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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 the 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 box office performance, however. This is where the game-changing money lies as some films deemed under-performers in North America recoup their losses and sometimes become global hits because of all of the revenue outside of 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 locusts of power still remain 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 where 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 here and 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 2 days until the film could be seen for one-fifth of the price. Second, 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?
The thinking behind selling consumers the digital copy of the film, as well as the movie-theatre ticket, is bundling the sale of the film on two different platforms at once. This is done to counter declining home-video sales. By banking revenue for home video at the theatrical release stage, distributors are mitigating risk and guaranteeing future earned revenue.
Could a $50 ticket work not just for a blockbuster but also for a film like, well, Lincoln? In a word: yes, and possibly the fit is even better. Older, higher-income audiences with greater disposable income. That being said, we don’t want to ride that slippery slope and then get painted as having films be only for “upscale” audiences. God forbid no one goes to see Grown Ups 2.
My deepest concern, however, with the $50 ticket is that it eventually becomes more and more common, and will eventually replace our current $10 ticket. We are already offered premium tickets in upscale theatres where food, beverage and seating options are far enhanced (more on this another time).
Do I think the $50 ticket will become the norm overnight? No, I don’t. Moreover, the industry should be warned about the consequences of such a pricing strategy. By making all films a premium, top dollar experience, you are killing your volume and, eventually, your profitability will be irreconcilably hurt by lack of attendance.
A major weapon in the film industry’s arsenal — what absolutely made it the signature art-form of the 20th century — is ease of accessibility to films.
Going to a film, for the most part, can be a casual, relatively unplanned or spur-of-the-moment experience. Going to the movies can be an everyday, commonplace experience. No need to save up for months, book well ahead, travel great distances or make sure we have all sorts of other hospitality plans built around making the film a whole “event”.
We don’t want to become the live theatre industry or the concert industry where a major barrier to success is the perception that participation requires a lot of planning in advance and making “an event” out of each participation.
This is directly tied to the price-point involved. Because film-going is casual and relatively cheap, it can be a regular, off-the-cuff experience. When you ask a movie “fan” how many films they see “in-theatre” per year, I promise you this likely triples how many plays, musicals or concerts a theatre or music “fan” sees in a year.
The mass-consumption and casualness of the experience ingrain film-going into our collective, recurring pop-culture. Thus, we need to be careful in and around the $50 ticket.
I don’t trust anyone associated to a “small” popcorn, anyways …
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 the 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 box office performance, however. This is where the game-changing money lies as some films deemed under-performers in North America recoup their losses and sometimes become global hits because of all of the revenue outside of 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 locusts of power still remain 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 where 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 here and 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 2 days until the film could be seen for one-fifth of the price. Second, 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?
The thinking behind selling consumers the digital copy of the film, as well as the movie-theatre ticket, is bundling the sale of the film on two different platforms at once. This is done to counter declining home-video sales. By banking revenue for home video at the theatrical release stage, distributors are mitigating risk and guaranteeing future earned revenue.
Could a $50 ticket work not just for a blockbuster but also for a film like, well, Lincoln? In a word: yes, and possibly the fit is even better. Older, higher-income audiences with greater disposable income. That being said, we don’t want to ride that slippery slope and then get painted as having films be only for “upscale” audiences. God forbid no one goes to see Grown Ups 2.
My deepest concern, however, with the $50 ticket is that it eventually becomes more and more common, and will eventually replace our current $10 ticket. We are already offered premium tickets in upscale theatres where food, beverage and seating options are far enhanced (more on this another time).
Do I think the $50 ticket will become the norm overnight? No, I don’t. Moreover, the industry should be warned about the consequences of such a pricing strategy. By making all films a premium, top dollar experience, you are killing your volume and, eventually, your profitability will be irreconcilably hurt by lack of attendance.
A major weapon in the film industry’s arsenal — what absolutely made it the signature art-form of the 20th century — is ease of accessibility to films.
Going to a film, for the most part, can be a casual, relatively unplanned or spur-of-the-moment experience. Going to the movies can be an everyday, commonplace experience. No need to save up for months, book well ahead, travel great distances or make sure we have all sorts of other hospitality plans built around making the film a whole “event”.
We don’t want to become the live theatre industry or the concert industry where a major barrier to success is the perception that participation requires a lot of planning in advance and making “an event” out of each participation.
This is directly tied to the price-point involved. Because film-going is casual and relatively cheap, it can be a regular, off-the-cuff experience. When you ask a movie “fan” how many films they see “in-theatre” per year, I promise you this likely triples how many plays, musicals or concerts a theatre or music “fan” sees in a year.
The mass-consumption and casualness of the experience ingrain film-going into our collective, recurring pop-culture. Thus, we need to be careful in and around the $50 ticket.
I don’t trust anyone associated to a “small” popcorn, anyways …
Oh,yeah. Right on, Jason.
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