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Author Topic:   Box Office - 2015
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posted August 28, 2014 01:36 PM     Click Here to See the Profile for indiedan   Click Here to Email indiedan     Edit/Delete Message   Reply w/Quote
Hollywood Pins Hopes on 2015 Lineup
By Erich Schwartzel
The summer movie season has been known to start early— "Captain America: The Winter Soldier" opened this year on April 4. But some in Hollywood would prefer the 2015 season to start now.
Excitement over a flurry of scheduled franchise sequels—and a comparatively lousy summer this year—has executives at the nation's top movie-theater chains and studios asking investors for patience. Specifically, about eight months.
Gerry Lopez, chief executive officer of AMC Entertainment Holdings Inc., told stock analysts on a July conference call, "it's a cyclical business, and this is the down part of the cycle." His chief financial officer, Craig Ramsey, chimed in to say 2015, on the other hand, "looks very, very, very good."
IMAX Corp. CEO Rich Gelfond told analysts last month that 2015 and 2016 are "shaping up to be some of the strongest box office years in recent history." And earlier this month, Cinemark Holdings Inc. CEO Tim Warner asked analysts: "How could you not get excited?"
Among the sequels due next summer are the car-racing action movie "Fast & Furious 7"; a return to Steven Spielberg's dinosaur fantasy with "Jurassic World"; and "The Avengers: Age of Ultron," which comes two years after the first "Avengers" grossed more than $623 million domestically. No movie besides "Captain America" and "Guardians of the Galaxy" this summer has cracked $250 million yet.
This summer's box-office revenues were down nearly 15%, compared with a year earlier, according to box-office tracker Rentrak Corp.
Some high-profile weekends like the July 4 holiday, which last year featured the animated hit "Despicable Me 2" and this summer offered Melissa McCarthy's "Tammy," were down more than 40% year-over-year. By contrast, next year's Fourth of July weekend is currently scheduled with two stronger contenders: a sequel to the stripper hit "Magic Mike" and a new installment of "Terminator" starring Arnold Schwarzenegger as the futuristic cyborg.
Also slated for next summer is "Pitch Perfect 2," the sequel to the sleeper hit that has built a sizable fan base since leaving theaters in 2012; superhero offerings "The Fantastic Four" and "Ant-Man"; and "Inside Out," from Walt Disney Co.'s Pixar Animation Studios.
Theater executives have been excited for 2015 since some high-profile titles were announced, but got more vocal about its prospects as this summer's season fell into a slump in June, said Eric Wold, an analyst at B. Riley & Co.
Ahead of next summer's expected windfall, theater owners are renovating, upgrading concession stands and acquiring smaller rivals. That allows executives to tell investors they've secured more screens before valuations rise with ticket sales next summer, he said.
Carmike Cinemas Inc. is already in the midst of a buying spree intended to boost its screen count by several hundred to 3,000.
"They know 2015 will be phenomenal," said Mr. Wold.
And if summer 2015 doesn't turn the tide, it'll only be four months until executives can look to "Star Wars: Episode VII" in December.


A-List Writer

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posted August 28, 2014 01:37 PM     Click Here to See the Profile for indiedan   Click Here to Email indiedan     Edit/Delete Message   Reply w/Quote
For Hollywood, Not All Box Office Dollars Are Equal

By Ben Fritz

The cut of each box office dollar that studios take varies from as little as 25 cents in China to about 50 cents in the U.S. Above, people watch 'Titanic 3D' at a theatre in Taiyuan, China. Photo: Reuters
"Transformers: Age of Extinction," released last month, made just over $1 billion in movie theaters around the world, about the same as its predecessor, 2011's "Transformers: Dark of the Moon."
But not all box office dollars are created equal. The recent film will likely generate tens of millions of dollars less in revenue for Viacom Inc.'s Paramount Pictures than the previous installment in the hit series. The reason: "Age of Extinction" took in far less than its predecessor in the U.S. and Canada—and far more in China.
The cut of each box office dollar that studios take varies from as little as 25 cents in China to about 50 cents in the U.S. On top of that, more-developed nations have robust DVD, digital and television markets that generate additional revenue following a movie's run in theaters. Developing countries, as well as ones with high piracy rates, have small or virtually nonexistent post-theatrical businesses.
"A dollar of box office is not a dollar of revenue," said Bill Block, chief executive of film finance and production company QED International.
The actual revenue value for Hollywood studios of a box office dollar—the only financial data point typically reported publicly—varies widely. In China, where nobody buys DVDs—at least not legitimately—and digital and TV distribution businesses are minimal, studios receive only about 27 cents on the box office dollar, according to internal studio analyses viewed by The Wall Street Journal. In the U.S., with its comparatively robust post-theatrical businesses, $1 of box office translates into about $1.75 of total revenue over a decade.
"It's a question of how much of that you can collect and how robust the ancillary markets are, and that really varies between territories," Mr. Block said.
A U.S. movie that sold $100 million of tickets domestically would allow a studio to collect about $50 million during its theatrical run, but over the next decade could bring in another $125 million ifrom sources including DVD sales, video-on-demand, and airings on HBO, basic cable and Netflix.
Russia and South Korea generate about 55 cents per box office dollar, according to the studio analyses, while Japan brings in 83 cents and the U.K. $1.30 over about a decade.
Box office is a strong, though imperfect, predictor of DVD sales. In addition, higher ticket sales typically trigger higher payments, up to a cap, for future TV airings.
Domestic box office sales are down 15% in the U.S. and Canada this summer, according to Rentrak Corp., which collects movie sales data. That's largely because studios released only 12 movies with budgets close to or more than $100 million between May and August, compared with 22 during the same period in 2013. Production delays on several would-be blockbusters contributed to the downturn in releases.
At the same time, domestic audiences seemed to lose interest in certain franchises.
This summer's "Transformers" took in $244 million in the U.S. and Canada—a low for the series and a full $108 million less than the previous installment in 2011. In China, meanwhile, where Paramount signed several partnerships in a major push for the movie, "Age of Extinction" made $301 million, compared with $165 million for "Dark of the Moon."
Combined, that's a $28 million gain in ticket sales for "Age of Extinction." In terms of ultimate revenue to Paramount, however, it is expected to lead to significantly less.
Revenue formulas are estimates and vary for any particular movie based on a number of factors including genre, competition, and word-of-mouth. A movie's ultimate profitability depends in large part on what a studio spent to make and market it. Despite the apparent drop in revenue, "Transformers: Age of Extinction" is the highest grossing movie world-wide so far this year and almost certainly profitable.
"The Amazing Spider-Man 2," from Sony Corp.'s Sony Pictures Entertainment and "Edge of Tomorrow," from Time Warner Inc.'s Warner Bros., also underperformed in the U.S. and made more in foreign countries with less-favorable box office splits and smaller home entertainment and television businesses.
"Trading U.S. dollars for dollars from other countries typically means your profitability is not as strong," said a senior executive at a major studio.
Sony's "22 Jump Street" took in less than "Edge of Tomorrow" world-wide—$304 million versus $364 million—but will likely bring in significantly more revenue. That's because the comedy sequel collected $190 million domestically, while the science-fiction film starring Tom Cruise made just $100 million in the U.S. and Canada.
Other summer movies whose revenue may be better than their global box office totals suggest, thanks to disproportionately strong performances in the U.S. and Western Europe, include Walt Disney Co.'s "Guardians of the Galaxy," "X-Men: Days of Future Past," from 21st Century Fox Inc.'s Twentieth Century Fox, "Neighbors" from Comcast Corp.'s Universal Pictures, and Warner Bros.' "Tammy."
Despite the smaller revenue opportunities, studios are expending more effort to reach moviegoers in fast-growing foreign markets. Their goal is to find new audiences in China, Russia and Brazil without losing viewers in the U.S., where theatrical attendance has been roughly flat for the past decade.
April's "Captain America: The Winter Soldier," for instance, brought in $83 million more than the first "Captain America" movie domestically and collected $116 million in China, where its predecessor wasn't even released under that country's foreign film quota system.
"What we're all striving for is that when these foreign markets explode, they bring in additional revenue, rather than cannibalize existing markets," said Joe Drake, a founding partner of the independent film company Good Universe.
Marketing costs also tend to be lower overseas, particularly in China, where government restrictions forbid most studio-sponsored advertising.
Although physical DVDs are unlikely to make a comeback, film producers are betting that as moviegoing increases in foreign countries, other post-theatrical businesses such as digital distribution and television will grow significantly in coming years, increasing the ultimate value of a box office dollar.
"You have to invest in these markets for the long term," said Nick Meyer, CEO of international film sales and production company Sierra/Affinity, "and ingrain the cinema-going habit."


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