Hollywood Has a Budget Problem...Here's the Only Way to Solve It

Did you go to the movies this past weekend?  In the United States, this past weekend was a holiday weekend for many (including me), and so I took it as an opportunity to see both Past Lives and Elemental (if you don't follow me on Letterboxd, you should as I review all of the films I see there, including ones currently in theaters).  If you read the box office receipts for this past weekend, though, I assume more of you than not didn't hit the movie theaters, as both Elemental and The Flash joined a growing number of movies this year that includes The Little Mermaid, Ant-Man and the Wasp in Quantumania, Fast X, and Transformers: Rise of the Beasts as movies that underperformed at the box office despite being massive tentpoles or coming from key studios (like Disney or Pixar) that usually are box office insurance.

When it comes to box office, the thing to always keep in mind is not gross, but profit.  After all, The Flash made the GDP of some world countries this past weekend, grossing a combined total of $139 million at the worldwide box office.  That's a lot of money, but it's not a lot when you consider The Flash's total budget.  While Warner Brothers isn't going to share the exact numbers on this, estimates assume that (including advertising) The Flash probably cost about $300 million.  Given that there are surely profit participants involved in the movie's production (again, this isn't leaked, but it's likely given their cache going into this movie that stars Ezra Miller and Michael Keaton both are getting a cut of the gross here), and you probably need the movie to clear $400 million before it's for sure in the black.  An opening weekend of $139 million makes that difficult to see happening.  Black Adam, which was considered something of a disappointment already by DCEU standards, made less than The Flash on opening weekend, and it topped out at $393 million...it also had three weeks of being the biggest movie in America before being displaced by Black Panther: Wakanda Forever.  The Flash, at this rate, will be lucky to last two weeks at #1 (the biggest release next weekend is No Hard Feelings which it certainly should beat, but at this rate there's no guarantee it will) before being destroyed on June 30th by Indiana Jones.  This all means that Black Adam might be the high-water mark for a key film in the DCEU, which at this point is limping to its conclusion later this year with just Blue Beetle (which, let's be honest, at a $120 million budget, plus probably $40-50 million of advertising, is looking DOA if audiences won't even show up for a literal Batman movie), and Aquaman 2 (which is kind of its own universe given the original's $1 billion gross, so any assumptions about it are premature).

Elemental is in the same boat.  It made just south of $50 million this weekend, $33 million in domestic theaters which (adjusted for inflation) is the worst opening ever for a Pixar film that was released exclusively in theaters.  The film cost $200 million, and presumably another $60-70 million to advertise, so it'd need to clear $300 million to turn a clear profit.  That's not going to happen.  Transformers: Rise of the Beasts likely cost $300 million (has made $278 million to date), Ant-Man 3 likely cost $300 million (and only made $476 million), and The Little Mermaid likely cost $350-400 million (including advertising) and has made only $468 million.  Again, these films star major celebrities like Melissa McCarthy, Paul Rudd, Michelle Pfeiffer, & Michelle Yeoh, so at least a chunk of that gross will go to paying them profit participation, so all of these films are at best going to break even...none of them are really the behemoths that other films in the Disney Live-Action, MCU, & Transformers franchises have been.

While it's easy to name-check some success stories (Mario, Spider-Verse, and John Wick are all hits, full stop, and Guardians of the Galaxy will definitely make a tidy sum even if it is nowhere near the $1 billion some thought it could achieve), this is too long of a trend to not feel like a problem for movie studios.  A lot of the blame lies with two men: Bob Chepak & David Zaslav, two CEO's whose incomeptence may well have destroyed a century-old industry.  Before the pandemic, it would've been unthinkable for a movie that cost north of $25 million to not get a full theatrical run, much less $100 million...no one would've done it.  But during the pandemic, they released potential blockbusters like Mulan, Soul, and Wonder Woman 1984 at home, for pretty much peanuts, to try and keep the lights on.  This was a risk, and maybe one that would've been easy to dismiss...had they not made the clear mistake of continuing to release major studio films on Disney+ and HBOMax after vaccination rates meant they could get audiences in theaters.  Disney released several films as part of a Premier Access release date (Black Widow, Cruella, and Jungle Cruise) while other films that would've normally gotten an exclusive theatrical run (Luca, Turning Red, Disenchanted, and Hocus Pocus 2) got Disney+-exclusive releases.  Warner was even worse-giving theatrical releases that were alongside streaming releases like Godzilla vs. Kong, Mortal Kombat, Space Jam: A New Legacy, The Suicide Squad, and Dune.  With the exceptions of Dune, Black Widow, and Godzilla, none of these movies were hits in theaters, and with the exception of honestly just Godzilla, even the hits didn't exceed expectations.

What this did, though, was set up an impossible standard for streaming platforms to create $100 million movies that they can't afford.  Had Disney only released Soul in theaters, and made Luca & Turning Red go back to "the way things were," it might have been fine.  But at this point, pretty much everyone knows that "you can see it on streaming."  Same with MCU, DCEU, and a host of other Warner properties.  This was something of a problem with DVD releases, but DVD releases were far more lucrative than streaming, which already has overhead costs from maintaining TV shows like The Last of Us and Andor, which are also extraordinarily expensive.  This isn't sustainable.  At all.

How to fix it is a multi-billion dollar question that no one quite knows the answer to; I take no joy in this even if it was something you could see coming (I'm a fervent cheerleader for pretty much all movies to be successful because it's good for movie theaters...even the movies I didn't like).  Streaming seems like something the entertainment industry is dead-set on maintaining, and as a result it's going to require people to want to see movies in theaters that they don't want spoiled in the ensuing months.  That means listening to the audiences by making movies that they actually want to see like John Wick rather than extending lucrative intellectual property until it runs dry (did anyone really want another installment of the Transformers franchise...was there any excitement about getting Michael Keaton back into the bat-suit without Jack Nicholson or Michelle Pfeiffer to come with him?).  It's going to require more ingenuity from Disney (Elemental is the eighth "parents just don't understand" screenplay to come out of Pixar in the past decade, and it was the plot of four of their last five movies...it reads as tired at this point).

And it's going to require looking differently at budgets.  I don't think we'll ever get past the world of $200+ million budgets entirely.  The payoff when it's big (like Spider-Man: No Way Home, Jurassic World: Dominion, and Avatar: The Way of Water) is worth the bet.  But you need a Hollywood that can treat $30-40 million movies as more than just padding on a streaming service.  Part of this is going to be betting that quality writing & charismatic movie stars can give you success (like it did for the entire 20th Century).  We'll see next week if that happens with Jennifer Lawrence, one of the few true movie stars of the Millennial generation, giving her all in an R-Rated comedy (I already have my tickets purchased for No Hard Feelings because I want to encourage this type of movie to be successful).  But this is how you start to understand who is worth putting in major films...you can't just bet on IP & unproven actors (it worked that way for a while, but in some ways they honestly got lucky with people like Chris Evans & Chris Hemsworth).  And it's also how you get people trained to always go to the movie theater first.  Because streaming...there's no future in this as a profit machine, and it's going to go down.  TV has a fallback plan in a (rotting) cable system, but blockbuster movies...the only way they work is a theatrical model, and you have to support that at all-levels, not just giving it quality reasons to get $300+ million opening weekends, but also with movies that can make $100 million...and still be considered a big hit because you only spent $35 million on them.