Could Hollywood possibly be in a box-office slump? Yet again?

Kristin here:

Speculative articles are presumably a lot cheaper for a news publication to run than are those pieces that involve travel, time-consuming research, and tracking down experts to weigh in on important events. The reporter need just sit at a computer, look at whatever evidence is at hand or a phone-call away, and opine on what one might expect to happen in the future. In part, of course, the opinion will be based on what happened in the past. The question is, what sort of information from the past would be most helpful in speculating with some likelihood of being right.

Not that it matters too much, since it’s pretty rare that months after events happen anyone goes back and checks on predictions made about them. That goes for prognosticators of award winners and of future hits and flops.

 

What might happen?

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In this era of shrinking news media and burgeoning everything-else media, speculation has run rampant. It sustains the 24-hour news channels between breaking stories and a lot of print publications as well. Politics can generation all sorts of guesses and opinions, especially now, since there are so many players who can’t be expected to behave rationally. Variety and The Hollywood Reporter (both of which have advertising-supporting online versions) were once full of useful, hard-news articles that we film historians could snip and file away for, oh, say, cyclical revisions of a film-history textbook. Now David and I still subscribe to both and consider ourselves lucky if an issue has one or two truly informative pieces.

Not that these venerable publications are overwhelmingly full of speculative pieces. There’s the gossip, the real-estate section, the fashion section, the ten or twenty-five or one hundred most-powerful [fill in the blank] in show business, and so on.

But speculation seems to dominate in trade journals devoted to entertainment and film. There are obviously the predictions for Oscars and Emmys and other awards, which have become a year-round occupation. (The Oscars were given out in February, and almost ever since we’ve been getting lists of possible nominees for 2019, many for films not coming out for months.) Variety, The Hollywood Reporter, and other trades indulge in awards-prediction coverage far more extensively than they used to, since it presumably extends the period during which film studios and distributors take out expensive “For your consideration” ads.

Box-office trends are often interesting and even useful to read after the fact, in the year-end analyses. They are, however, pretty vapid when presented piecemeal, month by month. There are a great many clichés that writers trying to fill page-inches with speculation can treat as if they are news. One particularly persistent and illogical one is that the industry must be in a slump when total grosses go down after a record-breaking year. We’re now at that stage in 2019 when enough films have come out to allow comparison with last year’s figures by this date.

Pamela McClintock recently wrote such an article for The Hollywood Reporter: “Will Red-Hot Avengers Blaze the Path to a Sizzling Summer?” in the April 30 print edition, and, with the strange habit that these trade papers have of changing articles’ titles for the online version, “‘Avengers: Endgame’ Will Need More Help to Save Summer Box Office”. Just after Avengers: Endgame opened, McClintock wrote that

North American revenue is still down 13.3 percent year-over-year during the January-to-April corridor, throwing cold water on predictions that 2019 could eclipse the best-ever $11.9 billion of 2018. (Before Disney’s Endgame unfurled April 26, revenue year-to-date was running nearly 17 percent behind last year, its lowest clip in at least six years.)

Nonetheless, analysts remain cautiously optimistic that Hollywood can at least match, if not best, 2018’s mark by Dec. 31, with predictions for the global haul settling a new benchmark of north of $41 billion.

These predictions are based on optimism about the plethora of upcoming sequel items and reboots: Aladdin, The Lion King, Toy Story 4, The Secret Life of Pets 2, Fast & Furious Presents: Hobbs & Shaw, Spider-Man, and Godzilla: King of the Monsters.

Let me point out three things.

First, in virtually all cases of year-to-year comparison are based on dollars unadjusted for inflation. Inflation is different in different countries, so trying to achieve a total global figure for any given year would involve a separate calculation for every country where movies are shown—which is close to, if not totally, impossible to do. Adjusted figures are helpful for some purposes, especially for comparing domestic grosses within the USA. For example, virtually everyone was claiming that the three Hobbit films outgrossed the original three Lord of the Rings films. In adjusted dollars, though, LotR is still the champ.

Here’s a helpful hint. Box Office Mojo has an inflation adjuster in its upper-right corner. If someone were to want to compare the domestic gross of Avengers: Endgame to that of some older film, say, Avatar, it would be informative to use the figure shown below instead of, or at least alongside, its gross in 2009 dollars: $749,766,139. (All figures in this entry stated to be in adjusted dollars were done using this feature, and all charts are from BoxOffice Mojo as well.)

Seeing film grosses go up year after year can give the impression that the industry can go on expanding its earnings forever. Even after a record year like 2002 or 2009 or 2018, pundits seem to assume a slump if the following year sees lower box-office results. But every year can’t be a record year (except in movie executives’ dreams). The list at the left gives the total domestic gross of each year from 2001 to 2018 in millions of unadjusted dollars. Part of the rise is due to inflation. Part of it comes from ticket prices being raised beyond the inflation rate—which is part of inflation, especially from the ticket-buyer’s point of view. We all know, however, that the number of actual tickets sold is flat or declining, even if it spikes in a record year.

Second, usually a very few high-grossing films determine when there are record years. Avatar was the big film of 2009–but it had some help. More on this below.

Third, those high-grossing films are usually released in the summer and in the Thanksgiving-Christmas seasons. True, that cycle is breaking down in the current attempts by studios to avoid releasing the biggest films opposite or even near each other. Black Panther, the top grossing film of 2018, came out in February 16. The studio probably didn’t expect it to do as well as it did, but the very fact that a traditionally “summer”-type film came out that early and topped the charts will just reinforce the industry decision-makers’ believe that there can be big hits at any time of year.

The point, though, is that if really big films come out late in the year, their grosses earned after the New Year are counted for the following year’s total. So for example, Avatar came out on December 18, 2009, and well over half of its domestic earnings came in 2010: $466,141,929 out of the $749,766,139 total. As the list shows, total domestic earnings across the industry jumped by close to a billion dollars between 2008 and 2009, but there was almost no decline in 2010, partly because all but the first two weeks of Avatar’s run came then and partly because Toy Story 3 came out. As for 2009, it may have been the year of (two weeks of) Avatar, but it was also the year of Transformers: Revenge of the Fallen, Harry Potter and the Half-Blood Prince, and The Twilight Saga: Full Moon.

Thus in talking about record BO years and why they happened, it helps to look at when the top earners of the previous year were released.

Take another example, 2002, which for years was considered the target to shoot for when it came to setting new records for grosses. That was the first year that the domestic gross was over $8 billion, and 2001 had been the first year over $7 billion.

The year 2002 was cited as the benchmark for the industry because it had four really major films come out–a relatively rare event, or at least it was then. Three of them were from some of the top franchises of all time, and one established what is now the top franchise of all time: Spider-Man, Star Wars Episode II: Attack of the Clones, The Lord of the Rings: The Two Towers, and Harry Potter and the Chamber of Secrets.

The last two titles were released on December 19 and November 15, so they helped make the 2003 total even slightly higher than the 2002 one—helped out by the top four of that year: The Lord of the Rings: The Return of the King, Finding Nemo (is Pixar itself a franchise?), Pirates of the Caribbean: The Curse of the Black Pearl, and The Matrix Reloaded.

In fact, no year between 2002 and 2009 went below the 2002 gross except 2005. In 2003, three films had grossed over $300 million domestically (below right), while in 2005 only one, Star Wars Episode III: Revenge of the Sith did. The number two film, The Chronicles of Narnia: The Lion, the Witch and the Wardrobe, led to two sequels (from a seven-book series) that fared significantly worse at the box office.

Beyond that, however, was the fact that there was relatively little continuing box-office income being generated by 2004 films in early 2005. The top three films had all been released early in 2004 Shrek (May 19), Spider-Man 2 (June 30), and The Passion of the Christ (Feb 25). The number four film, Meet the Fockers (Dec 22), contributed a healthy $103,501,600 to the 2005 grosses, but number five, The Incredibles (Nov 5) was largely played out by the end of 2004 and gave only $8,760,254 to the 2005 total.

 

Consider the calendar

I’m not going to say whether 2019’s gross domestic box office will surpass that of 2018, because it doesn’t matter that much. Annual figures fluctuate but have been remarkably steady over the years (adjusting for inflation). The industry will make a lot of money as a whole, and Disney will do extremely well. There will be the occasional modestly budgeted film that becomes a hit. Every year has its A Quiet Place or Crazy Rich Asians, numbers 16 and 17 among box-office leaders last year.

I can, however, point out some relevant contributing factors.

First, as in 2005, there’s an unusually small amount of money carried over from films released late last year and still playing early into 2019.

The top four films for 2018, Black Panther, Avengers: Infinity War, Incredibles 2, and Jurassic Park: Fallen Kingdom all came out in the summer or earlier. The fifth, Aquaman, is the exception, released on December 21, it grossed $335,061,807, of which $196,040,927 was earned in 2019. The next “late” release in the top ten, Dr. Seuss’s Grinch (Nov 9) carried over a mere $2,167,215 into 2019, and Bohemian Rhapsody (Nov 7) a bit more with $25,026, 514 earned after the New Year. Thus 2019 has far less carry-over money contributed by 2018 releases than most years would. That’s presumably one reason–probably the main reason–why the first few months of the year have shown such a drop from the comparable period last year. That’s a little strike against 2019’s total that the pundits tend to ignore. Thus the early-2019 “slump” doesn’t necessarily mean that people are less interested in movie-going or that streaming services have suddenly made a huge impact. It just means that the biggest hits were released too early in the year to carry over much late income. It’s not necessarily a slump. It’s just that box-office income doesn’t really go by calendar years, even though we measure it that way.

Given this rare disadvantage, can this year’s blockbusters make up the difference and match or top 2018’s total grosses? Let’s do what Box Office Mojo does: look at what the last film of the franchises made. Let’s do that in adjusted 2019 dollars.

I should note that now more big tentpole films are grossing a very large amount of the total box-office. The three top films that helped create last year’s record made over $600 million domestically: Black Panther at $700.1 million, Avengers: Infinity War at $678.8 million, and Incredibles 2 at $608.6 million. Compare this to the 2003 chart above, where the top earners were making in the $300+ million range. That shift can’t be wholly accounted for by inflation, which isn’t that high.

How many films this year can do that, or at least get over $500 million? Even as I post this, Avengers: Endgame is hovering on the brink of passing $800 million. How about Toy Story 4 (which deserves to, if only for its incredibly clever and funny trailers)? Toy Story 3 made, in 2019 dollars, $480.6 million. Beauty and the Beast made $511.8 million, and The Jungle Book $375.8 million. Disney has two of these live-action remakes coming out this year, Aladdin and especially The Lion King. These three seem the likeliest possibilities.

Beyond that, The Secret Life of Pets made $389.0 in 2019 dollars. On the lower side, The Fate of the Furious made $227.5 and Godzilla $217.2.

The weirdest thing about the current speculation is that the prognosticators aren’t even talking about the entire year. Despite McClintock’s mention of total grosses for 2019 at least matching those of 2018 by December 31, the latest film that she mentions is Fast & Furious Presents: Hobbes & Shaw, due out August 2. But why are we worrying about a slump when it’s plausible that just the films released up to the to that point could by themselves bring the total at least close to last year’s? We’re witnessing a film that will make as much as two ordinary blockbusters and possibly become the top grosser of all time (in unadjusted dollars, at least). We’ve already seen one low-budget film become a hit. Us grossed $174,580,800–oddly enough, very close to the total for Crazy Rich Asians, which did the same last year. As I’ve suggested, we could anticipate at least two or three summer blockbusters grossing in the $500-600 million range.

But more importantly, there are, after all, films to come after August 2. Big films. Most notably, Frozen 2 on November 22. Frozen made $441.8 in adjusted dollars. There’s the untitled Jumanji sequel; the previous Jumanji entry made $404,515,480. (The BoxOffice Mojo adjuster isn’t adjusting 2017 or 2018 to 2019 dollars yet.) There’s Star Wars: The Rise of Skywalker. The last Star Wars movie, Solo, was an exception to the saga’s fortunes, making only $213,767,512; so let’s take the previous one, Star Wars: The Last Jedi, which made $620,181,382 domestically.  Beyond these there is a bunch of somewhat more modest sequels (Terminator: Dark Fate, It Chapter Two), as well as some potentially big stand-alones (Cats, A Beautiful Day in the Neighborhood, Rocketman). I personally am rooting for Jojo Rabbit (below) to become an unexpected hit. We’ll see.

The lack of attention to films coming out late in the year does make some sense. Right now the industry is concerned to promote its summer films. That’s what marketing people want to talk about  with trade-media journalists. November is a long way off. Plenty of time to start speculating about holiday box-office and the awards season come August.

All in all, taking the factors that I’ve laid out into account, it looks like a pretty safe year for Hollywood. I can’t quite help feeling that the hand-wringing over this putative slump just makes for a more dramatic story than one declaring that the 2019 box office is doing fine, thanks. Of course, it’s especially fine for Disney. The heads of other studios might be doing some justifiable hand-wringing.

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David has written an entry about a related ongoing trope in trade-journal coverage of the movie business. The box-office coverage during “slumps,” real or imagined, often gets linked to the “death of cinema” notion, which David discusses here.

Jojo Rabbit.

from Observations on film art http://bit.ly/2K5aOvn