THB #250: The Creeping Terror

I am planning on writing about specific movies for the next few days, so I figured today would be a good time to do a business piece. I am sick to death about explaining why overpraise of a very weak October - against reasonable expectations - is not helpful to the future of the industry. Disney’s quarterly hits tomorrow morning, so I will write about that.

But what struck me was something I have been noticing that even I haven’t chosen to dig into much… the international market for theatrical.

Now before you run for cover… I get it. I will try to make is brief and to the point. There is a reason why few people write about international, almost none when you take away the weekly international box office pieces at the trades. It’s hard. It’s harder now than it was even a few years ago, before Box Office Mojo did it’s version of Elon Musk taking over Twitter and made its content much harder to mine for any details.

But… a BIG BUT… international revenues were what filled the revenue void for studios, especially for expensive movies, when DVD quickly subsided in the mid 00s and international growth went wild. But the real power of international box office was defined by Titanic in 1997, which did 2/3 of its then-record business internationally.

In 2019, 42 movies grossed over $200 million worldwide.

In 2022, so far, 19 movies have grossed over $200 million worldwide.

With 2 more mega-movies coming, we should get to 21 $200m worldwide titles this year. So half of 2019.

In 2019, 6 movies grossed over $700 million internationally by November 1.

In 2022, 1.

In 2019, 16 movies grossed over $300 million internationally by November 1.

In 2022, 8.

So when you read about how the big IP titles are going to save the industry… be careful. A lot more careful.

9 American movies have grossed over $400 million worldwide so far this year. They will all be profitable, though Fantastic Beasts: The Secrets of Dumbledore is the closest to red ink with a $200 million production budget and “just” $405 million in total theatrical worldwide. Black Adam is over $300 million but not yet at $400 million - might not get there - but it too is in the gray zone.

Of the 6 other titles that have grossed over $200 million worldwide and under $300 million, it feels like they are all lower budget movies… but are they. Smile definitely is and will be very profitable. But 4 of the titles have estimated budgets between $70 million and $90 million (The Bad Guys, Bullet Train, Elvis, DC League of Super-Pets). Lightyear is the only one sure to lose money by any reasonable standard, with a $200 million budget.

A friend said in conversation recently that he was concerned about the idea of “B-” movies losing money. And I guess that is part of what I am saying here. We all focus on the domestic box office because it all happens in an orderly, reported fashion. But domestic theatrical is 1/3 of the theatrical business. If, in its reduced condition, domestic becomes 50% of theatrical moving forward, that is quite a different math... on top of the variations of math we have all be chewing on since COVID began.

Interestingly, if you look at 2023, Universal, the most prolific theatrical releasing distributor at this time, is not laying heavily into IP titles. Yes, they have Fast X and Oppenheimer is pricey and Illumination brings Nintendo with the animated Super Mario Bros. and Trolls 3. But Fast X is the only title that really needs a big international number to work for the studio financially.

Disney, on the other hand, needs a minimum of $500 million worldwide each to feel comfortable on most of their movies… 6 or 7 out of what may be 9, 10 or 11. It’s not impossible, Disney had 7 movies over $500 million worldwide in 2019. Guardians 3 and Indiana Jones 5 are pretty much mortal locks. After that, not as clear. 2 more Marvel titles, the Little Mermaid live film, 2 animated films (god knows if they actually get theatricals). Then Haunted Mansion, A Haunting in Venice, and True Love, none of which are expected to hit those big numbers.

Only 6 American films grossed over $500 million worldwide this year.

It looks like the entire worldwide box office will be under $20 million, with international representing around $11 billion. International was over $30 billion in 2019.

So domestic will be off by about 1/3… international will be off by 2/3rds.

For most domestic distributors, this is not their concern… because their business is domestic distribution. A different conversation.

But for the big ones… this is The Serious Story, beyond the immediate future of domestic theatrical.

It may even explain Disney’s bad position on releasing non-IP films.

It doesn’t explain why “comedies are dead,” because most American comedies never traveled overseas well anyway. (But when they have… they made a feckin’ fortune.)

The irony, of course, is that the streaming world is heavily reliant on international to grow big enough to make profits. And that is, in my view, the primary reason why subscription sales have stalled. (And if you believe that Netflix fixed this last quarter and are back on a big growth path by selling 4 million subs in Asia, I have a bridge for sale.)

Entertainment is a worldwide business. You can survive on domestic only in a smaller company. But the big ones know that America is the easiest sell… the rest gets harder and harder, the wider and wider you go.

And on that happy note…

Until tomorrow…