Hollywood's Box Office Problem

If you follow me on my social media connected to this account compared to solely reading this blog, one of the things you may notice is that I talk a lot more about box office on Twitter than I do on this blog.  Part of that is because this is a personal, side hustle blog, one that I don't have enough time to get all of my thoughts out about as ephemeral of a subject as box office (hence why I subject myself to the increasingly terrifying world of Twitter).  But with the high-profile disappointments in recent weeks of, specifically, The Fall Guy & Furiosa at the domestic box office (both films will, despite having just come out, almost certainly end up in the red), I wanted to talk about this in-depth and give some longer-form thoughts on a subject I think about a lot: the financial health of the movie industry.

This is a big topic, so I want to provide a few ground rules here.  First, this is not going to be about critical quality of these movies.  I haven't yet seen Furiosa (I was on vacation last week, something I'll probably write about a bit in the coming days, as right now I'm getting back into my routines & also appear to have gotten something of a cold while I was on my cruise so I'm focusing on getting better), and I didn't really like The Fall Guy.  But my own personal thoughts on movies rarely impact box office (great movies have flopped since the beginning of Hollywood, terrible movies have made gobs of money before...this isn't about that).  I will also say that I don't think that it's too early to state that these movies are going to be flops, even if they just recently came out.  It's possible the films can have decent word-of-mouth or stronger legs than what their opening weekends entail.  The drop off, in fact, for The Fall Guy specifically is not bad, but we know due to its weak opening box office and the quick turn to streaming that there's no way that it has a sort of long theatrical shelf-life like Elemental did last year-the film cost $150 million, and the standard rule of thumb is that you need to make double your budget to make a profit (so $300 million)-that is not happening theatrically, period.  So no, I don't think it's too early to talk about this film's box office failure...though the size of that failure is very much an unwritten tale.

These are also not a new thing in 2024.  Despite a lot of box office recovery last year, driven in large part due to the "Barbenheimer" effect, we saw a number of major flops in theaters, including films like Indiana Jones and the Dial of Destiny and the clear underperformance of expected blockbuster films such as Mission Impossible: Dead Reckoning - Part 1 and The Little Mermaid.  The Fall Guy and Furiosa are part of a larger trend at the movies-people are not showing up in the numbers that Hollywood is expecting.  This isn't all new (again, movies have missed box office expectations before), but it is a distinct post-pandemic pattern.  So, let's just agree for the sake of the article there is a problem.

What is causing the problem is up for debate, but I'm going to start out right now with what I don't think it is.  First, it's not because "movie tickets cost too much."  This is wrong for a variety of reasons, but mostly because movie ticket prices have largely kept in-line with inflation, and honestly, thanks to deals like AMC A-List, are in many cases cheaper than they would've been twenty years ago.  When people complain about movie ticket prices, what they really mean is they are complaining about the cost of a babysitter, concession prices, or eating out before the movie (all of which are more than just a movie ticket price)-movie ticket prices aren't that expensive compared to virtually any other form of entertainment.  People saying "it's because they cost too much" is (and I'm not going to mince words here) a stupid person's answer to a complicated problem.  So get that out of your head-that's not the issue.  The same can be said for "theater avoidance" post-Covid.  People are back to traveling, they're back to work, they're back to meeting with friends...no one is avoiding things they want to do anymore (not in great enough numbers to matter) due to Covid in 2024.

What is a problem is five things: streaming, a fractured pop culture, film's inaccessibility with social media, unmanageable budgets, and lack of ingenuity in Hollywood.  Let's start with streaming.  One of the biggest reasons that I'm confident that The Fall Guy won't come close to making back its budget is that you can already watch it at your house.  While it costs $20 (nearly twice the cost of an average movie ticket), that will cut its box office, and more so, it trains the audience to think "wait until it's on streaming."  Streaming isn't actually that much cheaper in the long-run.  I subscribe to AMC A-List, which allows for the equivalent of unlimited movies (a maximum of three a week, which given current release schedules, is plenty even for someone who goes to the cinema as often as I do), and costs roughly what I pay for a streaming service.  But it's something that people are already paying for, so they don't think about how Netflix or Max also expensive.  

This wouldn't be an issue if streaming were as profitable as the post-theatrical solutions from, say, 1986-2010 would've been.  Then, you had a lucrative DVD market and a profitable second life for films on cable; if a film didn't make back its gross in a theatrical run, it could do so from home video.  There are actually films (such as Office Space, Showgirls, and Heathers) that turned a "flop" theatrical run into a financially profitable turn for the movie solely due to their eventual DVD sales.  With streaming, there's no real way to measure this, both because it's not entirely clear why someone is subscribing (just what they're watching), and because you don't make more money if someone is watching The Fall Guy specifically in the way you would from selling a DVD or higher ad revenue as a result of running on cable, it doesn't improve the film's bottom line.  Streaming is a way for a motion picture to gain a wider audience, but unless they're doing digital rentals, it's not a place to make more money for the film specifically.

No studio has handled this transition more poorly than Disney.  The studio has one of the glossiest and most coveted streaming service brands, with hit shows like The Mandalorian and Loki, as well as owning a catalog of shows like The Simpsons and Bluey, both insanely popular.  Quite frankly, combined with Disney's long catalog of theatrical releases that stretch back to the 1930's, there was no need for it to really get into the straight-to-streaming movie business post the Covid vaccines...but it did.  Films like Luca, Disenchanted, and Hocus Pocus 2, movies that all easily could've crossed $100 million given their fanbases, were released solely on Disney+.  This continued long past when they needed to do so.  There is perhaps no single movie that shows how little studios understood the damage that putting films that look like theatrical releases direct-to-streaming more than Disney's Turning Red.  A Pixar film with an adorable main character (a giant red panda), the movie not only could've been a hit, but it also could've been a new franchise (it regularly features into Disney's popular mystery toy brands for a reason).  But it launched on Disney+, and it trained audiences to expect films like this (i.e. beautiful animated films that cost nearly $200 million) to be on streaming-films that cost too much to exist on streaming, so basically an impossible business practice.  I firmly believe that there is a straight line between Disney's choice to release Turning Red on their streaming platform and the disappointing box office receipts of Lightyear, Strange World, and Wish.

Let's talk about some of the industry's other problems, because streaming on its own is not causing this (though it is the #1 issue).  I said above that the growth of TikTok and a fractured pop culture are also to blame.  The thing about movies is-they used to be a bigger deal to the cultural zeitgeist at large.  Part of the reason that "Barbenheimer" was such a phenomenon was because everyone in America was doing it-it was something that couldn't wait until it came out on streaming for you to be able to take part of the "cool thing" to do on social media.  Movies, in general, are a terrible match for modern social media.  Platforms like Instagram & Facebook are ostensibly about creating your own individual path on the internet (even if, in reality, it becomes about conforming to the quickest and fastest opinions & takes), but movies aren't about that.  They're about a shared experience with strangers, one that you experience in a darkened room (i.e. no cameras to prove that it happened), and are about a discussion afterward, rather than just a picture & a caption.  Movies, quite frankly, are generally too smart for social media.  In a different era, this was okay.  People would want to have discussions about cinema in the same way they wanted to discuss last night's episode of television or the latest bestselling novel; in order to be "cool" you needed to keep up.  In a world where the biggest TV show on streaming can be Suits (a cable television show long off the air) there's very few movies that can become "important" enough to get casual audiences to come to it without having some sort of clear cache or calling card.  And in a world where TikTok has destroyed people's attention spans (a conversation for a different day, but try going a week without using your phone/laptop while watching movies & television and see if you can do it without it feeling like you're having withdrawal symptoms...I recently did this by force, and it was honestly petrifying how hard it was to do), people increasingly don't have the patience to invest even two hours into longer-form storytelling.

Some of this is stuff that's going to be very hard for Hollywood to get past.  I think streaming is clearly a terrible business model that no one thought through when they went all-in, but Pandora's Box is open & I don't know how you close it (though they need to stop releasing movies that would've been released theatrically on streaming, and bring back the longer theatrical window at the very least).  And social media and its impact on people's attention spans & ability to constructively think...that's a larger issue, and given how easily fascist online movements have been able to weaponize it (particularly amongst young people), its impact on the movie industry is not something that should be on the top of the concern list.  The last two things, however, can be fixed by Hollywood in-house.

The first is around budgets, and with that, it's worth noting the box office picture right now is not all bad news.  The same weekend that Furiosa was gaining headlines for the slowest Memorial Day weekend in decades, The Garfield Movie made almost $100 million at the global box office.  That isn't enough to quite put it in the black, but there's no doubt that it'll get there, likely by the end of next weekend.  This is because The Garfield Movie cost $60 million.  It's probable that the film's star Chris Pratt will get some backend deals out of it, but Sony is 100% making a profit off of this movie, principally because it didn't cost that much to make.  Garfield isn't the only film that was able to carve out a profit this year thanks to keeping its budget trim.  Mean Girls, The Beekeeper, and Bob Marley: One Love all not only crossed the $100 million mark, but thanks to trimmer budgets, they all made money in doing so.  This doesn't entirely help the theatrical industry (they do need the occasional Avatar or Barbie to get outsized profits), but a steady stream of mid-level hits would do a world of good.

It's not a case where all major blockbusters with gargantuan budgets are going to fail.  Kingdom of the Planet of the Apes cost $160 million, meaning it needs to make north of $300 million to turn a profit-it'll do that in the next week, and will end with a profitable theatrical run.  But that's a franchise that you'd expect to be able to beat $300 million-the last three films in the series, in fact, did so.  The Fall Guy and Furiosa...not so much.  Much has been made about The Fall Guy being a remake of a little-remembered television series, which I don't think is its problem (I honestly think most audiences assumed it was an original property).  Its problem is it cost $150 million when it didn't need to do so.  You could easily have made this film for half of that, and you should have.  The effects aren't good enough for that kind of money, and the calling-card here was about it being a glossy rom-com with an action adventure quotient (i.e. no one is seeing The Fall Guy to see the VFX).  Had it cost $60-70 million (which is what it should have) it would have made a profit by now.  The same can be said for Furiosa.  A prequel to the critically-acclaimed Mad Max: Fury Road, it's worth remembering that this film didn't feature the breakout star of that picture (Charlize Theron did not return as the titular character), and despite critical hosannas, Mad Max: Fury Road barely turned a profit.  To assume that a sequel without the star that comes out a decade after it was important to pop culture (and hasn't had a video market or constant cable television viewings like the original films did to grow its audience) would make more money was always a losing bet.  These films are not indicative of the summer ahead.  Hollywood has surer bets with Inside Out 2, Deadpool & Wolverine, and Despicable Me 4...I still very much anticipate 2024 will have a $1 billion movie before we turn to a new calendar...but these movies always felt risky given their costs.

This brings me to my final point-it's clear that Hollywood doesn't know what audiences want anymore.  Look at some of the biggest hits of last year-many of them were unexpected victories.  Barbie and Oppenheimer, obviously, stand out the most, but films like Wonka and Five Nights at Freddy's both out-earning Aquaman 2 was on no one's radar last year.  Hollywood has been using the same playbook for too long-there were six comic book movies that came out last year alone, and only one of them (Guardians of the Galaxy 3) could really be called a hit.  To illustrate this point, in 1981 the highest-grossing film was Raiders of the Lost Ark.  It took 43 years for them to make five Indiana Jones movies.  To put that in perspective, the top-grossing film of 2002 was Spider-Man...in less than half of the time of the Indiana Jones movies, we've had nine Spider-Man movies (and that's only counting the ones where he's in the title-throw in the Avengers films and we hit double digits).  Of course the audience is going to get bored, and these don't feel special anymore.  There's still a place for sequels or reboots (Top Gun: Maverick and The Super Mario Bros. Movie both made $1 billion decades after they were last in theaters), but an over-reliance on established intellectual property was surely a house of cards that was going to hurt Hollywood.  Audience tastes change (just ask fans of the western or the musical), and the stagnancy (and over-reliance) on things like comic book movies and retreads of brands like Star Wars and Mission Impossible was always going to bite them in the ass.  That it's happening at a time when the theatrical industry is struggling so much is tragic & scary for fans of cinema...but it sure ain't a coincidence.