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David Poland

By David Poland

Paramount & The Stupidity of the Short Distance Runner (Pt 1 of 3 – Getting Here)

The revenue model for movies has changed. Repeatedly.

Never as dramatically as in the last 50 years, the second half of the history of the theatrical motion picture.

Early 60s – TV Changes the Face of Theatrical
Late 60s – The End of The Studio System
Early 70s – The Corporatizing of the Studios
Mid-70s – Birth of Home Entertainment via VHS, primarily rental
Late 70s – Wide Release Expands
Mid-80s – The Multiplex Revolution
1989 – Sell-through VHS Launches in Earnest and Batman has the biggest opening weekend ever with $40 million
Early 90s – The Megaplexes Show Up
1995 – Batman Forever has the first $50m opening weekend
1996 – DVD launches, sell-thru first
1997 – Netflix launches DVD subscription service
1997 – The Lost World: Jurassic Park has the first $70m opening weekend
1997 – Fox sells of a big chunk of Titanic to Paramount to reduce risk.
Late-90s – The Bankruptcy & Rebuilding of The Theatrical Infrastructure
1999 – George Lucas funds the second Star Wars trilogy out of pocket and hires Fox for distribution
2001 – Harry Potter has the first opening weekend over $73 million… with $90 million.
2002 – Spider-Man marks the start of the CG Revolution and the first $100m+ opening weekend
2003 – The first international opening weekends over $100 million (Matrix 3 and Rings 3)
Mid-00s – DVD revenues start dropping for new film content, but DVD overall still bouyed by library content
2005 – Warner Bros uses Legendary for partial funding of Batman franchise, starting with Batman Begins
2005 – Bob Iger takes over at Disney, acquiring Pixar, but starting a strategy to fund only animation and existing franchises in-house.
2005 – Paramount makes a deal to distribute DreamWorks Animation titles for a fee
2007 – The first domestic opening over $150 million (Spidey 3)
2007 – The first international opening weekends over $200 million (Pirates 3, Spidey 3)
2007 – IFC introduces and refocuses its model on day-n-date VOD
Late-00s – DVD revenues plummet overall… still significant, but no longer dominant
2009 – Disney shifts strategy and acquires Marvel, intending to fund all animation and Marvel films in-house.
2009 – The last movie year in which more than one entry in the annual box office Top Ten is not a franchise, remake, or animated film
2009 – Once again, Fox sells off a large chunk of a very expensive Jim Cameron film, this time to a funding group, not another studio
2009 – Avatar makes a huge impact on the bottom like with 3D, becomes, by far, the biggest grosser of all-time
2010s – Domestic theatrical suffers minor annual drops while expanding international market grows
2011 – Netflix splits DVD and streaming fees, announcing streaming primacy moving forward
2011 – The first international opening weekend over $300 million (Potter 7b)
2011 – Harry Potter ends, marking the last franchise funded exclusively in-house by Warner Bros for the time being
2012 – 3D starts to fade in a significant way domestically, though still has impact internationally
2012 – Disney acquires Lucasfilm, putting another big bullet in their “All Franchise” strategy
2012 – The first domestic opening over $200 million (Avengers)
2015 – Three $145m+ domestic openings in 10 weekends
2015 – More than 1 film in a year grossing $1.3 billion worldwide for the first time ever (three films, #5, #6 & #7 to ever achieve that level)

I am sure there are landmarks that some of you hold dear that are not included… or that perhaps I simply forgot to include. But this should offer a pretty good look at the change mania of the last 50 years, but even more significantly of the last 25. Using much broader categories…

VHS Creates Home Entertainment
Wide Release becomes dominant and the theatrical window shortens to get to Home Entertainment revenue quicker
Sell-Thru DVD explodes the idea of windows and studios start scheming openly to shorten theatrical, which quickly becomes bigger than theatrical
Sell-thru DVD starts to slide significantly
Two major candidates to replace DVD revenues emerge… streaming and international.
People won’t pay for VOD/PPV in huge numbers, much less at the higher prices studios fantasize about
Indie business finds that while the math on VOD doesn’t work for major studios, it can work great for their revenue model
International grows massively, supported by governments, including China

Simpler? (Too simple, really, but here goes…)

70s… 90% theatrical
80s… 60% theatrical
90s… 45% theatrical
00s… 40% theatrical
10s… 55% theatrical

Again… too simple, not only as there are many variations on the theme, but also because where the theatrical and non-theatrical revenue is coming from has changed dramatically in each decade. Just as a”for instance,” the DVD Revolution was really from 1998 – 2008 or so… where the cash cow was just plain milked to death and produced so much that studios really did have a hard time losing money on movies. So in the late 90s and early-to-mid 00s, the theatrical percentage of revenue dipped down into the 30s. But then the international growth started kicking in around the same time DVD started fading.

Things keep changing. Things will keep changing. People get very upset about the status quo, as though the industry is set in cement. It is not.

Part 2 – What Paramount Is Doing

Part 3 – Does This Matter?

One Response to “Paramount & The Stupidity of the Short Distance Runner (Pt 1 of 3 – Getting Here)”

  1. EtGuild2 says:

    Good post.

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