The Interesting Thing About This Year’s Box Office Numbers

Disney / Marvel

I’m going to do something different than usual and open with a story. It’s been in my family for a long time and goes something like this. During World War II, a destroyer is cruising through the South Pacific when word comes to the captain that the mother of one of his sailors has died. He tells his executive officer to inform the young man of the bad news, which the XO does brusquely, saying, “Hey, Simpson. Your mother died.”

As the sailor bursts into tears and runs off to his bunk, the captain hears about it and calls in his XO, castigating him for being so insensitive. “The next time something like this happens,” he says, “I want you to show some compassion, for Pete’s sakes.” The XO apologizes and pledges to do better the next time. As it happens, he gets the chance the next day, as something comes over the wire that another sailor, Zabriskie, just lost his dad.

So, the XO thinks about it and decides to call everyone together. He makes an announcement for all the men to assemble on the rear deck. Once they do, he steps forward and says, “All those whose fathers are still alive, take a step forward. Not so fast, Zabriskie!”

(Pause for polite chuckle.)

Warner Brothers / DC

My family has been telling this joke for years, often shortening it to the punch line in appropriate situations. When I was the editor of Film News Briefs and one of the editors at SSN Insider, I would sometimes put a variation of that into an occasional headline (e.g. “All Those Who Think Doug Liman Is Still Directing the Gambit Movie Stand Up, Not So Fast, Folks!”), which I did until my father suggested I stop because without proper context, the line doesn’t make any sense.

He was right, which is why I tell the story now, to give it the proper context. What context is that? I’m glad you asked.

The other day, The Wrap had a piece about how the summer box office, which has been thought to be a total disaster, is actually better than last year’s and is, in fact, on pace to be the second-best ever, after the monster year that was 2013. The story suggested that this summer is actually something of a success and that we should take to heart that things are not nearly as bad as they might seem.

All those who think that’s the full story, stand up. Not so fast, Readers!

The thing is, there’s a lot more to this than the surface numbers might suggest, but that’s the great thing about numbers: more often than not, you can make them work to your advantage and tell a story that you want them to tell, while either ignoring the bigger picture or outright fudging it to make your point. Mind you, I am not accusing anyone at The Wrap of any malfeasance, just incomplete reporting.

Illumination

What do I mean by that? Here’s the thing: while the domestic gross numbers might actually be better this year, they don’t reflect the much more important factor of profitability. Which is to say, this summer might very well have some impressive domestic grosses, but it’s a pretty major money loser for most of the companies involved. That part of the story didn’t make it into The Wrap piece, but we’re going to spend a fair amount of time discussing it here.

For starters, let’s take another gander at those numbers. According to comScore, 2015 had grosses of $4.02 billion, while 2016 is at $4.14 billion through the same weekend. On the surface, that’s good news, right? Sure, if you only look at that part of the story. It still doesn’t address the very disconcerting reality that, all kidding aside, we might finally be seeing solid evidence that the tent pole strategy of studio filmmaking just isn’t working.

Breaking it down is pretty simple. For comparison’s sake, we’ll focus only on movies that opened on at least 1,500 screens. There have been 40 such movies to be released thus far this year, as opposed to 42 last year. Through the third weekend in August of both years, both the domestic and international numbers are similar. The above mentioned $4.14 billion to $4.02, for domestic, and roughly $6.5 billion this year to $6.6 billion last year for international.

Totally analogous, right? Great. Let’s press on to the big stuff.

20th Century Fox / Marvel

The percentage of overall box office is the first big discrepancy. Last year, the grosses of those 42 movies made up 93 percent of the summer’s domestic take. This year, 40 films are responsible for 79 percent. Even if you add in a couple extra movies to this year, that says a heck of a lot about the strength of the independent film world, but there is something else that, I think, says a lot more.

This year’s batch of 40 major releases cost just under $3.3 billion to make, whereas last summer’s 42 movies cost just over $2.5 billion. That’s a lot of cheese, and these numbers are just for production. It doesn’t factor in anything for P&A which, as we know, is much more vague. Being conservative, let’s say the studios spend 50 percent of a film’s budget on promotion and advertising. That will vary, of course, because a Suicide Squad is going to get more of a push than, say, Bad Moms, but that’s a solid estimate.

If we factor that in, we’re looking at roughly $5 billion to make, promote and release the movies this summer. Last year’s cost was around $3.8 billion, and the total grosses are roughly the same, which, even using my rudimentary math skills, is a surefire way to go broke. Rapidly.

Sony Pictures Studios

Paul Dergarabedian is the senior media analyst at comScore and is quoted liberally in The Wrap piece. Full disclosure, he’s also a good friend of mine, so I called him up to chat about this very thing, and his perspective, as usual, was on point.

“The perception has always been that, if the movies are good, then the business is good,” he told me. “This year could put a damper on that because the movies have been mostly lousy and yet people are still showing up to see them. But the thing is, if every summer is like this one, where they’re spending more and more money and not getting appreciably larger numbers, then it’s Armageddon. That kind of thing just can’t continue.”

He’s right, and while some are trumpeting the benefit of solid grosses, the studio beancounters know better (especially at struggling studios like Paramount and Sony), and it’s only a matter of time before a seismic shift is forced to occur. It’s simple economics, and the clock is ticking.

All those who think the system can sustain too many more seasons like this one, stand up.

You know the rest.

Neil Turitz is a filmmaker and journalist who has spent close to two decades working in and writing about Hollywood. Feel free to send him a tweet at @neilturitz. He’ll more than likely respond.