Daily Box Office Analysis
By David Mumpower
June 11, 2014
BoxOfficeProphets.com
Before we get started with today’s primary topic, I will return to yesterday’s subject matter for a moment. The Fault in Our Stars grossed $5 million on Tuesday, a total that was enough to earn first place at the box office. Alas, this particular star is fading fast. Its margin of victory on Tuesday was less than $300,000, indicating that the second place film, Maleficent, could upend it as early as today. At most, The Fault in Our Stars will spend seven days in first place, and the reality is that it probably does not reach a full week.
I mentioned standard daily box office behavior in yesterday’s column. One of the rules established is that films do better on Tuesday than on Monday, at least most of the time. That was true for 90% of the top ten yesterday. The lone exception was The Fault in Our Stars. It fell 2%, a negligible amount in theory. In execution, any drop whatsoever for a new movie indicates frontloading. The Shailene Woodley romance has a current total of $58.1 million so it is a dynamic performer. It simply is not showing the early signs of legs Fox had hoped would occur.
For its part, Maleficent is quietly becoming a leggy film. Its $4.7 million on Tuesday represents growth of 17% from Monday’s $4 million. Maleficent claimed the best Monday to Tuesday increase of any movie in the top five. In addition, the Disney release has now grossed $8.7 million on Monday and Tuesday. Last week, it earned $13.4 million over the same timeframe. A weekday drop of 35% is exceptional. With $136.9 million already in the bank, the film is poised to reclaim its spot as the number one domestic release either today or tomorrow. As of this moment, it has been the number one movie in nine out of 12 days in release.
While Maleficent is no Frozen, this box office performance is quite Pixar-ish thus far. To wit, WALL-E earned $136.1 million after 12 days; the Pixar masterpiece finished with $223.8 million domestically. An even better analog in terms of current results is Up, due to its similar release period. Up’s 12th day in theaters was June 9, 2009. It had accumulated $146.8 million by that point. Maleficent will obviously not match that title’s $293 million domestic take. It is lagging behind Up’s pace. Up was unusually leggy for 2009 and 2014 releases do not have the theatrical staying power that they claimed just five years ago. My point is rather that the Angelina Jolie film still has a lot more potential in it than people are appreciating. $225 million still seems feasible, and more is not out of the question.
The third place finisher yesterday, Edge of Tomorrow, is today’s primary topic for discussion. The Tom Cruise movie behaved as expected, increasing 9% from $3.2 million on Monday to $3.5 million yesterday. Its running total inched up to $35.4 million domestically in addition to the $82 million it has garnered overseas thus far. As everybody knows by now, the movie has a massive budget estimated at $178 million. Its negative cost is presumed to be in excess of $225 million. Warner Bros., like most studios, is dodgy about the precise financials of their productions.
What does the above mean in the here and now? A lot depends upon how a person evaluates box office performance. The sloppy rule that most people use is that a film needs a global box office total of double its budget in order to turn a profit. The rule is sloppy for several reasons. The primary one is that the domestic/international revenue split is crucial. As has been repeated ad nauseam here at BOP, studios recoup much less of their overseas box office revenue. The explanation is simple. Foreign countries fight to keep their money inside their borders, just as America does.
Anyone who lives in the United States should be familiar with interstate commerce, the philosophy of which is generally that states love to rob other states of money yet fight like cats and dogs to prevent the opposite from transpiring. International commerce is like that to the nth degree. Plus, there is a perception that America is wealthy enough that it does not need the money anyway. I am not discussing any politics here, simply stating basic human behavior. Keeping it in the family has always been the primary rule of money acquisition, after all.
The box office numbers back this up. In North America, Hollywood studios have sweetheart deals with exhibitors. The body of the opening weekend gross, oftentimes as much as 90%, goes to the studio. The split gradually grows fairer until such a time as it is almost 50/50 (usually 52% for the studio, 48% for the exhibitor). That process takes a month. It is problematic for exhibitors because releases are regularly available for digital purchase/home viewing within 90 days of theatrical release now. So, the studio gets the best part of the deal in every conceivable way.
That business behavior also explains why so many titles are pushed heavily to open well. That early phase of release is when the studio is incentivized to acquire as many early adopting customers as possible. Simply stated, North American revenue provides the best case scenario in terms of box office acquisition. That is strike number one for Edge of Tomorrow, a movie whose best chance of success now is for the extremely positive word-of-mouth to carry it after a truly disappointing opening weekend.
With regards to overseas box office revenue, the percentage of the theoretical ticket sale that is returned to the distributor is much smaller. The starting point is generally 40% and the actual take home was only 15% as recently as seven years ago. Take a moment to consider that. When you hear that a movie has earned $500 million overseas, we are discussing “only” $75 million of actual revenue going to the studio. Even worse is the fact that China starts at 25%, meaning that the second largest movie marketplace in the world also provides the worst percentage return for ticket sales. A distributor is lucky to recoup 10% of a ticket in China, and that presumes they get paid at all. On multiple occasions, the Chinese government has interrupted payments directed toward Hollywood. This feels like the perfect opportunity to point out that $25.7 million (i.e. 31%) of the international revenue for Edge of Tomorrow last weekend was earned in China. Call it strike number two.
The positive about the career of Tom Cruise is that he is still one of the most popular stars in the world, even as North America runs hot and cold on him. Herein lays the proof. Cruise’s most recent 11 films prior to Edge of Tomorrow grossed $1.347 billion domestically. The lone exclusion is Lions for Lambs, which was simply too big a bomb to justify foreign exhibitions. On average, Cruise’s globally released movies have grossed $122.5 million abroad.
Internationally, he does much better. Those same 11 titles claim international revenue of $2.373 billion, over a billion more (!). So, the same Tom Cruise movie that earns $122.5 million on this side of the Atlantic (and Pacific) improves to $215.7 million overseas. So, he is 1.762 times as popular in the rest of the world as he is in the United States. That sounds like great news for Edge of Tomorrow. It isn’t.
The glowingly reviewed action flick has earned enough over five days that we can reasonably project a final domestic total of $80 million, give or take. I will hone the accuracy of this number over the next couple of weeks as the summer box office campaign continues. We already have over a 1 to 1 ratio with its international revenue since it grossed $82 million already. Let’s boost that to the outer limits and anticipate that Edge of Tomorrow does three times as well overseas, a total of $240 million. That provides the title with roughly $320 million in global box office. Is it profitable? The answer is probably not.
Only about 60% of the film’s $80 million domestic take would be recouped, an amount in the range of $48 million. Let’s now presume that the non-Chinese box office, the other 70%, is recouped at a high rate, 25%. That would be another $168 million. Finally, let’s average Chinese return on ticket sales at 10%, a number I believe is ambitious rather than pessimistic. That’s only $8 million out of the $80 million estimated. That brings its overall take, the actual one rather than the global box office total, to $224 million. As I mentioned above, the negative cost is presumed to be $225 million or more, meaning that even if Edge of Tomorrow garners $320 million, it loses a tiny amount of money because of the domestic/foreign box office receipt discrepancy in play. That’s strike three. It’s out.