Jan 25 $50m $181.2m $56.2m
Stand Up Guys Feb 1 $15m $3.3m -$34.1m
Side Effects Feb 8 $30m $28m -$46.9m
Beautiful Creatures Feb 13 $60m $32.3m -$117.6m
Escape from Planet Earth Feb 14 $40m $43.1m -$56.8m
A Good Day To Die Hard Feb 14 $92m $221.1m -$8.8m
Dark Skies Feb 22 $3.5m $13.3m $4.6m
      $584.7m -$306.5m
         
Brad's Picks
Movie Date Budget Box-Office Current Total
Texas Chainsaw 3D Jan 4 $20m $34.3m -$15.6m
Gangster Squad Jan 11 $60m $96.1m -$53.8m
Broken City Jan 18 $35m $19.6m -$67.8m
Mama Jan 18 $15m $104.7m $67.2m
Parker Jan 25 $35m $17.4m -$70m
Warm Bodies Feb 1 $35m $85.7m $1.7m
Bullet to the Head Feb 1 $55m $9.4m -$128m
Identity Thief Feb 8 $35m $108.4m $20.9m
Safe Haven Feb 14 $28m $57m -$12.9m
Snitch Feb 22 $35m $24.4m -$63m
  $557.5m -$324.9m
         

In addition to the draft, Laremy also does the weekend box-office predictions for RopeofSilicon every Thursday and as of late the comments and predictions on his posts have been down. Quite simply, no one seems to care about the movies being released and can you blame them when the only film in the top ten at the box-office with a majority of positive reviews first hit theaters almost five months ago and went nationwide over 45 days ago?

The issue, of course, is larger than just looking at the awful months of January and February as a recent article in The Economist points out.

In 2011 American cinemas sold 1.28 billion tickets, the smallest number since 1995. Last year, ticket sales rose back to 1.36 billion and box-office revenues to a record $10.8 billion, thanks to blockbusters like The Avengers. But film-going in America is not a growth business, especially now that people have so many media to distract them at home. The share of Americans who attend a cinema at least once a month declined from 30% in 2000 to 10% in 2011. Analysts expect revenue from American cinemas to be flat for the foreseeable future. Even people in Hollywood admit that America is a "mature" film market. That is no compliment in a town where ageing puts you out of work.

No one is going to the movies!

While the article does point out how much studios depend on a film's performance not only in theaters, but at home, but also adds this caveat: "Hollywood's movie studios are confronting three long-term problems: less lucrative home-entertainment divisions, the rising cost of making films and the terms they get in fast-growing new markets."

We all know DVD and Blu-ray sales are declining, falling 36% in fact since their peak in 2004. "People are still watching the same amount of movies that they did a few years ago," Todd Juenger of Sanford C. Bernstein, a research firm, told The Economist. "They're just spending $6 billion less a year to do it." Yet, studios seem to be spending more and more and the more they spend the less those record revenues mean.

Oz the Great and Powerful carries a price tag of $325 million (source) as a result of its production and marketing costs and last weekend's box-office bust Jack the Giant Slayer cost a reported $300 million to make and market.

While Oz does carry a name brand and is estimated to be heading toward $80+ million this weekend, audiences are beginning to sniff out these big budget losers and are waiting until they hit DVD/Blu-ray and the streaming market.

To these rising costs, The Economist piece adds:

Meanwhile, costs are rising. Everyone had expected technology to make it cheaper to produce films, but the opposite has happened, says Michael Lynton, the boss of Sony Pictures. A move from analogue to digital film enabled perfectionist directors to shoot more takes and touch them up afterward, using up expensive production and editing time. Studios have also started to make more "tent pole" films: big releases that can support the bottom line like a pole holds up a tent. These typically rely on expensive special effects, rather than compelling scripts, to attract a global audience. They often cost $200m to make and another $50m-100m to market.

When costly movies flop, the losses are scary. Disney took a $160m write-off after the failure of a single one, John Carter, a confusing space adventure. Studios used to be able to sell tickets and DVDs even for duds. Now social networks and fan sites ensure that bad reviews spread quickly, sinking a film's reputation faster than a director can shout "cut".

With social networks the world has become a much smaller place. Opinions spread like wildfire and while studios try and control the conversation, if you look at some of the content on the Facebook and Twitter pages it's almost laughable.

Interestingly enough, studios always seem to feel throwing money at the problem is the best solution, not sorting the quality from the crap.

As I sat in the theater and Hansel and Gretel: Witch Hunters was about to begin, a four-minute preview for this summer's $185 million sequel G.I. Joe: Retaliation played, a film of which I expect the marketing costs are astronomical. It was then I realized what Paramount had done with the Hansel and Gretel. They'd turned a $50 million film into a $50 million bonus feature attached to a G.I. Joe commercial. Fortunately for them, Hansel and Gretel is one of this year's only monetary successes so far, but looking at the final product I'd argue it was hardly a gamble worth taking, and looking at the price tag on Joe I can't help but wonder if the money spent there couldn't have been spent much more wisely.

When it comes to evaluating the year a studio had, recent news regarding The Hobbit: An Unexpected Journey and Skyfall crossing the $1 billion mark is all anyone is discussing. When there's talk of The Hunger Games success ($686m worldwide) no one mentions Dredd which brought in $35 million on a $50 million production budget. Warner Bros. made money on The Hobbit, but the $75 million they spent making Rock of Ages resulted in $56 million at the box-office. And Columbia loved the success of Skyfall, which they shared with MGM and Fox handled the DVD/Blu-ray release, but what about the $70 million spent to make That's My Boy and the $57 million it made?

With only 10% of the population seeing one film a month and this month it looks like it's going to be Oz the Great and Powerful, there are a lot of films being made that probably don't have any business in the multiplex and those review ratings at the top and recent box-office results would seem to support such a claim.

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  • http://www.ropeofsilicon.com/profile/Xarnis/ Xarnis

    I try to go to movies as often as I can, to support the industry, and because I just like watching movies in general.
    But it seems the only movies the "general public" want to see today are blockbuster superhero movies or comedies, which are usually not as good as other films from that year, which results in many movies losing a lot of money.
    I also think that Netflix is definitely hurting the DVD/Blu-Ray sales, and I rent movies from Netflix more often than I buy them.
    I still think movies will be made, but I think that the film industry is on a downward slope at the moment, which is very unfortunate. But te industry will probably pick back up again somehow.

    • Brane

      I support the industry too, and love going to the movies. But except for the Oscar nominated movies, this year's movies are poor. I went to see Flight in my local theatre in Zagreb, Croatia, and the trailers were shown for Bullet to the head, G.I. Joe, Scary movie and Jack the Giant Killer. Not interested.

  • http://timeforafilm.com Alex Thomas

    Perhaps I should be grateful that January and February was full of Oscar nominated films over in Australia (SLP, Django, Lincoln, Amour, ZD30). The new releases were very slim though, can see why ticket sales would be down....

  • Jack

    Look at Silver Linings-it's been in theatres since November.

    But also look at Identity Thief-terrible reviews and poor word of mout, and it was the number 1 movie twice.

    It's strange what catches on and what doesn't.
    No such thing as a bankable star anymore. Channing Tatum is a different case-because 21 Jump Street/The Vow nobody went to see just for him. Magic Mike has all due to him. Take out Tatum and just leave it as the stripper movie for women-it doesn't even make $50 million.

    Also, a lot of good movies are mismaketed. Look at Killing Them Softly-Brad Pitt, a world famous actor, marketed as a nonstop mafia movie, when there was any actual marketing. People go to see a Brad Pitt action movie and instead get an art house movie without much Brad Pitt. What do you expect happens?

    The budgets are just way too high anymore. studios are setting themselves up for failure. I don't care-no movie needs to cost $300 million dollars, then another $100 million for marketing. Now that movie needs to make $800 million just to break even.

    Plus, I think way too many movies are getting made.

  • http://letterboxd.com/gman/ G-Man

    It's kind of funny how for the last three months or so of last year I was going to the theatre to see a solid five movies or so a month. This year, I've seen three movies released in 2013 so far, and only one of them I had expectations I would really enjoy (Side Effects). The other two, A Haunted House and 21 and Over, I just went on a whim because there wasn't much else going on. Truth is, I'd rather stay home and catch up on an older movie I've never seen or watch a TV series I'm interested in, all of which has become so much easier due to streaming Netflix and Amazon Prime. I still love going to the movies - nothing can match that experience for me. But when you're putting out garbage, it leaves me little desire to check it out, even with my prepaid MoviePass allowing me to watch unlimited 2D movies every month.

    • Bertram J. Krogh

      Why does MoviePass have to be America only? I would kill for that thing! I’m stuck here in Denmark, where they show films like, 6 months after American release, and they show SO FEW IT’S UNBEARABLE. I envy you guys.

  • Vince O.

    I just have better stuff to do with my time & think a lot of what Hollywood has been churning out looks terrible. Don't get me wrong, I'm not one who is hard to please, but honestly, you're crazy to think that I'm going to pay $10+ for a movie about Hansel & Gretel becoming witch hunters, a lazy, cash-in Die Hard sequel when I never even liked the franchise to begin with or a lame Twilight knock-off with witches instead of vampires.

    So I'm not drinking this year, so I've been allocating that money towards film as of late. $10 might get me a drink or two at a bar or I'll use it to see a dumb action movie with Sylvester Stallone (I did watch Bullet to the Head, for the record, as well as The Last Stand). But that's just me. Why would I pick some of these movies when I have dozens of movies & TV shows on my Netflix/Amazon Instant/HBO Go queue? When I have a ton of physical & digital novels & comic books stacked in my room? When I have a huge backlog of games (some games that I got for cheaper than what it costs for a movie ticket) that'll keep my attention for at least twice as long as the length of a film? When I can go out with friends, go to the gym, go work at my day job, etc.

    Hollywood is forgetting that big-budget films don't automatically equate to "blockbuster/event" status. You can market a film however you like but if you don't deliver the goods, we can smell it from miles away. Marketing & a built in audience only gets you so far. True successes grow organically.

  • Susan

    I guess I just have no faith in the movie going public, at least in regards to theatres. We all know there's a plethora of ways to see stuff at home minus crowds/loud people/high prices and it only takes a few months to do so after the initial hype and release. I don't blame people for not going to movies in droves. However, I think quality has little do with what gets seen, at least more often than not. It's more about the event, and with the aforementioned ease, people just skip the theatre experience and smaller, quality films, or ones with less explosions in mind, get ignored until then.

  • http://www.iamramiam.blogspot.com Movieram

    Give me some bona fide movie stars in well-written quality films and I'll gladly go spend hours at the multiplex. But how often is there something there that's better than House of Cards or The Walking Dead? Frankly, if a movie can't get at least a 60% rating on Rotten Tomatoes, why should we waste our time?

    I'm in the 10%. Since January 1, I've seen Jack Reacher, Silver Linings Playbook, Zero Dark Thirty, and Side Effects. Side Effects is the only 2013 release that held much interest for me. I may choose to see a couple of the releases on DVD in the future, but will they really appeal to me then? (Maybe, with reduced cost).

    No doubt, the cinema experience is better in the theater. If people don't talk, cell phones don't light up, the theaters are clean and well-maintained, and the theater staff doesn't start cleaning before the end credits are over.

    Trim back the budgets. We will see much better films over all. Or put all the money onscreen like in Skyfall. I always did think Hollywood executives were mostly stupid. Chances of financial success are better if you make five 20 million dollar movies instead of one 100 million dollar one.

    Another thing that hurts January and February box office is that the weather is atrocious in a large part of the country during that time. But mostly, the movies suck.

    I think there's a big problem with the way movies are marketed too. We all can't go out and catch a film the first weekend. In fact, the experience is often better four weeks later when we have the theater to ourselves. How can most movies get good word-of-mouth when they are expected to perform opening weekend, and are classified as successes or failures by that standard. It hasn't been that long since My Big Fat Greek Wedding built to a phenomenon over a six month period. Do some regional rolling out of films and reduce the advertising budget by advertising smarter.

    And don't tell the whole darn story in the trailer. Leave some surprises for the film.

    Those are my thoughts. I'd love to see more good, mature, thoughtful films. And I thought 2012 was a good year for movies!

  • http://www.ropeofsilicon.com/profile/Corbin/ Corbin

    Well, no matter how depressing that news is, at least we got a sneak peek at Brad's Oz: The Great & Powerful review.

  • chriscarmichael

    Many of those numbers are HIGHLY inaccurate I have to say. Stand-up Guys only had a few million at most spent on P+A.
    ALso, Dark Skies had more than 12 million spent on P+A. Not 7 or so.
    The 2.5 times budget rule is certainly not always the case. Espescially when concerning smaller films and independant releases.

    • http://www.ropeofsilicon.com/ Brad Brevet

      Which I pretty much said, but okay.

  • Jaylav3205

    Good article Brad. I love the movies and will go to the ones I think will be able entertaining. I think the lack of people going to the movies is because of all the home media options. The movies use to be an experience you couldn't duplicate anywhere. Now you have Bluray and hd tvs. I also think another big thing is writers/directors are finding it easy to make tv shows the way they want to and they get to expand on more then what a 2 1/2 hour movie can hold. I think the movies will always be around but you will see a lot more good writers/directors going to tv to tell there stories and trust that they will bring them to life. I love movies and tv shows but I am starting to notice that I like the stories more in tv shows now then I do in most movies. Just my thoughts on the subject.
    Thanks again for the article. I like thought provoking pieces like this

  • Roger

    Personally, I am now used to waiting 3-4 months to rent a movie at home rather than go to the theater. Now I tend to go mostly in the summer and see the bigger blockbusters or anything that I personally believe should be seen in theaters. I am looking forward to seeing movies like Lincoln, Silver Linings Playbook, Les Miserables etc...but I have no problem seeing those movies in the comfort of my home. I would rather see movies like The Hobbit or Skyfall or Iron Man 3 on a big screen. But that's just personal preference.

  • Roger

    Also, another thought touched on by other users, TV Shows are getting so much better. I would much rather see shows like Game of Thrones, Homeland, The Walking Dead or The Following than movies like Hansel & Gretel and Jack The Giant Killer. It's hard to get myself out of my home and pay a ridiculous amount of money to see mediocre movies when any one episode of the above mentioned shows are far more entertaining, and it plays right on my TV. TV is in a great place right now, we have top-notch shows that we wouldn't think to be seeing on television even 5 years ago.

  • Irf

    Well, no doubt the 3D re-release of JURASSIC PARK next month will see that movie finally joining the billion dollar club, enabling Hollywood to gloat about how profitable established methods remain.

  • Helgi

    Just about time someone told the truth! The studios are run by robots in suits and they have no respect for storytelling in any form whatsoever.

  • Tarik

    Say, I'm stupid for saying this but I honestly think that they should make film less expensive or offer more scholarships to the students so people who have that natural creative poor and ambition to perfect their craft can have a chance. And also have the resources and connections available to them as well. I feel like too many films are being made from crap storylines and they lack originality and creativity. I don't want to sound self righteous but I feel like this new generation has a lot more creative ideas as far as films go and you will never see them be given the light of day because they don't have the connections to do so. I don't know I feel like it's becoming more about the money than the stories and it backfiring because these films are making any money at all. I would also like to mention that I am aware that what I said makes no sense, I was just saying a bunch of random thoughts.

  • adu

    I would love to watch as many movies as possible in a theater, but due to my financial situation, I only watch appealing big-budget ones. I do however make an effort to watch as many 'quality' films that come out in the latter half of the year at the theater.

  • http://www.ropeofsilicon.com/profile/JohnTree/ JohnTree

    I came to this article late, but I created an account just to post my thoughts on this subject. I'm in the group who doesn't get to the theaters very often, and I see an increasing trend for studios: per-scheduling the home video release date at the time of the theatrical release. Or, if not quite that explicit, announcing the home video release within 1-2 weeks of the wide open for the film.

    This virtually guarantees that you will never have the "films with legs" experience of years ago, when a film could find an audience and play for months theatrically. Dating myself, when I was a kid I recall a local theater getting & holding Raiders of the Lost Ark for 52 weeks - they held a Raiders party on the one year anniversary of the release. That was an extreme example, but when you pre-set the home video release at or just after the time the film hits theaters, you've guaranteed that a 'sleeper' hit will never find its audience in the theater (only on home video, TV, etc.).

    I've lost count of the times I checked the online movie times to see that a film I wanted to see had not only left first-run, but even second-run/"dollar" theaters. And this was between 4-6 weeks after it first came out. When the 'average' moviegoer can't look for films to play *anywhere* for any reasonable length of time, why should they bother going? I'm not going to schedule my life around a film's release date - and if I can't get to the theater while a film is still playing, then my 65 inch plasma with a BluRay disc is a pretty good substitute.