Overseas Film Sales Are Saving Hollywood From a Terrible SummerBy
Rest of world supports love affair with sequels and reboots
With only North America, ‘it would be a monumental disaster’
The duds just keep coming this summer in North America, from “The Mummy” to “Alien: Covenant” to “Pirates of the Caribbean: Dead Men Tell No Tales.” The season has been what critics politely call lackluster for Hollywood studios -- but don’t expect them to stop churning out more bombs.
That’s because as badly as so many franchise films and reboots have done in the world’s biggest cinema market, they’ve racked up solid ticket sales elsewhere. Theater-goers in America thought Paramount Pictures’ fifth “Transformers” was pretty much a yawner, but in China they liked it. And No. 6 is already in the works.
“Look at the casualties just this summer,” said Paul Dergarabedian, a Los Angeles-based analyst for ComScore Inc. “If they only had North America, it would be a monumental disaster for the studios.”
For now at least, the rest of the world -- China in particular -- is supporting Hollywood’s love affair with series, sequels and rehashes like “The Mummy,” Universal Pictures’ new take on a story that’s been told dozens of times. The risk is that sequel fatigue will set in overseas too. Chinese moviegoers are becoming more choosy, and the fastest-growing film market is slowing down. That’s a challenge for studios such as Walt Disney Co. and Time Warner Inc.’s Warner Bros., which plan and schedule movies years in advance.
Jonathan Papish, an analyst for China Film Insider, described as a “disaster” the $250 million that “Transformers: The Last Knight” is projected to record in the world’s most-populous country. The reason: the previous version from Viacom Inc.’s film division pulled in 17 percent more, “a worrisome sign for both Paramount and other Hollywood studios who have become far too complacent thinking that Chinese audiences will swallow whatever garbage they shove down their throats.”
This “Transformers” opening in China, at least, was about 30 percent bigger than the opening for the previous one, according to Box Office Mojo.
Not every sequel or franchise entry has fallen flat in North America, of course. “Wonder Woman,” Warner Bros.’ fourth episode in the DC Extended Universe series, has taken in $346 million domestically and is one of the year’s top films. Disney’s “Guardians of the Galaxy Vol. 2” topped the box office for two weeks and has taken in $383 million domestically.
And there are some big-hitters coming. Sony Corp.’s “Spider-Man: Homecoming” is expected to take in $301 million in North America after its release this weekend, according to BoxOfficePro.com. “War for Planet of the Apes,” out July 14 from 21st Century Fox Inc., could grab $165 million.
But the second-quarter domestic box office ended down 3.6 percent from a year ago at $2.7 billion, Barton Crockett, an analyst at FBR & Co., said in a note. He blamed disappointing sequels; even with a better-than-expected “Wonder Woman,” he predicts a 15 percent decline for the third quarter.
Chinese box-office sales fell in June, as local movies as well as Hollywood imports failed to meet expectations. This month, PricewaterhouseCoopers LLC pushed back its forecast for China’s movie market to overtake the U.S. to 2021 from 2017.
This weekend, Universal’s “Despicable Me 3” will test the Chinese market, after opening in first place in 44 out of 46 countries, according to data from the film division of Comcast Corp. A new installment in another Universal series, “The Fate of the Furious,” enjoyed strong demand in China, taking in $393 million there earlier this year.
Even with big budget films flopping at home, movies can earn money for years to come from digital downloads and sales to Netflix Inc. and other streaming sites and cable-television channels. The latest -- and last -- “Pirates of the Caribbean” may have missed expectations when it came out May 26, but it could end up generating a net profit of $219 million, according to an estimate from Wade Holden, analyst with S&P Global Market Intelligence.
That hasn’t stopped some analysts from complaining that studios have focused too much on making big-budget features.
“There is an over reliance on sequels,” said Richard Greenfield, a media and technology analyst at BTIG LLC. The major studios “are so worried about investing in an unknown property that they are all just relying on sequels and hoping that sequels will save them.”
While Disney has had tremendous success, Greenfield said it’s not bullet-proof. “The danger is that investors are essentially assuming that a movie like ‘Star Wars’ will be successful forever.”
As much as any studio, Disney has tied its future to sequels and remakes. The company’s 2017 schedule includes eight films, of which six fit that profile, according to Box Office Mojo.
Disney said its strategy sets it apart from the competition -- in 2016 its film business had its most profitable year ever. Other studios trying to ape it have had less success. Sony, for example, tried and failed to refresh its 1984 hit “Ghostbusters” last year in the hope that it could spawn a new series.
In any event, many future slates are laden with new installments of existing worlds of characters. 21st Century Fox and Sony, which license Marvel characters, are planning more “X-Men” and “Spider-Man” chapters.
Disney has laid out several years worth of Marvel superhero offerings and at least a six-picture series of “Star Wars” movies. Meanwhile, the company is revisiting “Mary Poppins” and “Mulan.”
“Studios are rushing these sequels,” said Jeff Bock, senior analyst at Exhibitor Relations Co. “If you want to get the domestic audience back, you’ve got to do something a little outside the box.”