Box office sleight of hand

[Jim3k]

The Columbia Journalism Review has a nice piece about how and why the weekly box office numbers are misleading. I'd bet that Jason fully understands all of this, as he is writing columns about movie finance. Because of the CJR premise, though, I'd like to see more about how the studios actually succeed (or fail) financially, even where the movie seems to be doing well in the theaters. Is Skyfall (or any other blockbuster) really succeeding on the business end? If the movie costs X to make, does the gross box office receipt actually mean success for the production company? CJR is saying--maybe, maybe not.

All this is simply observing that financial angels--like Grant Hill and Elton Brand--may not be in the catbird seat they would like.

So--Jason, what do you think? About CJR's premise? About the weekly box office story? About the fact that it's all marketing, not real accounting?

[JasonEvans]

Well...

First of all, I suppose this is a good article for folks who know very little about bxoffice and the movie business. Frankly, I think most of the folks around here are aware of stuff like the fact that films (especially action ones) generally make more money from international distribution than from US sales or that studios really make their profit from DVD, TV, and other ancillary products versus domestic boxoffice. There is little new to report there.

Similarly, the notion that a movie that lasts a long time in theaters can be more profitable than one that fades quickly (comparing MIB III to Moonrie Kingdom) is also something that I think most of us were already aware. When many of us talk about boxoffice in the "Top 5 Movies of Summer/Winter" threads we often refer to "long legs" and the impact of them on a film's overall boxoffice success.

The article author seems to be implying, though, that there is something wrong and artificial in the media's reporting of the weekly boxoffice race. On the one hand, he is correct that obsessing over "who was #1 at the boxoffice" is reporting in a vacuum and often misses what really matters to the industry. He is right that many of the stories on the weekly boxoffice race will only scratch the surface. But there are outlets and reporters who dig deeper and explain more.

For example, just a few weekends ago, Paranormal Activity 4 opened in first place with $29 million, easily beating 2nd place Argo, which made just $16 million. A story that merely said those two facts would be woefully short of the entire story. PA4's opening was very poor compared to PA2 ($40 mil) and PA3 ($52 mil). It was a clear sign that the PA franchise had worn thin and that the latest version of the franchise was not going to make nearly the kind of moolah the others had raked in. Of course, a thoughtful story on the weekend boxoffice race would also be wise to note that PA4 had only cost about $5 million to make (no name actors, a simple production format with few special effects), though it did have a large marketing campaign associated with it. Still, despite a relatively poor opening compared to its predecessors, there is little question PA4 will make a decent-good profit for the studio and its producers. What's more, despite slipping to 2nd place at the boxoffice, Argo had only slipped 15% from its opening weekend, a sign of huge word of mouth success and a movie that would have "long legs." to merely say that Argo had fallen to #2 would be woefully missing the full story of the success of that film.

There are assuredly boxoffice reporters (Boxoffice Magazine, Variety, Deadline, BoxofficeMojo, BoxOfficeGuru, and others) who would make note of all the above facts and conclusions. The "mainstream media" like USA Today and the cable TV outlets probably will only note "who won" and leave it at that. Though I think most people who care even a little bit about this stuff would go to the more in-depth reporters, who are easy to find on the internet.

One more thing I would add -- the article author appears to want to put down the importance of the domestic boxoffice race as if it barely matters. I think that is the wrong conclusion though. While studios generate most of their revenues from ancillary outlets, not theatrical showings, the size of those ancillary dollars almost always closely correlate to the size of the movie's boxoffice haul. One of my best friends works for TNT, TBS, and other Turner networks in film acquisition. When they bid to purchase the TV rights to a movie, the bid is almost always expressed as a multiplier of the domestic boxoffice. These deals are generally made before a film is even released in theaters, or very soon after its release. So, within days of a movie's release, TBS and TNT would offer to pay (for example) 2.4x the domestic boxoffice for the rights to broadcast that movie up to 20 times in a 3 year period, or something like that. Similarly, DVD sales are almost always higher for films that made big money at the domestic boxoffice and the international market almost always embraces a movie that was embraced by US and Canadian moviegoers. So, to say that domestic boxoffice does not matter -- well, that is just uninformed.

--Jason "still, a good article and one worth reading for anyone who cares a bit about how studios make money and how boxoffice works -- just not a lot there that I think most folks don't already know" Evans