Movie industry under mounting money pressure
Premium ticket pricing a short-sighted response
Recently, Steven Spielberg confirmed the rumour that his 12-time Oscar-nominated Lincoln was this close to becoming a TV movie for HBO because no studio would fund the film for theatrical release.
The public admission was met with a sense of communal exhale within the film industry. At last, the truth on what has been going on for at least a decade. If Spielberg is having such problems, I can promise you absolutely everybody else is too.
In terms of profitability, this is how movie-math works. You take Lincoln’s $65-million production budget and multiply it by 2.5. Thus, $162.5 million is what it would take to make the film profitable for its North American theatrical release, including its advertising costs, which are usually safely as much as the total production cost, and paying theatre exhibitors their slim cut, too.
Always keep an eye on foreign boxoffice performance, however. This is where the game-changing money lies as some films deemed underperformers in North America recoup their losses and sometimes become global hits because of all of the revenue outside North America.
That is why passing final judgment on a film based on how well it does in North America is futile. This summer’s “under-performer,” The Hangover 3 did 68 per cent of its box office outside North America ($235 million) for a global total of $346 million ... and counting. I wish I could under-perform like that, too!
By 2017, China will become the world’s most important film market in terms of attendance. That being said, the locus of power still remains in North America and that is not changing. If you have noticed the trend of including more international stars in blockbuster films (Pacific Rim, Red 2), this is no accident as they are instrumental in supporting foreign-market appeal.
So, how is the industry planning on keeping box office sales up, considering multi-platform options that exist well outside the movie theatre?
Well, Paramount offered filmgoers a $50 ticket for World War Z, Brad Pitt’s zombie flick, in advance of its release. For $50, you got to see the film two days prior to release, got commemorative 3D glasses, a film poster, a digital copy of the film upon home release and, heck, even a small popcorn, too.
Overall? You are paying $50 to be an opinion leader and that is where the value is and that value is what could possibly make Paramount’s venture a recurring model.
In consumer research, it’s sound theory that people who view themselves and who are viewed as opinion leaders, will make decisions around consumption experiences that confirm this identity.
If you want to be “in the know” and have the bragging rights of having done everything first, you will pay for it. This is smart on Paramount’s part.
My concerns, outside of getting opinion leaders to cough up big bucks, are, nonetheless, substantial. When all was counted, Paramount made $60,000 on five $50-ticket screenings. Small potatoes.
The opinion leaders came out. Everyone else waited two days until the film could be seen for one-fifth of the price.
The value proposition here is weak. A poster, a small (!) popcorn and 3D glasses? Really? What about that digital copy of the film?
Nice idea but what if I dislike the film? I’ve paid $50 to pre-purchase a film I didn’t like and I can now hang its poster on my wall to remind me of the $50 I wish I could get back?