Studios are hunting the next big property
EmptyAt some point within the next two weeks, producer Laura Ziskin and the top brass of Sony Pictures Entertainment will sit down together for the first time since "Spider-Man 3" opened May 4 to discuss the franchise's future.
It's a crucial meeting, all the more so because director Sam Raimi will be there. And Raimi, who has sent contradictory messages about his future plans, might at last indicate whether he'll helm the next installment.
"It would be great to have everybody back," Ziskin says. "But no one is going to sign on the dotted line until we have a script. These are the questions being discussed now. The one thing we have answered definitively is: There will be more 'Spider-Man' movies. We just haven't answered what shape they will come in and (Sony) hasn't given us a release date."
The upcoming meeting "will be the first step in a process," Ziskin adds. "'Spider-Man' will continue; I can't tell you every person who will be involved."
It goes without saying just how critical the "Spider-Man" franchise is to the studio's bottom line; at press time, the franchise had netted upwards of $2 billion in boxoffice receipts, not to mention home video revenue and other income from ancillary ventures. But it is hardly unique in today's Hollywood.
As the fifth film in Warner Bros. Pictures' "Harry Potter" series, "Harry Potter and the Order of the Phoenix," opens tomorrow in an estimated 4,100 theaters across the country -- the series will conclude after two additional features -- the major studios are more than aware that the franchises on which they have rested their fortunes are at a turning point. Many of the series are financially top-heavy or their stars haven't committed to another installment or there's an expiration date written on them.
After May's wildly successful "Pirates of the Caribbean: At World's End" -- which had grossed upwards of $300 million in domestic boxoffice at press time -- the Walt Disney Co. is uncertain whether Johnny Depp will agree to star in a fourth "Pirates" adventure. However, Depp has indicated that he might be open to the idea if the right factors are in place.
At Warner Bros. Pictures, "Ocean's Thirteen" appears to be the last in the Vegas-based caper series. While studio president and CEO Alan Horn says of the most recent film, which had grossed roughly $109 million at press time, "The (financial) performance is comparable to 'Twelve' and may exceed it," there are "no plans" for an "Ocean's Fourteen."
At Universal, the third installment in the studio's spy-fi franchise, "The Bourne Ultimatum," opens Aug. 3. The movie was meant to cost $130 million, but sources say there were considerable reshoots and the budget may have topped out far higher than that. So far, star Matt Damon has made no commitment to any future features. Meanwhile, Universal is in preproduction on the planned 2008 release "The Mummy 3," with the film set to follow young star Luke Ford -- who could become the lead character in future "Mummy" adventures -- and a new iteration of "The Incredible Hulk," also set for a 2008 release, starring Edward Norton.
At Fox, 2006's "X-Men: The Last Stand" appears to have concluded the franchise -- at least in its present form. Instead, the studio is developing two possible spin-offs: "Wolverine," starring Hugh Jackman, and "Magneto," which would follow the character portrayed by Ian McKellen as a much younger man.
Also at Fox, the future of "Fantastic Four" is unclear after the second installment, "Fantastic Four: Rise of the Silver Surfer," dropped 66% in its second weekend, following an exceptional $58.1 million opening. Fox is developing a "Silver Surfer" follow-up and is considering another "Fantastic Four" sequel, but no script is in development, sources say. (Fox's surprise success "Live Free or Die Hard," showed the long-term value of the best franchises.)
At this point, most studios are adopting one of two strategies: either trying to keep their popular franchises alive or looking to launch new series. DreamWorks Animation is under way with a fourth film in its "Shrek" series for distributor Paramount, and Paramount is reaching even further back with a new installment in its landmark "Indiana Jones" franchise set for release next year. The studio also is embarking on a new "Star Trek" film with J.J. Abrams directing, and there is plenty of speculation that "Transformers" might become a vibrant new franchise for the studio based on its boxoffice take this past week.
Meanwhile, Universal is optimistic about its planned 2008 Benicio del Toro-starrer, "The Wolf Man," and that year's "Hellboy 2: The Golden Army," and Disney currently is shooting "National Treasure: Book of Secrets," a sequel to 2004's Nicolas Cage-starrer, "National Treasure," with an eye toward that becoming an ongoing franchise.
Replacing the existing franchises, though, is a herculean task.
"(Franchises) are critically important, more so now than ever," says Hutch Parker, vice chairman of 20th Century Fox Film Group. "In a market that is getting increasingly cluttered with third-party productions -- often financed by hedge funds and other sources of financing -- franchise pictures cut through the clutter, courtesy of their unique relationship to the audience, and have a currency around the world that very few other kinds of pictures do."
That currency means much more than just boxoffice. According to a recent report from the MPA, theatrical boxoffice now accounts for only 19% of a movie's total revenue stream. In other words, for every $100 million that a movie makes at the boxoffice, it makes almost $400 million more from other media. With big franchises like "Spider-Man" and "Harry Potter," that can mean billions in revenue.
"Even if you have to spend a lot of money, the return on your investment, if you hit, is huge," Ziskin says. "You don't get that anywhere else."
Part of the challenge, executives say, is finding material that will connect with the broadest possible audience in a meaningful way. "You need to define how you are going to seek out the underlying material," explains David Linde, co-chairman of Universal Pictures. "You have to look everywhere, but with a strong perspective on your own business strengths."
That hunger for potential franchise material is something London-based literary agent Michelle Kass experienced firsthand when she came to Los Angeles in May with her client Derek Landy's novel "Skulduggery Pleasant," a fantastic tale of a young female detective who teams up with a wisecracking ghost. Kass and Landy were wooed by several major studios, even meeting with Steven Spielberg, before executive Kevin McCormick persuaded them that Warners was the right home for the project with a deal that gave Landy around $1 million, along with the right to script the film and be involved with creating his own video game.
Most franchises do not come cheap, and the more successful the franchise, the more each episode tends to cost. "Shrek" is a case in point. Insiders say Cameron Diaz earned 3% of first-dollar gross on 2004's "Shrek 2," which made upwards of $436 million during its theatrical run.
Similarly, insiders say star Tobey Maguire's pay for the "Spider-Man" films has increased dramatically. He was paid $4 million for 2002's "Spider-Man," but sources report he received $17.5 million for 2004's "Spider-Man 2," with 5% of the back-end -- 5% of Sony's receipts after exhibitors get their share. (The film grossed more than $373 million domestically.)
Maguire earned $15 million for "Spider-Man 3," with an even higher back-end of 7.5%; the film has brought in more than $333 million domestically to date.
To avoid the whopping bite of back-end deals, Sony instituted a mandatory cap of 25% on gross participation on all its films -- meaning, it will not give away more than a quarter of its receipts, no matter what.
Disney reportedly managed to protect itself on "Pirates" by making an arrangement wherein there would be no first-dollar gross participants, enabling the studio to recoup all its costs before making any payments to director Gore Verbinksi, producer Jerry Bruckheimer and Depp. "They get a share of the profits at 'cash break zero,'" says one insider, "which means when the studio has recouped both the cost of the picture, plus (prints and advertising) -- only then do they start paying."
Bruckheimer and Depp's agent, Tracey Jacobs at UTA, declined to comment.
Expense has been a prohibitive factor in maintaining many franchises. New Line's deal for its upcoming Aug. 10 release "Rush Hour 3" involved paying Chris Tucker $20 million against 20% of the back-end. Fox also had to add several million dollars to its above-the-line costs for "X-Men: The Last Stand" because Jackman only had signed on for the first two films, and he received $20 million for "Wolverine," though Parker declined to comment on Jackman's salary.
But the stars are not the biggest factor in making franchises so expensive. "One of the cost categories that has grown exponentially is the visual effects component," Parker says. "Even as recently as five years ago, it would represent a much smaller piece of the budgetary pie. Today you could find yourself spending significantly more on visual effects than on the cast."
The studio has been so eager to get "Wolverine" out next year that it has committed to go into production the instant Jackman finishes Baz Luhrmann's epic romance "Australia," which Fox is tentatively set to release next year. "The idea is, they can finish him out in September or October and put this one on the fast track so they can get it out next summer," says one source.
For the time being anyway, it seems that "Wolverine" is the best hope for continuing the "X-Men" movie franchise. "There is no script for an 'X-Men 4,' and there is none in the works," avers producer Lauren Shuler Donner.
Meanwhile, Sony, which released 2006's "Casino Royale" to roughly $167 million at the boxoffice, would love the rights to the James Bond franchise, though MGM is unlikely ever to let them go. As it stands, Sony has the right to distribute the upcoming Bond film theatrically, with MGM set to handle the film's release on cable and home entertainment.
"On the next Bond film, Sony is a 50-50 financier with MGM," says one source familiar with the arrangement. "But, according to their deal, in five years, MGM can buy Sony's 50% back. That was true on 'Casino Royale,' too: They can buy Sony's half back in five years, and there's plenty of TV and DVD money in those movies."
Indeed, MGM holds the rights to all future outings, and the resurrected studio is equally determined to make the most of Bond. Executives recently renegotiated the company's deal with star Daniel Craig to continue as 007, significantly upping his salary though declining to give him a share of back-end.
But perhaps the most controversial project MGM is involved with is the potential "Lord of the Rings" prequel, "The Hobbit." New Line has said that the project is in development and has the rights to produce the project, though MGM has the rights to distribute the finished film. Studio chairman Bob Shaye has insisted that Peter Jackson -- who is suing New Line for additional monies he alleges are owed him from the "Rings" franchise -- will not direct the J.R.R. Tolkein adaptation and is said to be searching for another helmer to take over the project, a decision that is not sitting well with Jackson's legions of vocal fans.
The company has high hopes that its planned December release "The Golden Compass" could spawn another major fantasy series, but there are risks associated with the production. "I hear it cost $180 million," one insider says. "That means it has to do $360 million worldwide, plus 20% to show a return on investment. This will have to do $400 million or $450 million worldwide to justify a second film."
New Line declined to comment on the film's budget.
"Everybody is throwing money to try and find the next big franchise," observes veteran attorney Peter Dekom.
Some studios have been more successful than others. Disney enjoyed rousing success with 2005's "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe," which brought in more than $291 million during its domestic theatrical run, and a follow-up, the planned 2008 release "Prince Caspian," is filming in New Zealand. Additionally, Michael Apted has signed on to direct a third installment in the franchise, "The Voyage of the Dawn Treader," which is set to begin production early next year for planned release in 2009.
Fox also had terrific success with 2002's "Ice Age" and 2006's "Ice Age: The Meltdown," which together earned more than $371 million at the boxoffice. Perhaps not surprisingly, a third installment is in the works.
Warners, too, is proceeding with a second installment in its latest "Batman" series. "The Dark Knight," which is set for a summer 2008 release, reteams Christian Bale as the angsty superhero with director Christopher Nolan after the pair scored an estimated $205 million domestic boxoffice take with 2005's "Batman Begins."
The future of the studio's recent comic book adaptation, 2006's "Superman Returns," is somewhat more dubious. That film cost $209 million (even after various tax rebates) and marketing costs sent
expenses upward of $300 million, but director Bryan Singer's Man of Steel picture made only $201 million domestically. While insiders say the movie was profitable, the studio mandated major cost cuts before proceeding with a sequel.
"If we do a sequel to 'Superman,' we want it to be less expensive," Horn acknowledges. "I have to see a screenplay before I say yes to anything. But the studio would be willing to spend as much as $175 million if the screenplay and other factors warranted it."
Still, Singer has announced that he plans to direct a second "Superman" project.
Universal is taking what Linde describes as a multipronged strategy, with a goal to "promote and invigorate good, established tentpoles -- 'Mummy,' 'The Hulk' and 'Hellboy' -- and consistently create new potential franchises like (the planned 2008 releases) 'Wanted,' 'Wolf Man' and 'Death Race.'"
Ultimately, Linde's regime, and those of his peers at the other major studios, will sink or swim based on their ability to deliver these franchises.