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Saturday
Sep052009

Summer 2009: The Opening Weekend is Overrated

We reported last week that this was a record summer for Hollywood, edging out 2008 by about $10 million. And it was an interesting mix of success stories and failures. As expected, Transformers: Revenge of the Fallen was the top choice for moviegoers...except you could argue that it really wasn't. Because if this summer proved anything, it's that the open weekend is overrated.

True, Transformers earned the most money, even though critics hated it. That brought the old argument back that people don't listen to reviewers and that they simply don't matter anymore, a sentiment echoed by G.I. Joe director Stephen Sommers in early August, when he did a victory lap over the film's number one opening. Both films are from Paramount, both films had big opening weekends, but neither film continued to perform to that level once the marketing died down.

That's why the real winners from this summer are those films that continued to attract audiences well after the first three days and the millions of dollars spent on advertising. In my mind, there are five enormous hits that all played by these rules and really only two that survived by the opening weekend model, Transformers and Harry Potter. And it's great if you're on one of those teams, but most of the money this summer came from films that kept finding audiences weeks after the fact and were designed to do just that. Most movies that relied on opening weekends didn't meet the challenge: Wolverine, Terminator, G.I. Joe, Land of the Lost, and The Taking of Pelham 123 were all disappointments.

In order, those five movies that capitalized on word-of-mouth all summer long are The Hangover, Up, Star Trek, Ice Age: Dawn of the Dinosaurs, and The Proposal. From where I sit, The Hangover was hands down the movie of the summer. It wasn't even supposed to win its opening weekend, but even though it surprised with $44 million in that frame, nobody, anywhere, thought it would make $200 million, much less $270 million to become the number two comedy and the number three R-rated movie ever released.

It's a little difficult to compare the top two earners this summer in terms of total revenue (but not profit margin) with the movies we believe were bigger winners because Revenge of the Fallen and Half-Blood Prince both opened on Wednesdays, making it a little harder to compare weekends. So instead of looking at the first three days, we're going with the first two weekends because by that point, most of the advertising has slowed down for all the movies and people residing on the fence on any of those movies will have had a chance to make up their minds about buying a ticket or staying home. In other words, the test of the film on its own merits is more pure a couple weeks in.

In terms of raw dollars, if you compare The Hangover to Transformers after their first two weekends, The Hangover actually earned much more money: $165 million to $106 million. The difference is that The Hangover had already more than doubled its budget by that point and was running on pure profit. Critics also happened to love it. So did audiences. Imagine if Revenge of the Fallen was as good and fun as the first Transformers. Think of how much more it could have made by continuing to generate audiences the way The Hangover did.

In fact, if you extend that argument, Up made around $150 million after its second weekend, Trek made $109 million, and The Proposal earned just under $100 million even though it came out five days ahead of Transformers, which was supposed to turn the skies dark for everything else in theaters. So even compared with the big, bad Transformers, when it was left solely up to word-of-mouth weeks after the critics and the talk show circuits made their cases, The Proposal was nearly as popular as the alien robot movie, and significantly more popular than Harry Potter, making nearly 20% more. And as you go up the chart in comparison to the boy wizard, the numbers are more impressive for our other four winners.

So do you want a big opening weekend or better results over the long haul? If you're Stephen Sommers, it's the first answer; his remarks about how out of touch critics are with the mainstream moviegoer were undercut when those same moviegoers ditched his film pretty early. Even though it still has a few weeks left, G.I. Joe has only earned $35 million after its first two weekends, meaning it's running about even with its August 7th counterpart, Julie & Julia.

Actually, because it's never been in fewer than 1,000 more theaters than the Meryl Streep/Amy Adams film (and opened in about 1,500 more), G.I. Joe is by any standard the less successful film. It cost over four times as much to make and in the US is still working from a deficit. And considering that there's no way Joe will double its money even with worldwide grosses - a figure that's still well below expectations for most tentpoles - it's barely successful by any definition in the overall scheme of things.

The two movies with the biggest earnings combined to make right around $700 million in the US. Potter brought in more than Transformers worldwide because of its strength in the international markets. And while we don't know the marketing budgets, we know they were huge. Last winter, Valkyrie spent over $75 million on its advertising, and it's nowhere near the kind of blitz we see in the summer.

So you can conservatively add $100 million or more to each budget, meaning that $700 million made up for total costs around $650 million. Globally, it's about $1.8 billion in box office for both movies, but there are increased marketing and distribution costs there, as well. Oh, they're profitable, but among blockbusters, they're not the most profitable.

Suddenly, they don't look nearly as impressive when you compare them to the five films in our discussion. The total production costs for those five films is $480 million. Of the five, only Star Trek will fail to triple that amount in global sales. We'll estimate the total marketing costs at $375 million. Up and Trek were probably in the $100 million range; Ice Age and The Hangover were probably around $65 - 75 million, and The Proposal was significantly less. That thing existed almost entirely on positive word of mouth and its position as the only romantic comedy between May and mid-July.

Even if those advertising budgets are a little larger, it hardly matters; the five films earned $1.17 billion in the US alone, accounting for more than 28% of all ticket sales this summer. In keeping with our theme that it's not just about the opening weekend, those same five movies, after the first two weekends, were responsible for just shy of 15% of all summer tickets sold. We should also point out that really only two of them - Up and Star Trek - were designed to play for keeps in the domestic market this summer. The rest of it is gravy. Ice Age is more of a global player than a US event movie, and The Hangover and The Proposal were big surprises. Total ticket sales for the two $300 million movies after the second weekends: $180 million, or 4% of summer movie revenue.

The lesson for Hollywood in all of this is simply that audiences don't care if you spend $200 - $250 million on a movie. That opening weekend is all about building hype, and it costs a ton of money to do that. Or you can let the hype build itself because people who check out a movie in its first few days tell some friends how good it is and it grows from there. It sure looks impressive that Transformers makes $90 million in two days, but that barely covers the amount of money spent to make that $90 million in the first place. Why not make a smarter, better, cheaper movie that people would want to see again and again, or even just recommend to other people?

There are multiple examples of exactly that in Summer 2009, movies that beat audience expectations first and financial ones second. And those are the real hits.

Reader Comments (8)

This article continues to prove why getthebigpicture.net is one of the best movie blogs around. It's more about the quality of film, and about the low-budget films that do really well. I am also glad that someone else gave Transformers a 1/10 (or 1/5 dirty apes in this case)

Saturday, September 5, 2009 | Unregistered CommenterNelson

I have trouble with the argument, that just because a film made less money after an arbitrary date, that it was somehow less popular. Because that ignores the fact that on opening 5 days for Revenge of the Fallen was nearly 74% of the The Hangover's TOTAL GROSS. Yeah, it made a lot of money and made investors and studios happy, but at the end of the day, the big loud films still grossed more then the films that relied solely on W.O.M. So, while it is a good attempt to show how word of mouth affects films box office gross, the tearing down of other films was flatly unnecessary, especially when the numbers show that it is not quite as close it is spun out to be.

Saturday, September 5, 2009 | Unregistered CommenterPJ

Perhaps now that I've opened the door by including the entire summer, it will make more sense if we just set up a hypothetical situation:

Movie A cost $30 million movie and spent $75 million on marketing. It took ten days to turn a profit based on that math. Following that point, it made another $165 million - all profit.

Movie B cost $200 million, spent at least $100 million on commercials and billboards, also took ten days to turn a profit and after that point made $50 million less than Movie A.

Which is the bigger success story?

It's not strictly about grosses, because this is a profit margin game, otherwise Warner Bros wouldn't be sore about last summer's Get Smart only making $220 million worldwide, three times its production cost. The Hangover almost made 10 times its budget, so it's a better studio investment than Transformers.

It's also not about tearing down a movie or movies but rather the model that puts all of its eggs in the opening weekend basket. I loved Harry Potter, but the fact is that after the advertising wore off, more people would have rather paid to see The Proposal, and they did.

If these movies were stocks and you had 100 shares of Transformers and Potter it would cost you more to get in, even though you'd sell really high. If I had the other five films, I'd make much more money when I cashed in because I bought lower.

Saturday, September 5, 2009 | Registered CommenterGet The Big Picture

When you are talking profit is still worth noting that Harry Potter and Transformers made a significant amount of money via merchandising which is something that The Hangover and The Proposal could not do at all and that Up, Trek and Ice Age could not do nearly as effectivily. While you can argue that the box office performance of the wizard and the robots were not as impressive as the other five films I have a tough time imagining that when all revenue sources are included that they were not better investments.

Saturday, September 5, 2009 | Unregistered CommenterD

Oh and sorry for the double post, but The Hangover is only the third highest grossing domestic comedy of all time behind Home Alone and (shudders) Meet the Fockers. But it did just open in quite a few international markets in the last few weeks so it might be able to catch them in worldwide gross.

Saturday, September 5, 2009 | Unregistered CommenterD

That's a very good point, but think of all the third parties getting payouts on that stuff. They also have separate marketing costs and production expenses to consider. And then there are back-end points to consider for Transformers. Michael Bay made $75 million off the first one, so his cut of the sequel cut into the total revenue considerably.

Oh...you're right about the comedies, D. My mistake.

Saturday, September 5, 2009 | Registered CommenterGet The Big Picture

Transformers was not that bad but it was also not great and unfortunately it could have been a lot better. Maybe thats becasue I was expecting the worse. I enjoyed it until the last 30 minutes of action just seemed to drag way too long. Good article Colin keep them coming

Saturday, September 5, 2009 | Unregistered CommenterBrandon

Yeah, good article Colin. I was shocked to learn that Stephen Sommers will start filming the sequel of GI Joe as early as end of the year. The explanation given by Paramount does not make sense to me : "Because of the successful outing of ‘GI Joe: The Rise of Cobra’ with US$288 million revenue worldwide, the production is wasting no time to start with the sequel. "

Monday, September 21, 2009 | Unregistered CommenterDarkAngel

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