Too Many Tentpoles: Hollywood's Homegrown Summer Movie Crisis
"Pacific Rim," "The Lone Ranger" and "White House Down" flops are leading studios to re-evaluate their plans as an overcrowded summer schedule leads to millions in losses; one analyst tells THR, "It's not worth the pain."
This story first appeared in the July 26 issue of The Hollywood Reporter magazine.
At CineEurope, June's convention of European theater owners in Barcelona, Spain, a top studio executive asked a colleague to snap a photo of him with a costumed Despicable Me 2 minion in the lobby. The executive doesn't work at Universal, and he's not the only one envious of that studio's global blockbuster, one of the season's few successes as Hollywood endures the most crowded summer in history for tentpoles. The pileup has resulted in an unprecedented string of expensive bombs that collectively will lose hundreds of millions of dollars.
It's a crisis of Hollywood's own making: Studios are releasing double the number of pricey movies they usually do during the summer, pushing the boundaries of how much the marketplace can expand. Amid the carnage, insiders question why studios are greenlighting so many films that cost more than $150 million to produce when so few have risen above the clutter.
"There was abnormally bad scheduling this summer by everybody. I don't think you will see this again for a while -- it's not worth the pain," says Wall Street analyst Doug Creutz of Cowen and Co. "While studios will still be willing to spend on a good concept, I think they might be a little more circumspect about when they are going to launch that movie."
Guillermo del Toro's Pacific Rim, the latest disappointment, is the third straight high-profile miss after Gore Verbinski's The Lone Ranger and Roland Emmerich's White House Down. The three megabudget films opened during a two-week period, leaving no wiggle room. Worse, they debuted in the wake of Warner Bros.' Man of Steel and Paramount's World War Z, both of which caught on at the global box office and appeal to the same audience. Those films have grossed $619.1 million and $423 million worldwide, respectively.
"The biggest issue is dating," says one studio head. "You had too many $100 million-plus movies, not to mention $200 million-plus movies, jammed on top of each other. There isn't enough play time, and the result has been more movies that wipe out."
Pacific Rim, which cost as much as $200 million to produce -- plus a global marketing spend in the $175 million range -- could lose $50 million to $100 million for Legendary and Warners, according to rival studio insiders. The pic opened to a soft $37.3 million domestically and $53.1 million from its first 38 foreign markets. While poised to do big business in Asia, Russia and Latin America, its chances are dicey in Europe and Australia. Legendary, which produced the fanboy-friendly film and footed most of the bill, will take the biggest hit.
Lone Ranger, with a production budget of $250 million, is falling off even faster than expected, grossing $71.5 million domestically and $48 million internationally to date for a total of $119.5 million. At those numbers, some Wall Street analysts say Disney could face a write-down of nearly $200 million. Analysts also say, though, that the studio is well insulated by profits from Iron Man 3, the summer's top earner with $1.21 billion in worldwide grosses, and Monsters University, which has earned $474.2 million worldwide.
Sony has had two high-profile flops and likely will lose tens of millions from White House Down and Will Smith's sci-fi epic After Earth. White House Down, which cost $150 million to produce, has earned a paltry $82.7 million worldwide, and After Earth, which cost $130 million to make, has nearly finished its run with a tepid worldwide gross of $214.8 million (though it is off to a good start in China).
And the carnage might not be over. Universal's R.I.P.D., starring Jeff Bridges and Ryan Reynolds as otherworldly cops, could fall flat based on prerelease tracking. The movie cost about $130 million to produce.
Ironically, summer box-office revenue in North America is running 13.8 percent ahead of 2012, nearly closing the gap in year-over-year revenue. Several more modestly budgeted movies are helping to fuel the surge, including Summit's magician heist pic Now You See Me and Fox's female comedy The Heat, which have earned $185.8 million and $128.4 million worldwide, respectively. Sony's offbeat comedy This Is the End also has succeeded in serving as counterprogramming to tentpoles, taking in $91.6 million domestically.
May was far less crowded in terms of tentpoles, and it showed. Even in Iron Man 3's wake, Warners' The Great Gatsby and Paramount's Star Trek Into Darkness did good business, grossing $326.9 million and $446.9 million worldwide, respectively.
The deluge began Memorial Day weekend when Universal's Fast & Furious 6 and The Hangover Part III opened opposite each other. Rivals were surprised at the double billing, considering both films needed males to succeed. Fast 6 was the big winner, taking in $704.2 million worldwide. Hangover III, from Warners and Legendary, earned $347 million, far less than the previous films in the trilogy.
"I'll say one thing: This summer has got to be an exhibitor's delight," quips another studio executive. "Imagine being a theater owner and having all these tentpoles in a row. Face it: A theater owner couldn't care less if the movie drops off a ton."