Things used to be so simple. A movie opened in theaters, and if its total box office was lower than what it cost to make and market it, minus the half theaters took, we could easily call it a flop. It was dead in the water. Some were worse than that and were true bombs, though we’re splitting hairs on the terminology here.
Take your pick of historical, overly expensive flops, be it “Cleopatra,” “John Carter,” “Battlefield Earth,” or “Waterworld.” That last one is considered an infamous failure, but it grossed $265 million, not adjusted for inflation, and still has a theme park stunt show to its name, three decades after its release.
Today, many films would be lucky to sniff what “Waterworld” made in movie theaters. This fall at the box office has been dismal, with title after title floundering. The New York Times estimated that, of 25 dramas and comedies released this fall, not one has surpassed $50 million at the domestic box office and can safely be called a “hit.” “The Smashing Machine,” “Christy,” “Kiss of the Spider Woman,” and “After the Hunt” all fit the bill, among others. That doesn’t include action movies and franchises, but some of those have fizzled too (looking at you, “Tron: Ares” and “The Running Man”).
It’s safe to say they’re not hits. We still tend to know one when we see one. But are they flops? Failures? Bombs?
Every studio has its own benchmarks, metrics, and mandates for success, and every movie is different in terms of where they’ll perform best and how they make their money back. But what is consistent is that every studio and decision-maker is using gobs of data and forecasting out a movie’s value not just in the lifespan of its run in theaters, but for as much as seven to 10 years in advance.
A movie used to have a standard life cycle of 90 days in theaters and then a new marketing campaign for its home video/DVD release. The really successful ones would live again on cable. Today, a film‘s theatrical window could be as short as 17 days, and it gets revenue from PVOD, SVOD, and international licensing in multiple windows down the road, all while DVD sales have largely evaporated. Some movies generate money through merchandise licensing, gaming, or in the value they create for older franchise movies that live on a streaming service.
The trouble is, only box office is publicly reported, and it’s the only thing the average observer has anything to go on. We do know that studios get a higher share of PVOD revenue — closer to 80/20 percent compared to a 50/50 split — than they do from exhibitors, and that it’s a bigger slice of the pie than it has been ever before. The majority of that revenue comes in across a year or two, whereas box office is done in a matter of weeks or months at best. But everything else is murky and not consistent film to film.
A distributor source told IndieWire that it’s not just the press that is weighing box office results too heavily for any given film, but that industry types are stuck in an “in-between phase,” where many are still looking backwards at the old metrics for how we used to evaluate a film’s performance.
“We’re in this apples to oranges thing, and we’re trying to compare apples to apples when it’s just different,” the distributor said. “It’s nuanced. It’s why defining what a flop is and what’s not a flop, it’s so different than what it used to be. It’s a very different model per movie.”
Take a movie like “One Battle After Another,” which has surpassed $200 million at the global box office and $70 million domestic. By the NYT’s metrics, it’s a hit. But the movie cost $130 million before marketing and could probably lose $100 million for Warner Bros. It could also win Best Picture and has generated more cultural currency than any movie this fall. WB is now in good graces with Paul Thomas Anderson and could easily make his next movie. Is it a flop?
One studio film chief we spoke with told IndieWire that defining a film’s financial success solely on its box office would be “ludicrous.” Looking at a movie with anything but the overall, holistic view of a movie’s life cycle is the only way to rationally assess a movie’s performance, the source said. But that doesn’t mean things don’t need to change.
“There is so much more than any non-industry consumer, and frankly, most industry press would factor into the economics of the motion picture business,” the studio film chief said. “It’s way more nuanced, way more multifaceted, way more complicated than anyone I know actually gives it credit for.”
Tobias Queisser is the CEO of the Cinelytic Group, and his platform Cinelytic is a machine learning tool that forecasts a film’s performance in its earliest stages. It’s used by studios and independent producers to build a business case and estimate value for a film based on its genre, budget, its cast and director, and the ancillary revenue it can generate for your film library (if Paramount green lights a “Running Man” reboot, it’s doing so likely knowing it has the original on Paramount+ and any revenue buying it on PVOD generates), and it provides a 10-year projection that goes well beyond what it does opening weekend at the box office.
Queisser said his data shows that box office alone is only a real profit driver for a handful of mega hits. The revenue mix is changing for films, he added, and Cinelytic’s data and models can show studios how a film can expect to perform and what it can recoup in profit if the box office falls short of expectations. It can also inform what the optimal window for a film would be — he believes 25-45 days is a sweet spot for most movies — in order to optimize PVOD revenue.
Add all that up and it’s harder still to call something a flop.
“Only a good film will get you a good result. It doesn’t mean that you have to not make a good film and pray for the result. But you can still now forecast it and create a business case around it that makes sense,” Queisser said. “It needs to tick all the boxes. Just being a good creative and leaving the rest to chance is not good enough anymore because we live in an environment where everything has to be good.”
It should be a given too that not all studios are created equal. Whereas Disney and Warner Bros. may need an event each quarter to generate value for shareholders, A24 and Neon can afford to take more swings and let the value and appreciation for these films grow over time. A24 in its profile with The New Yorker earlier this year boasted record profits despite films that fizzled like “Death of a Unicorn” and “Eddington.”
For a company like Lionsgate that has a unique business model that involves it licensing out international rights, which helps mitigate the losses on films, it took an absolute bath on its ambitious “Borderlands” video game movie, but the studio that same fiscal year still saw record revenue on the licensing it generates from its backlog film library. For Amazon MGM and Apple, whether a movie is profitable hardly even matters because on the whole its a drop in the bucket for those tech giants.
The studio source even speculated that, in the case of the aforementioned “One Battle After Another,” likely no one was convinced that a film with a budget so high would be a winner on an individual basis, but that doesn’t mean it was a miscalculation on Mike De Luca and Pam Abdy’s part. They may end up losing more on the film than expected, but they could swallow taking a risk and will see a halo effect from it, even if that’s impossible to quantify.
“Nobody is going to bat 1.000. That’s not how the movie business works,” the studio chief said. “So the only responsible way, in my opinion, to look at it is, over the course of a couple of years, did your wins significantly outpace your losses? That could mean one mega win could outpace a whole bunch of bad outcomes.”
For some films, there’s no amount of downstream revenue that will help dig a studio out of the hole it has created. For many, many other movies, the answer is never that clear cut. “You might look at it a bunch of years later and go, holy cow, we’ve actually clawed our way out of that hole,” the studio source added.