Box Office: Hollywood's Franchise Crisis Worsens Over July Fourth
Domestic summer revenue has tumbled more than 8 percent behind 2016 after a string of misses.
Call it the franchise fizzle.
Save for Guardians of the Galaxy Vol. 2 and Wonder Woman, every summer tentpole so far has underperformed in North America — albeit to varying degrees — resulting in revenue for the season currently running 8 percent behind the same period last year. Even worse, gains made in the earlier part of 2017 have been eroded to the point where revenue for the full year is now even with 2016 (in mid-April, it was 6 percent ahead).
The common link? Many of the event films failing to set off major fireworks were the umpteenth outing in a series. And a majority were clobbered by critics.
Heading into the July Fourth weekend, Hollywood was confident that Universal and Illumination Entertainment's Despicable Me 3 wouldn't suffer the same plight. But instead of opening to an expected $85 million-plus, the animated tentpole came in at $72.4 million, well behind Despicable Me 2 and spinoff Minions. While the threequel is hardly a bomb, its lackluster domestic debut sets off another round of alarms within the major studios.
"There seems to be a disruption in the box-office force this summer," says Paul Dergarabedian of comScore. "Is this a signal that the era of the franchise with sequels that go beyond a second installment is coming to an unceremonious end, or is it more an issue of quality?"
The gap is startling. Pirates of the Caribbean: Dead Men Tell No Tales, now winding down its run, has earned $165.5 million domestically since its release in late May, compared to $241.1 million for the last film, Pirates of the Caribbean: On Stranger Tides. Disney went ahead and made Dead Men Tell No Tales even after On Stranger Tides did notably less business than either Pirates of the Caribbean: At World's End ($309.4 million) or Pirates of the Caribbean: Dead Man's Chest ($423.3 million).
Paramount's once-shiny Transformers is in the same boat. Like Dead Men Tell No Tales, Transformers: The Last Knight is the fifth outing in a franchise already plagued by diminishing returns in the U.S. The Last Knight, which hit theaters on June 21, has grossed just $102.1 million. The previous installment, Transformers: Age of Extinction, topped out at $245.4 million, versus $342.4 million for Transformers 3 and a franchise-best $402 million for Transformers 2.
It is certainly true that the many of the summer tentpoles lagging in the U.S. are finding plenty of treasure overseas. Despicable Me 3 is off to a strong start internationally, earning nearly $117 million so far.
Pirates 5 has grossed $543.2 million offshore for a worldwide haul of $708.7 million, while Transformers 5's international tally is $327.8 million for $429 million globally. But without a stronger U.S. performance, neither will come close to clearing the $1 billion mark at the worldwide box office, as the last installments did. And generally speaking, studios get less back from the foreign box office, while ancillary revenue streams are dependent upon a strong domestic run.
Other struggling franchise titles contributing to the summer box-office decline in North America include Disney and Pixar's Cars 3, which debuted to a franchise-low $53.7 million in early June, and Fox's Alien: Covenant. Universal's The Mummy reboot also got buried stateside.
"Maybe studios need to think beyond milking everything to death and find some new stories with some fresh talent," says Wall Street analyst Eric Handler of MKM partners, noting the stellar performance of smaller summer films including Edgar Wright's critical darling Baby Driver or the indie shark movie 47 Meters Down. "And part of the problem with the tentpoles which have failed is that the movies weren't very good."
Transformers 5 and The Mummy both have a miserable 15 percent rating on Rotten Tomatoes, the aggregated review website that has become the scourge of Hollywood studios. Baywatch and King Arthur: Legend of the Sword, two other high-profile summer misses, show a 20 percent and 28 percent rating, respectively, followed by Pirates 5 at 29 percent. (Per the rules of Rotten Tomatoes, a rating of 59 percent or lower is considered "rotten.") Cars 3 (67 percent) and Despicable Me 3 (63 percent) fared better.
"People are looking for fresh stories, particularly when it comes to family films. Despicable Me 3 has good reviews, so maybe it will have legs, but it seemed a bit formulaic. Same with Cars 3," says Handler.
Disney and Marvel's Guardians Vol. 2 and Warner Bros. and DC's Wonder Woman — both embraced by critics — are far and away the summer's top performers domestically with $383.3 million and $346.6 million in earnings to date, respectively. And Guardians is the only summer franchise title so far to rocket past its predecessor, both in North America and globally. In summer 2014, the original Guardians of the Galaxy grossed $332.2 million domestically and $773.3 million worldwide, versus $854.5 million so far for Guardians Vol. 2.
The fate of the extended Hollywood franchise will be tested once again on Friday when Sony and Marvel open their reboot, Spider-Man: Homecoming, followed a week later by Fox's threequel, War for the Planet of the Apes. They are interesting test cases since both have received glowing reviews.
"When modestly priced and innovative films like Baby Driver, The Big Sick and The Beguiled are making their big-budget brethren look bloated and undesirable, and R-rated comedies are flailing about desperately trying to grab a disinterested public's attention, then a reevaluation could be in order," says Dergarabedian. "Maybe it's time to throw out the current summer playbook and time to adopt the spirit of more gleeful abandon that fueled an excellent first quarter of moviegoing gems, including Beauty and the Beast, Get Out, Split and Logan. It is not too late to course correct. The warning signs are right in front of of us."