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David Poland

By David Poland poland@moviecitynews.com

Movie Math

In another entry, I was responding to a comment and my response got thick enough that I thought it deserved its own space… so…
Geoff wrote: ‘Dave has been harping on them for how much they spent on this thing, but come one….a few years ago in the summer of the “Threequel” both Pirates and Spidey sequels barely grossed $30 million more than their production budgets domestically. This is really nothing new for mega-franchises and at least Paramount doesn’t have to split the earnings with a Marvel or Bruckheimer.”
My response…
The difference is, Geoff, that domestic box office is not the answer to the threequels or Star Trek.
$799 million, $890 million, and $961 million is the answer to the spending on the threequels.
Iron Man grossed about the same as all of them domestically… and $582m worldwide. That $120 million in theatrical rental only for the lowest grosser of the three.
That’s why the price tag on Star Trek means a lot more than, say, the price tag on Transformers 2. Star Trek looks like it will, in a great success far overshadowing the other Trek films, something just above or below $400 million. Transformers did $708m worldwide. That’s a $165m difference only in theatrical.
I can promise you that if Transformers 2 cost $350 million, I would be raising holy hell about it…. though it would have a better shot at profitability than a $200m+ Star Trek.
It’s just math.
Harry Potter sequels at $200 million-plus are bargains. Year One at $75 million or Public Enemies at $100 million-plus are not.
Why are they sticking with the team on Spider-Man 4 even though the movie will be insanely expensive… surely over $250 million in this down economy? Because the third film, shit that it was, did more money worldwide than the other two films, even though it did less domestically than either of the first two.
The economics are whether a reboot that cost $150 million to produce had as much upside as another film with this team that cost twice as much. Sony gave us an answer to that question. With all revenue streams accounted for, an extra $150 million in cost plus more gross points, this group probably needs to gross at least $250 million in worldwide theatrical to make as much as a successful, cheaper reboot.
Iron Man is the highest grossing comic book character other than Batman and Spider-Man, with $582 worldwide. (X-Men’s best was $459m worldwide.) That’s a $300 million spread to the last Raimi/Maguire Spidey.
Is it possible that a Spider-Man reboot would do as well as the Raimi/Maguire versions? Sure. But that’s a gamble that Sony doesn’t want to take.
And you’re wrong about Paramount not needing to split the profits. They do. They have two funding partners on the film. (WB has one on the Nolan Batmans. And Sony has the best comic book deal in town, since it was early on, with Marvel on Spider-Man.) One of the reasons they keep pushing the theatrical so hard is that they take a distribution fee on every theatrical dollar and the P&A gets paid out first, so they actually benefit, marginally, from a longer road to net profit (which they have to share). At some point, that will stop being the case (when ongoing marketing costs overwhelm potential breakeven.)
Spidey 3 and Pirates 3 are 2 of only 12 movies in history to crack $550m worldwide. (The others are 4 Potters, 3 Rings, Titanic, Jurassic Park, and another Pirates.) That’s $300 million in rentals before domestic theatrical or a dime in ancillaries… and that’s the low mark. For Pirates 3, that was $358 million in foreign rentals… about the monster production budget. They got about $170 million in rentals for domestic. And got hurt a little by the DVD slump, which had already started. So even ALL that money means some tight accounting.
You can be sure on Pirates 4, they’ll be looking to make the production budget $100 million or more smaller. (And Pirates 2, which was a LOT cheaper, was much more of a cash cow.) My guess at Depp’s deal would be $50 million or $60 million cash upfront with additional money to start only after the $1 billion mark. And that’s a good deal for Disney. They lose the two-three-four other stars of the series and try to keep the actual production under $200 million. If they can keep the whole thing under $300 million, it’s as good a bet as you can make in this business. Crazy numbers.
$400 million for Star Trek worldwide and you might have barely cleared the production budget. That’s the point.
And the sequel? By the time they start shooting, Pine and Quinto will realize that they will never get a bigger payday than Trek and there will be the inevitable hold outs. Add another $20 million onto the budget that JJ will already be pressured to cut back on from the first film. If they can get the whole thing down to the budget they keep claiming to the media – $130m to $150m – then the franchise could be a big money maker in future. But pulling back from the high bar has proved to be very difficult. And it already is Star Trek Origins. So… the movie will not be made without those stars, which gives them leverage. The pressure to give JJ what he wants for the film will be enormous. So the reality is that Paramount will have a very hard time bringing in a sequel for less than $200 million and $250 million would not be a surprise. Some people will believe that the film will take a TDK-like leap at the box office… but the odds aren’t great on that. More likely an uptick to $450 million worldwide if all goes well. Tough numbers to work with.
The industry as a whole offers an interesting dichotomy. If you want to be in the $200 million+ production business (add in $125m minimum on worldwide marketing), $500m worldwide is about the bottom to be assured of profit.
In 2007 and 2008, the number of $500m worldwide movies leapt from a record high of 5 in one year to, respectively, 8 and 9 in those years. The big difference is, a little surprisingly, animation. In both of the last two years, there were 3 animated films over the $500m mark worldwide. Never before in movie history had there been more than 1 animated $500m worldwide movie in a single year.
But that

14 Responses to “Movie Math”

  1. Geoff says:

    Dave, I am quite flattered that you started a whole new thread to respond to my comments – I have no doubt that you are much more “inside baseball” and attuned to how the industry works than I will ever be.
    And yes, I have to admit that I did not think about Bad Robot or any other partners that Par had on this thing. I’ll grant you that international will be a big difference maker for these films, but…..
    You completely ignored my comments about the Star Trek catalog that Paramount owns – it’s only rivaled by Star Wars or James Bond. Are you telling me that the hip, new Trek isn’t going to bring about higher sales for the DVD’s or higher ratings for the reruns of the various series’? Obviously, that’s can accounted for on the spreadsheets for any one movie, but you cannot deny that it played a part in Paramount’s investment, here.
    And the things you are saying about Pine, Quinto, etc. make sense, but it’s still just pure speculation at this point…it could go either way.
    Think about Fast & Furious – I have little doubt that Universal got Vin for a much cheaper price than he was asking for six years earlier. Pine and Quinto might try to parlay their Trek success, but if they fall flat on their faces with other big films prior to the sequel, then they might end up need more Trek as much it needs them.

  2. IHeartThatCurtis! says:

    Geoff: David’s response will always be “DVD IS DOWN.” This means jack and shit when you realize how many of those jack shit BD boxsets of the original six films sold, and how Paramount has pulled the previous boxsets of all the other 10 films in order to guarantee some big ass release in the Fall. This Trek is making all of TREK money. Ignoring this for another rambling ass commentary about budgets and international box-office. Pretty much ignores that this film SAVED TREK. If you think saving Trek is not important to Paramount, then you really have another thing coming.
    Oh yeah Mr. David HEAT RASH Poland: I believe this Trek film will get to people like Batman Begins. It’s a movie that is easily re-watchable, and will always be some good to watch any time of the day. This is what led to TDK. Never ever forget this. Begins built that audience over three years. Sort of like the way Iron Man will be doing it over this year in order to guarantee something epic next May.

  3. The Big Perm says:

    I wouldn’t watch it again. It was good and I liked it, but that was a one time movie for me.

  4. mysteryperfecta says:

    DP is right to downplay domestic totals. The Threequels grosses broke down to about 1/3rd domestic, 2/3rd foreign. Star Trek has historically broken down in the exact opposite fashion, and this latest entry is no different.

  5. Dirk2112 says:

    Not to pile on, but it’s really past time for a definition of “profitability” that includes the haul from the kinds of ancillary products (games, toys, animated tie-ins, etc) that most tent pole pics are designed to sustain.
    I mean, the Riddick film was a box office bomb but the games based on that series are clearly making money.

  6. Blackcloud says:

    “You completely ignored my comments about the Star Trek catalog that Paramount owns – it’s only rivaled by Star Wars or James Bond.”
    I don’t see the Trek catalog rivaling Star Wars or 007 except in quantity. Trek has several more movies than Star Wars, but still about half as many as Bond. I’d be skeptical that it’s made as much money as either of the other two, unless you’re counting the TV shows as well. Are you?

  7. mattn says:

    To add a few numbers:

    At Amazon, Star Trek movie blu-ray collection is #52 (going down), having been in top 100 for past 39 days. Season 1 blu-ray is #126. Of course, both of these sets are fairly pricey. Star Trek II is #10 at Amazon VOD sales (and #48 at iTunes), and III and IV are both in the top 20 (III-VIII are in top 100 at iTunes).

    For the week ending May 17, “Star Trek Trilogy (presumably II-IV) entered at #27 on DVD sales chart ($1.5 million for the week; from http://www.the-numbers.com/dvd/charts/weekly/thisweek.php).

    It would certainly be interesting to see the aggregate Star Trek sales numbers; It does seem reasonably safe to say that at least part of these sales is due to the new movie, but of course some sales may have occurred without it.

  8. quizkid82 says:

    I suppose “Star Trek XII” could have a shot at making “TDK” money if, say, Zachary Quinto died shortly after principle photography wrapped, and stories about his life (and his “final” performance) pervaded all forms of media for six months prior to the film’s release.
    Now that we’re almost a year removed from it, can we all please drop the ridiculous notion that Heath Ledger’s death had NOTHING to do with “TDK’s” unbelievable box office?

  9. David Poland says:

    I would actually argue that this Star Trek hurts the historic franchise as a library product. It was not exactly a growing cult. But who in God’s name is going to spend money buying Nimoy & Shatner based on like this Trek?
    On the other hand, the people who have loved the original for decades will buy almost anything they put on the market, which accounts for the Blu-ray series and movie series sales.
    I am fine with you believing what you like, IO… tipped the hat to you. But the HUGE difference between Star Trek is the history of the Batman franchise. Batman was a mega-franchise every time out since 1989. Star Trek was never a mega-franchise. People not going to Batman Begins and then deciding that Nolan was a reason to go back to Batman makes sense. This Star Trek expanded the interest in the franchise… Batman Begins just made an already massive franchise safe again.
    Had Superman Returns had this kind of likeability combined with its mediocre numbers, I would agree that a BB-TDK trajectory was a realistic possibility. But there have only been two of these kinds of mega-leaps in movie history. Batman, though as I say, a bit of a false recovery, given the incredibly successful history of the franchise. Shrek to Shrek 2… groundbreaker… rose the DVD wave higher than any film. A third sequel, Matrix Reloaded, had a more modest leap by percentage, the first film doing $465m and the second doing $765m. But again… a groundbreaking film that is legendary and engaging on a deep level.
    Do you think that the decent action movie that Star Trek is breaks any ground at all? I mean, an inch?
    I’m not saying that it can’t have a 15%-20% growth spurt next time out. (opening for sure… the legs depends on the film and the market at the time.) But more than doubling the gross from this time out?
    Seems illogical.
    P.S. to quizkid… not nothing… but not a ton. His performance as seen in the trailers and tv spots were infinitely more important than his passing. He was not a major box office draw. It added some mystique, but we have seen many major stars unable to draw in their last efforts.

  10. hcat says:

    I disagree with David about the new trek not bringing new converts to the old franchise. Each time the Bond franchise starts anew it brings a fresh set of eyes to the archives, and while they may seem a bit hokey or slow compared to the new model they have their own charms that people will discover. I think the same thing will be true with the trek franchise, with people checking out the Shatner films to see where it all started.

  11. Dr Wally says:

    “I would actually argue that this Star Trek hurts the historic franchise as a library product. It was not exactly a growing cult. But who in God’s name is going to spend money buying Nimoy & Shatner based on like this Trek?”
    Actually, quite a few people i would reckon. If the Star Trek revival is analogous to the BBC /UK’s frankly brilliant 21st century reboot of ‘Doctor Who’, then interest in library product is going to skyrocket. In Britain, you’ve got the DVD’s of the 20th century original show flying off the shelves, while tots sit raptly in front of dusty black-and-white sixties episodes that were made before even their parents were born. I’m not kidding.
    This is why Lucasfilm was savvy enough to deny the DVD release of Star Wars 4-6 until the prequels were pretty much done and a new generation of fans had been corralled. The eventual box set of 4-6 broke records.
    Personally, i’d have bit on the Blu-ray boxset of the old Treks IF they’d have put out the director’s cuts, especially Robert Wise’s much-improved revamp of the original.

  12. Geoff says:

    “I would actually argue that this Star Trek hurts the historic franchise as a library product. It was not exactly a growing cult. But who in God’s name is going to spend money buying Nimoy & Shatner based on like this Trek?”
    Dave, are you really serious? Are you telling me that because of the success of this film and all of the new brand awareness, that people are LESS likely to give the TV shows (yes, Blackcloud, I was including TV shows) or movies a glance at Best Buy or Amazon???? That just doesn’t make sense.
    Look, I cannot deny that this film does not really break any new ground, but come people DO seem to genuinely like it – it probably has the best legs of any sci-fi blockbuster since Sith.
    Can Paramount make the next sequel jump into Dark Knight/Dead Man’s Chest/Shrek 2 territory? Probably not, that’s very rarified territory. But I can see them pulling off $300 million with the right hook – they will likely need a big time star to play the next villain.

  13. Hallick says:

    “But I can see them pulling off $300 million with the right hook – they will likely need a big time star to play the next villain.”
    That’s the kind of ill-fated thinking that leads to “…and Arnold Schwarzenegger as Mr. Freeze”.
    The best villain the Star Trek movies ever had was a guy with a so-so anthology series on ABC. The next Trek movie HAS to overcome the biggest fault in this entry, or the franchise will slowly die from the inside out. Kirk and Spock can’t go up against another rent-a-goon who wouldn’t have stood out on “Star Trek: Voyager” much less in a theatrical release.

  14. yancyskancy says:

    Is all the Star Trek TV stuff still insanely overpriced? If so, that won’t help.
    I dunno, the new film is a fun ride, but it’s so devoid of substance. I can’t imagine a kid who digs it having the patience to sit through an episode of the original series, but then again I don’t know a lot of kids.
    One thing I’d like to know about Trek ’09 — why is Kirk hanging off the edge of something every 20 minutes or so? Lame running gag or just lazy writing?

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