Couldn't have better start to what could be $4 bil summer

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May momentum: With pirates, ogres and superheroes having launched this summer to previously unimaginable boxoffice heights, the question as we look back at the very merry month of May is just how long can this momentum continue?

For the answer I turned to Paul Dergarabedian, president of the Encino, Calif. based boxoffice analysis and tracking company Media by Numbers. Dergarabedian's been following boxoffice ups and downs for about 15 years and is one of the industry's most widely quoted experts. Our conversation Sunday as studio estimates for the weekend were starting to circulate provided the perfect opportunity to focus on what this summer's boxoffice fever means in terms of Hollywood's health.

"You couldn't have a better start to a summer," Dergarabedian told me. "To have three movies open with over $100 million within a month has never happened before. We've got three of the top five opening weekends of all time coming from May 2007 and the records that have been broken are numerous -- from top opening number of theaters to top opening weekend of all time to biggest single day to the biggest Memorial weekend ever and the biggest Memorial weekend opening ever with 'Pirates 3.' It just doesn't really get any better than this -- and it is all about momentum. This is how good summers get started and this could be a great summer. We have to now go beyond the three three-quels and make sure that we have enough in terms of product left in this summer to keep this good thing going. That will be the key."

When we look at past success -- such as the summer of 1989's blockbuster opening of "Batman" to $42.7 million that's recalled in today's Filmmaker Flashbacks item below -- and we see what were considered to be big numbers then, it's clear that we've pushed the fences way back these days in terms of what constitutes an outstanding opening.

"We have," Dergarabedian agreed. "It's astounding because when the first 'Batman' came out, $42.7 million was considered a huge number. It kind of gave us the sense that, 'Hey, is the $50 million opening weekend not too far away?' It took until '93 with the first 'Jurassic Park' for that $50 million benchmark (to be met). And think of it -- up to and including 'Pirates 3' there's only been 63 movies that have opened with over $50 million. Of course, (with 'Pirates 3' there now) will be nine films of all time that have opened with over $100 million.

"To have a $50 million weekend was a big deal (in '93) and then you fast forward to 'Spider-Man 3's' first day, which was about $60 million. We have pushed the fences way, way back because given the number of theaters that films are opening in today, the saturation level of the marketplace and this opening weekend mentality, it's just created a situation where, 'How high is up? How big can these opening weekends get?' I think that $151 million on 'Spidey' is going to hold for a long time, but still it's astounding where we are today versus just 10 years ago."

And, yet, expectations keep growing. There were, for instance, Internet bloggers who prior to "Pirates 3's" terrific launch to $153 million for the four-day holiday weekend (including $13.2 million in Thursday night previews) were buzzing about the prospects of a $200 million holiday weekend. "I think people get really caught up in just the fervor and the fever," Dergarabedian said. "When a movie like 'Spider-Man 3' exceeds expectations and then 'Shrek the Third' exceeds expectations, people pinned a lot of expectations on 'Pirates 3' and how well it would do. And it certainly did great numbers, but $200 million on an almost three-hour movie? That would be a tough number to achieve. That's like two 'Shreks.' 'Shrek 3' was like 90 minutes. 'Pirates' is almost three hours. So that would be kind of tough to do. But it's still a great gross on 'Pirates.'"

Asked what accounts for Hollywood now being able to generate grosses that previously were just not even imaginable, Dergarabedian replied, "I think it's a combination of ticket price inflation, marketing that really pushes people into theaters in the opening weekend and just the sheer number of theaters and screens that these films are opening on. You've got the marketplace responding instantaneously and wanting to go see these movies even before they open. (For) a Thursday preview to do $14 million is pretty significant and tells you that audiences are chomping at the bit to see these films.

"It used to be that films had legs and they were marathon runners and they took their time. A 'Home Alone' or even a 'Titanic' or a 'Sixth Sense' would play for weeks and weeks and weeks. Now the shelf life is so short. The time when you have to strike while the iron is hot is really short and -- especially in the summer when people are migrating from one blockbuster to the next every weekend -- you have a very short time to plant your flag and make your mark. It's definitely a different world today. These films are opening in well over 4,000 theaters and in some cases over 10,000 screens. You can see how the marketplace has changed in the last 20 years."

It's a feast or famine situation now with very big gaps separating the handful of films topping the chart and everything else in the marketplace. "When the marketplace is so top heavy that the difference between the No. 1 and No. 2 film can be over $50 million in some cases, that tells us that we need to start rolling out these summer blockbusters so that there's more in the marketplace than just three films that are dominating," Dergarabedian noted. "But this particular summer is so interesting. Because of the fact that we had that perfect storm of the three three-quels, everybody pretty much stayed out of the way. All the other big guns stayed out of the way so it created a situation where 'Shrek the Third,' 'Spidey 3' and 'Pirates 3' totally dominated and have dominated the marketplace."

There are, however, he added, "some big movies still to come. I think 'Harry Potter' and 'Transformers' are going to be huge. I think we're going to be looking (at very big grosses when they open, respectively, July 13 and July 4). You know, this isn't over. We tend to think, 'Well, the three three-quels are done. They're out and we've gotten through May of '07.' But there's a lot of movies to come and lot more three-quels, too. For some reason, there's a lot of third installments this summer. There's also a Pixar movie, 'Ratatouille' (opening June 29). So there's some big movies still to come. And don't underestimate 'Sicko' (opening June 29) or 'Knocked Up' (opening June 1) to really surprise people. Or 'Evan Almighty' (opening June 22). It's rated PG so they're going to get an enormous audience for that. They're going for the broadest possible audience.

"The key now is to maintain the momentum and keep the 'positivity' going and keep the boxoffice moving forward and moving up. You know, the trap we could fall into is, 'Well, these three movies opened in May and now it's kind of like coasting for the rest of the summer.' But, no, this is, I think, going to be the first $4 billion-plus summer and that could lead to a $10 billion year for the first time."

Reflecting on the possibility of seeing that kind of record-setting business, Dergarabedian asked, "And two years ago, where were we? We were like, 'It's the end of going to the movies. It's the death knell for the theatrical moviegoing experience.' Two years later, we're breaking records, we're filling theaters and the business to be in right now is the movie business because that's the product that's really driving everything right now."

But does Hollywood recognize that the movie business is now very healthy? In response to the troubled summer of '05, studios cut their marketing budgets to save money. But at the same time, there's more product than ever flooding the marketplace and that's made things much more competitive, a situation that would typically call for spending more rather than less marketing money.

"I think we're a little gun shy," Dergarabedian told me. "After '05, we're still a little cautious. I think '05 was a good correction because it actually showed people that if the movies are not top notch or, at least have top notch appeal to the audience there are so many other options for entertainment that the audience can just as easily leave you as come to your theater. I don't think Hollywood can rest on its laurels. But I think what it's going to do is create a blockbuster mentality in the summer. Hopefully, there won't be a deal where every summer movie is a sequel, but certainly the lessons learned from May of '07 I think are going to carry over into the future."

So we're looking at an industry that is healthy and that's not losing its audience as long as it delivers what people want to see. "Exactly," Dergarabedian agreed. "Again, it's not just throwing things at a wall and seeing what'll stick, like it used to be. There used to be a lot of junk that was put out in the summer -- like a lot of action movies that were just not good, but (studios were) figuring, 'Well, the audience expects action movies so we'll just throw 'em out there and people will line up.' No, no, no. They have the option of staying at home and (playing) their video games or going on the Internet or (watching DVDs in their) home theater or whatever. But if the movies are compelling enough and the marketing is good and the audience gets caught up in the whole moviegoing habit and the fervor of going to the movies, then the industry will remain successful."

What does he make of the fact that so much of this summer's product puts us into a fantasy world rather than into the real world? "A lot of these movies like 'Fantastic Four' and 'Transformers' and these 'fantastical' (genre films) are very cinematic. In the summer, people loved to be wowed. On that screen, they want to see every penny of the budget. Audiences are pretty savvy (and they think), 'You know, I just spent my hard earned money to sit in this theater and I want to be impressed because it's going to take a lot to impress me.' And I think the fantasy films (like) the 'Harry Potters' and the 'Transformers' are emblematic of what people want in their summer movies.

"Now as you get towards the middle or end of summer, sometimes there's a little bit of blockbuster fatigue and people start looking for, maybe, something like 'Sicko' that's different or something more low key or just a comedy rather than these big budget fantasies. So there's a place for all these kind of movies and even some indie films can break out in the summer by being different and by not being the typical blockbuster. So audiences can really go either way. You can wow 'em with big blockbusters, but if they get burned out on that you can have a 'Greek Wedding' or some sort of sleeper indie hit in the summer that takes advantage of the fact that audiences are looking for more than just the big blockbusters."

With people going to the movies in the volume they are these days and, presumably, liking what they're seeing, what does that mean for future moviegoing? "A satisfied audience is your best marketing tool," Dergarabedian observed. "When you have record numbers of people in the theaters being exposed to in-theater marketing and trailers for upcoming films, that only helps the other films. So it's a good thing. It just means that you're cultivating a satisfied audience that will continue to pay dividends in the future with the good faith that's created between the studios and the audience by putting out great product (so that) when that person leaves the theater they're saying, 'Wow, I'm not even thinking about the $10 I just spent because I had such a great time.' That is money in the bank for the future. That's making a future moviegoer.

"A dissatisfied customer is a really negative thing to have in the marketplace. You don't want people going out there and saying, 'Movies suck. I don't want to go. I spent too much money. People are on their cell phones.' You know, all the negatives that came up in '05. Nobody's really talking about those now because people are talking about the fact that we're breaking records and people are lining up to go into movie theaters (rather than) running away from movie theaters."

Indeed, all the negative issues that doomsayers cited in the summer of '05 -- like the flood of preshow commercials, people jabbering away on cell phones throughout films, overpriced concession stand snacks, sticky theater floors, etc. -- are still with us. Nothing has changed. "It's still here," Dergarabedian pointed out. "When the movies are good, they transcend all those negatives. I mean, the moviegoing experience should be about the movies, themselves, not about the sticky floors or people talking on their cell phones. But when the marketplace is depressed and that becomes the story, then it allows people to vent their frustrations about going to the movies. And that negativity really can hurt the boxoffice. We saw that in '05."

Although more people today than in '05 have their own big screen TVs at home where they can watch DVDs comfortably while eating microwaved popcorn, they're still racing to see each weekend's big new franchise episode. "That's right," he said. "Well, who wants to be at the water cooler Monday and not have anything to talk about? People love to talk about movies. It's a really important part of our culture. But the movies have to be compelling. Even if the critics don't like movies, at least the audience has to find them appealing and want to go see them. I noted in '05 that when trailers would come on before the movies, a lot of trailers were met with indifference and even sometimes with boos or hissing. And I noticed that this year when I'd see trailers, people were really excited and pumped up about going to see these films and that's really important."

So for Hollywood to build on this summer's success all it has to do is make more good movies. "It comes down to the product," he emphasized. "You make a good product that people are satisfied with, they're going to keep buying it. If you make a product that people don't like and (if you) continue to do that, you do that at your peril because the audience has other places they can go and other things they can do. So keep making good movies or, at least, compelling movies or appealing movies and the audience will come to the theater."

The formula for success these days clearly revolves around creating and maintaining franchises. "The franchise has really become very important," Dergarabedian observed. "In '05, the summer of the slump, there were only three sequels. This year there are 14. In '03 there were 15 -- and '03 was a really good summer in terms of boxoffice. Even though people decry the lack of originality, what are people lining up for? It's franchises. There's a brand name recognition. There's a built-in comfort factor. That doesn't mean those movies can be bad movies and just rest on the fact that they have the name and the pedigree. It still has to be a good movie that holds up on its own. Like 'Pirates of the Caribbean,' it's not a (likely best picture) Academy Award winner, but people just love to go and have that escapist experience. And that's what going to the movies is all about, especially in the summer."

This May's great strength makes a $4 billion summer possible. "Last summer was $3.85 billion," he said. "But the summer of '05 was $3.61 billion. If we were somehow to do $4.5 billion, which maybe could happen, it would be almost $1 billion higher than the summer of 2005."

Perhaps that would be enough of an improvement for Hollywood to finally feel good about itself and accept the fact that moviegoing's not on the endangered species list. "Right now more than ever it shows that this old fashioned idea of going out of your house and sitting in a movie theater is just as relevant today as it ever was," Dergarabedian said. "The naysayers in '05 who said this may be the end of going to the movies were just flat out wrong. It's easy to get caught up in that. When you see the boxoffice slump for 18 weeks in a row, it's hard not to jump on that bandwagon and think that we were at a tipping point where (you start worrying), 'Are people moving away from that out-of-home in-theater experience and just nesting at home and not going out to see movies?' But, again, it's just like the restaurant business. We all have kitchens in our homes, but we still go to restaurants."

Would Hollywood be better off if this big volume of franchise product that we're seeing this summer was spread out even more than it is? What if instead of starting in May this procession of brand name movies had started arriving in April? "We may see that," Dergarabedian replied. "We may start to see the summer season become even more elastic and really become something that could start in April. But when you look at this May -- and if it ends up being close to a billion dollars or over a billion dollar May -- maybe you do keep the summer season this finite space of time whereby people get excited about waiting for it. If you give them blockbusters whenever they want them, then maybe it doesn't become a big deal.

"I think what happened this year is that people were just psyched about the summer so we saw a little bit of a lull before the summer started when 'Disturbia' was No. 1 for three weeks in a row and then the minute 'Spider-Man 3' hit, audiences that were just chomping at the bit flocked to the theaters. So there may be something in holding back a little bit, building up that anticipation and then creating this big blast of boxoffice performance."

There is, however, the danger that Hollywood could become a business of blockbuster franchises only. "That's why, I think, (it's good) to have the summer season as kind of the blockbuster season," he noted, "because you don't want to have just big blockbusters and sequels. Man does not live by that alone. We need the good fall films. We need the character driven more intimate kind of films. We need the Oscar contenders. We have to keep that mix. If everything were blockbusters, Hollywood would go broke producing enough to fill the slate the whole year with blockbusters. It's also about the quality of product and having a nice mix of the big effects-laden blockbusters along with the Oscar contenders and the smaller more intimate films. As long as Hollywood keeps that balance it will be a good thing and good for the moviegoer."

Of course, to achieve a potential $10 billion gross for the year 2007, the fall, awards season and winter will all have to hold up their end, too. "We cannot live by summer alone," he cautioned. "It accounts for 40% of the year's boxoffice, but you still have to have solid performances throughout the year to create a record breaking year. And this year on paper just looks phenomenal, but we have to make sure we don't run out of steam by the time we get to the end of the year.

"I am optimistic looking ahead. I think there's a lot of great film out there. I think Hollywood's getting it right this year and I think we're going to see that bear fruit in a really significant way. But, again, we just don't know. Sometimes we get all caught up in the fact that we're doing so well and then all of a sudden you get into another slump, so you can't just sit back and say, 'OK, from now on everything is coming up roses.' You can't be complacent. The studios have to make sure that the product pipeline is filled with great product to keep this going."

Filmmaker flashbacks: From June 28 & 29, 1989's columns: "Boxoffice records have been falling so rapidly this summer that for a while it seemed as though we should be using loose leaf record books. That no longer is necessary now that we've seen Warner Bros.' history-making $42.7 million opening of Jon Peters and Peter Guber's production 'Batman.' That's one record that looks to me as though it will stand for a very long time to come.

"While 'Batman's' boxoffice strength surprised some of the local doomsayers, I'm happy to say I saw it coming. 'Warner Bros. should sizzle with 'Batman,' directed by Tim Burton and starring Jack Nicholson and Michael Keaton, which looms as one of the summer's biggest hits -- perhaps even the biggest,' I wrote here May 10.

"Nonetheless, there were those who doubted that the film would work and were dubbing it 'Howard the Bat.' Indeed, for months there had been uninformed gossip about Warner's worldwide theatrical production president Mark Canton's neck being on the executive chopping block should the movie fizzle.

"'Obviously, we're all elated here at the company,' Canton told me Monday morning. 'The fact of the matter is that for a long time we were confident we had made a great movie. That is the critical factor in everything ... It was the first thing that I was ever involved in developing at Warners nine and a half years ago with Jon Peters and Peter Guber. Several years ago Jon and myself got actively involved and brought Tim Burton in. Once we had a point of view, we never really doubted the direction that we wanted to go in and I think that was the critical factor. The three of us -- Jon Peters, Tim Burton and myself -- really shared a point of view and it was one that everyone now thinks was gutsy. It's all the things that they were worried about before it happened...'

"'Jon Peters said a long time ago to me, 'Batman is a hero of the people, by the people and for the people. He's a street hero,' recalls Canton. 'You see it (when moviegoers) wear the T-shirts in and the hats and some people have haircuts with bats on their hair and others come in with Joker greasepaint on their faces. One of the things this movie has done is cut into the culture.

"'I think one of the reasons why is that it's very much of its time -- like 'Star Wars' was of its time or 'E.T.' was of its time. When you realize that we live in a world with a revolution in China and where there are things going on in Panama and all of these gritty things, one of the things that this movie does is present itself in a cultural way so that you feel it's a hero, not from another planet, not without complexity, not someone who's inaccessible, but someone who has the courage of his own convictions, who is a romantic gothic figure ...'"

Update: "Batman" launched a fabulous franchise for Warner Bros. that's had its ups and downs over the years. The original episode grossed $252.2 million domestically, making it 1989's top grossing movie, and it did another $160 million-plus internationally. Domestically, it's the number one episode in the six film series, which has grossed over $916 million in the U.S. and Canada.

Martin Grove hosts movie coverage on the broadband television channel www.UpdateHollywood.com.
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