News Column

Movie industry's tough summer may be just the start [Pittsburgh Tribune-Review (PA)]

August 11, 2013

YellowBrix

We've been through the housing bubble, the Dot-com bubble, and the stock market bubble.

The pattern always seems to be the same. First, a build-up of reckless speculation and risky over-investment.

Then the bubble pops.

Could the next economic bubble to burst be the movies?

Steven Spielberg seems to think so. In a widely reported speech at the University of Southern California in June, he predicted an "implosion" of the movie business, when three or four, or even five or six, $250 million mega-blockbusters all flop within a short timespan, which could disrupt the current movie-making model entirely.

As if on cue, this summer's epic array of blockbusters began flopping at a startling clip.

The summer started out terrific. After a record-setting May, June also set a domestic box office record, $1.25 billion, with "Man of Steel," "Monsters University," "World War Z" and "Now You See Me" helping it blow past June 2009's record of $1.09 billion, according to box-office tracker Box Office Mojo (www.boxofficemojo.com).

But the flops started to pile up, too: "The Lone Ranger," "White House Down," "After Earth" and "R.I.P.D." The big one, "The Lone Ranger," cost $215 million to make and has, domestically, so far only earned $87 million. Even with worldwide totals added, at $175 million, it's nowhere close to breaking even.

Even the giant $55 million opening-weekend take for "The Wolverine" is considered disappointing when compared to other "X- Men"-related movies.

"We're down like 20 percent from last year," says Anthony Breznican, senior writer for Entertainment Weekly and New Kensington native. "It is a down year for movies. It's shaping up to be the lowest year in eight years or so."

The main difference seems to be the sheer volume of big-budget movies out this summer.

"This is an extraordinary summer because there are more tentpole, blockbuster wannabes (costing more than $100 million) that need to make $200-300 (million) to break even," says Todd Cunningham, news editor for industry-watcher The Wrap. "There's been 20 this summer as opposed to 14 last year. Just about every week this summer, you have three or four movies debuting."

One of the culprits for slow box-office business should be fairly obvious.

"It costs a lot to go to movies," says Dawn Keezer, director of the Pittsburgh Film Office. "People have lots of options for how to spend their dollars. With all the new technology people have at home -- home theaters with 70-inch screens and surround sound -- it's hard (to compete). And the movies are in and out (of theaters) so quick. You can get it on DVD or On Demand almost the same day."

A report from the National Association of Theater Owners indicates that ticket prices rose from $7.96 to $8.38 in the past year. And there are plenty of regions in the country (New York City, for example) that would love to pay only $8.38. The proliferation of IMAX and 3-D movies, which can add $3 to $5 to a ticket price, is at least partly to blame.

Yet, each mega-flop, so far, seems to have failed in its own way.

"It is a down year overall for box office, but it's hard to ascribe a unifying theory for why that is," Breznican says. "Each film struggles under its own unique circumstances. M. Night Shyamalan (director of "After Earth") is just a director that no one wants to see anymore. The trailers weren't good. And it was more about Will Smith's kid than Will Smith.

"You have a lot of films like 'The Lone Ranger,' that failed to provoke excitement. I'm not sure who really wanted that kind of 'Lone Ranger' movie. Disney wanted a 'Pirates of the Caribbean'- style action-adventure-comedy that would make a billion dollars. I'm not sure the audience was ever there for the Lone Ranger, a character who hasn't been a big part of pop culture for 60-some years."

Sometimes, it doesn't take a lot of effort to see a flop coming. Did we really need two big-budget terrorists-invade-the-White-House movies in the same year?

"I think with 'White House Down,' you just had a movie with the same premise, 'Olympus Has Fallen,' that did reasonably well," Breznican says. "It felt like a retread. It didn't feel like 15 years ago when 'Deep Impact' and 'Armageddon' were just-different- enough asteroid movies (to both succeed)."

Though not remakes, movies like "The Lone Ranger" and "White House Down" weren't exactly full of fresh, exciting ideas.

"Hollywood continues to serve very old leftovers and wonders why people aren't coming over for dinner," Breznican says. "I think a lot of the problem with the summer box office is that studios have gone back to the well too often with types of movies that have been a success in the past, and the audience is tired of that. You look at, say, 'The Hangover Part III.' Summertime is perfect for a raunchy comedy, but you had a sequel already that wasn't original, and it soured people. This one was just as bad."

Not every blockbuster has tanked, though. Even this year, there are some, like "Iron Man 3" ($200 million budget; made $407 million domestically, $804 million worldwide), that do exactly what they're supposed to do.

"There were bound to be major casualties," Cunningham says. "There's just not enough people out there to make them all hits. But if one clicks -- like Disney did with 'The Avengers' -- you can see returns that will get into the billions for literally years to come. Sequels and licensing, merchandising, and in Disney's case, a theme park. It's all about trying to launch a franchise."

Yet, it's not hard to see some patterns in the big summer mega- flops. They're all special effects-laden action movies that seem to spend more on explosives than, say, "The Perks of Being a Wallflower" spent on everything. That's not an accident, either.

American humor doesn't always translate overseas, but explosions, crashes and computer-generated monsters don't have that problem.

"There's still a market overseas," Keezer says. "American movies are still the No. 1 export from this country. I think foreign (sales) has an impact on it. Making a product that appeals to both is quite a balance."

According to the Motion Picture Association of America, foreign box office is up 32 percent in the last five years, driven especially by growth in China, Brazil and Russia. Despite this summer's losses, it's possible that some flops will make their money back overseas, in time. Even that isn't entirely risk-free, though.

According a recent story in the Hollywood Reporter, the China Film Group has stopped paying the studios their 25-percent cut of the Chinese box office, due to a dispute over a new 2-percent value- added tax.

Even if a movie makes enough to cover its production budget, that doesn't mean it's making money yet. There's also the money that it costs to advertise a potential blockbuster.

"The studios are really, really reluctant to discuss marketing in general, and that number specifically," Cunningham says. "But for a big blockbuster, you can easily spend $100 million. You almost have to."

In 2009, there were plenty of stories asking, "Is 'Avatar' destined to flop?" (Slate). Obviously, despite its absurdly ambitious premise, embrace of unproven technology (3-D) and way- over-shot budget, it was a record-setting hit.

In fact, it appears that just about all of the increase in domestic box-office profits -- up 12 percent from 2012, according to MPAA -- is from the growth in 3-D. And lately, the novelty of 3-D has begun to wear off.

The percent of total box office from 3-D ticket sales for "Wolverine" fell to 30 percent, and 25 percent for the animated film "Turbo" -- both all-time lows, according to a report in The Wrap. These follow soon after the previous lows, "Monsters University," with 31 percent, and "World War Z" with 34 percent. Overseas, however, 3-D still seems to be doing well.

If it's any consolation, Spielberg's apocalyptic vision doesn't seem to be here quite yet -- $130 million flops are a magnitude lower than $250 million flops. "The Lone Ranger" was bad, but last summer's "John Carter" (cost $250 million; made $73 million domestically) was worse.

"I don't think this is the devastating blow that Spielberg was predicting," Breznican says. "I think it's a sign of really weak creativity in Hollywood at the moment."

Hollywood will learn some costly lessons this summer, though. It's unclear what will change, but one thing is virtually certain: Expect more sequels.

"Launching a franchise is about the toughest thing to do in Hollywood," Cunningham says. "Just about all these flops were originals. That's a big deal. The movies that hit -- 'Man of Steel,' 'Iron Man 3' -- were sequels. Why does Hollywood do sequels? They're safer."

Michael Machosky is a staff writer for Trib Total Media. He can be reached at mmachosky@tribweb.com or 412-320-7901.

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