It depends what paper you read. Some say that Spiderman 3 as a film was lame, others count the money that it took at the box office, and perhaps reflect that as predictable as the plot lines may have been, it’s not only better than anything else around, it has also reached more people than any other film in its opening weekend.
There were glowing reports printed in every type of webzine, film blog or industry paper, but there was also a feeling that all of these publications and services were back slapping a little too much, their air of desperation showing. Perhaps the film industry ‘doth celebrate too much.’ The truth is that no-one that drives the current film exploitation sequence of modern film can afford to think beyond the next few years, they all want instead to pretend that nothing is ever going to change in filmland.
Movies will be made, promoted by advertising and over the internet, clips will be shown all over the internet and on TV, stars will be interviewed on late night talk in programs, short form versions only will appeal on the handset, so again only clips will be shown and the film will be released to the hungry cinema going public, who have an inexhaustible supply of enthusiasm for going to the cinema because there isn’t anything quite like it. Later they will all buy the DVD, whether it be on Blu-ray, HD DVD or standard DVD platters. That future quite simply isn’t an option for the studios businesses around the planet if online delivery makes good on its promise.
The trouble is that the box office success of each successive film is ensured simply by mastering the logistics of launching the film in more and more cinemas. That way, even if only 65 seats out of 100 are filled in cinemas, a big movie, with a big advertising budget will still have a record weekend. But for how long will this remain true?
Spiderman 3 took around $148 million in US ticket sales and broke records set previously by the Pirates of the Caribbean; Dead Man’s Chest. It launched in 4,252 screens in the US, the most ever, and it also took $227 million in 105 countries, beating Star Wars III ‘ Revenge of the Sith for that particular record.
Ask yourself, can you even name 105 countries? Well some people can because there are around 179 countries that have signed up for the World Copyright Treaty, so that’s roughly how many legal entities that qualify in some way or another as a country with a measurable economy.
So perhaps we can extend the launch of these films to another 74 countries before anyone in Hollywood has to worry about the problem. Except that most of those countries that don’t get films right away now are including places with 1 million or 2 million total population, as few as 30 cinema screens and in some cases no more than a handful of screens in the capital.
So while Spiderman was the biggest opening ever in the US, Canada, Japan, Korea, China, Russia, Italy, Mexico and Brazil, and the film broke records in around 26 of those 105 countries, it proves only one thing. Franchised films, with special effects, which take years to make, even for a studio as technically sophisticated as Sony Pictures, do quite well if you launch them in enough places at once.
But is Spiderman really as good as Lord of the Rings? Or King Kong? Why did it cost $260 million to make and another $120 million of marketing promotion, putting more than $480 million of Sony’s money at risk to make? And given that Sony will only get roughly 50% of the box office takings and that a huge percentage of takings are in the first week of showing (and it has less places now to open for more first weeks, since 105 of them have already been done), where is the rest of that money going to come from. Sony may have recouped around $140 million, but that’s less than a third of its costs. And although most films make between 55% and 60% of their total revenue in DVD sales, will that happen here? Well probably, but the question is whether or not it can be reliably repeated.
DVD sales are dipping, masked only by the fact that some people are spending much more on a single High Definition DVD. Add the fact that the more that is spent on promoting a film, means that more people see it at the cinema, and that if the critics are right and Spiderman 3 has little right to attract so much attention, then you have a recipe for potential disaster with DVD sales lower (because everyone’s seen it and know it’s no great shakes).
Spiderman 3 will also have soaked up lots of cinema going time all over the world, detracting from other films that others may have seen had they not gone to the highly advertised Spiderman.
Hysterically people are now saying that all the ills of the cinema industry are over and that the ills of the past few years where box office has bene dramatically down, are over. So Shrek 3, and Pirates of the Caribbean 3 and Ocean’s 13 and Fantastic Four 2 will all do fantastically well. They are repeat franchises, they cost a fortune, they use special effects or are animations (except Oceans 13 which has an all star cast), and they will have a fortune spent on promoting them. All that is likely to happen is either 1) They do not live up to expectations or 2) These films do fine, but detract from multiple other films, which fail to get enough attention because of the money spent promoting these.
So when Hollywood says in interviews all over the internet this week that this will be the first $4 billion Summer and extrapolate that this will therefore be the first $10 billion year, and that there will definitely be a Spiderman 4, a Pirates 4, a Shrek 4, and a Fantastic Four 3, an Oceans 14, ask yourself if you were an executive within Sony whether or not you would tie up $500 million for two years, with all the lost opportunity that brings you elsewhere, to make a sequel? Has there ever been a film franchise that went successfully beyond 3 films? James Bond perhaps, Star Wars of course, errr’ that’s it. Has anyone ever seen Jaws 5? Or Death Wish 9?
It will take one of these studios to register a crashing failure where a loss of $250 million or so accumulates on a ‘certainty’ before they begin to understand that there is a natural evolution going on here and that cinemas will no longer be filled, as more and more online entertainment is made available, on more and more large flat screens at home, and that cinemas around the world will stop increasing in number as the third world gets its ration of them, and that audiences sizes cannot go up much further beyond 105 countries. Cinemas themselves will have to think about different strategies to make money of rather than dancing to the tune of bid Hollywood studios.
If this is the first $4 billion summer, and we don’t think it will be, the chances are that it will be the last, until studios look more honestly at letting their films go online, earlier, for less money and with more partners. At the moment online film seems to be about experimentation, with price levels designed to stop it from being appealing.
The truth is that if a film that was launched on the internet, was shown to around 10% of the 300 million or so broadband internet customers in the world, it would not have sales tail off so fast (if you take it out of the cinemas after one or two weeks it has no long tail revenue whereas these is online). Such a film would make just as much at $10 a time in online film rentals, with a bigger proportion going to the studios and with far less costs. As the long tail develops the price would come down for rental and download to own would take over. The first studio to actually consciously try to get to that position first, is the studio that will dominate the ‘box office’ going forwards.