'Battleship' Fallout: Lessons From a Box Office Sinking (Analysis)

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As Hollywood's quest for franchises leads to more high-risk, $200 mil plays, studios search for answers when big bets go bust.

As Hollywood's quest for franchises leads to more high-risk, $200 mil plays, studios search for answers when big bets go bust.

This story first appeared in the June 1 issue of The Hollywood Reporter magazine.

When a big movie like Battleship tanks, inevitably a sense of dread ripples through Hollywood, accompanied by an impulse to look for the lesson that prevents the disaster from happening again.

In this case, several top industry insiders think they can skip looking for answers because so many saw peril from the start in making a $210 million-plus-budget film based on a board game. "Nobody here thought Battleship was worth the investment," says a leading agent. "No stars, an [intellectual property] play that made no sense, and nobody thought the script was good."

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Nonetheless, the Peter Berg-directed film's low $25.5 million domestic bow has caused industry anxiety as well as speculation -- apparently unfounded -- about the future of the executive regime at Universal. A top NBCUniversal source says there will be no management changes at the studio, though sources say it likely will lose $150 million on the movie.

The general unease is caused not only by the fate of Battleship but also the recent battering of other expensive films: Disney's John Carter, which prompted a $200 million write-down and led to the ouster of studio chief Rich Ross; Warner Bros.' Dark Shadows, which sources say cost more than $150 million but opened to less than $30 million domestic; and Paramount's The Dictator, which the studio says cost $65 million but multiple industry sources say really ran to more than $100 million after reshoots.

Yes, the Disney/Marvel marvel The Avengers is cleaning up in a way that proves the audience is hungry for well-executed A-list properties, as Lionsgate's The Hunger Games showed in March. But with other studios questing to launch new franchises, the faltering of expensive efforts drives home the risks of failing to hit the bull's-eye. (Top executives say the fate of these films also underscores the lethal effect of social media. As the head of one successful production company notes, in today's world, movies that don't appeal are "killed in their cradles" on opening night.)

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Although NBCUniversal is standing by its studio leadership of president and COO Ron Meyer, chairman Adam Fogelson and co-chairman Donna Langley, two other risky high-cost films -- both from first-time directors -- are in its pipeline. The industry is keeping a watchful eye on tracking for the June 1 release Snow White and the Huntsman with Kristen Stewart and Chris Hemsworth, which has a hefty budget of at least $170 million. The Keanu Reeves samurai film 47 Ronin, with a budget that sources say has sailed past $200 million, has been moved to 2013. Universal cites its desire to perfect 3D sequences, but there is speculation the studio aims to avoid the risk of another big loss in 2012. Its other big summer movie is The Bourne Legacy, its August relaunch of the Bourne franchise with Jeremy Renner.

Despite the industry's "I told you so" attitude, there appears to be one lesson to be extracted from the Battleship wreckage -- though ironically it came from a strategy that didn't work as Universal had hoped. The studio was aware from the start that a movie based on a board game faced skepticism in the U.S. (Sources say Universal considered pulling the plug before production started and unsuccessfully sought financial partners while it was shooting.) But the studio figured that overseas audiences would be more accepting. So Battleship opened abroad first in the hope that the studio could use big foreign numbers to sell it to U.S. audiences.

That didn't quite work out, but Battleship has pulled in more than $225 million overseas. Those numbers weren't dramatic enough to be a U.S. selling point -- a strategy that isn't exactly tested -- but a rival studio exec says the early opening helped. "Was it the success they needed? No," he says. "But had they waited, they would have been annihilated."

Box-office analyst Paul Dergarabedian says he believes that Avengers, which also opened overseas, proves Universal had the right idea to grab as much foreign money as possible. "The buzz on Avengers was so big internationally that it created even more of a furor domestically," he says. He thinks industry experts underestimated the magnitude of Avengers in the U.S. by not factoring in that buzz effect.

On the other hand, bowing a movie overseas can be a double-edged sword. Says Dergarabedian: "If you're trying to hide a movie by opening it overseas first, in this interconnected world that's a false hope. It can be a dangerous game."