THB #1: Greetings... and Box Office Monday

In August of 1997, I started the first online column about the movie business. It was called The Hot Button. Back then, there were no additional pages beyond the “front page.” I had no more than 400 words available to write each day. And it was, looking back, shockingly nasty at times.

24 years later, I have been through a lot more adventures, high and low. The landscape for industry news has changed. In fact, the very idea of The Industry has changed. I was one of the very first adopters to journalism on the internet. ‘97 was the same year of the first commercial DVD, which launched with Twister and then saw the release of Mars Attacks that summer. Only half the box office Top 10 that year was IP-driven, when the #1, Men in Black, was an original. Broadcast and cable were the only TV options and Seinfeld was #1… and ironically, is Netflix’s big move in the world this very week. Nine of the Top Twenty are still impactful, five of which as news/sports… but we’re also welcoming back the OG Law & Order shortly to go with Seinfeld, Friends, and the reboot of Frasier. YouTube had just made itself available to public uploading, which replaced incredibly pricey private uploads. And streaming anything longer than 3 minutes was a glimmer in someone in Silicon Valley’s eye.

In any case, I turned 57 yesterday. And after an unhappy dance with consulting, I have spent much of the pandemic wringing my hands, deciding what to do when I grow up… again.

We are all overwhelmed by newsletters, the current trend. But it did occur to me that the thing that is missing from the newsletter mix is, after all these years, something like The Hot Button (which grew to 2000 words a day when the web allowed it), which was dense with subjects, but not dense in its delivery. A daily look at the anything and everything with quick, concise analysis from someone who was actually analyzing and not just shooting from the hip or being told what to think by management.

And so…

Box Office Monday: Venom is the word and it has all the kids confused about their feelings. Venom: Let The Be Carnage is a notable mess of a movie, scoring 58% on Rotten Tomatoes, which is a massive improvement on Venom’s 30%, showing that box office can lead a critic to rationalization, but you can’t really be sure what we think.

But I am burying the lede… the $90 million opening. 48, 70, 80, 75. Those are the 4 biggest pandemic openers until now, in May, June, July, September… and now add the topper of 90. Who knows? Maybe Bond will crack off a $100 million opening.

Here is the poop in the pudding… 21, 24, 35, and 7. Those are the second best openings of May, June, July, and September.

Let’s assume that all the big openings are 20% off their possible bests. That seems to be improving and will continue to improve. But what the health of the exhibition business depends on is those second and third and fourth best openers on any given month.

To wit, the Healthy Index for Theatrical (HIT). The math is simple. Take your #1 domestic grosser of the week and subtract it from the overall domestic gross for the weekend.

In the 19 weeks that started with A Quiet Place II, the HIT has been anywhere from 26 to 61. Sixty-one is, however, not the highest grossing weekend. The weekends with the 3 top openers have tightly clustered HITs of 35-39.

Instinctively, you would expect this. The big movies eat the multiplex whole and there is less room for other movies. Fair enough. The problem is, while this instinctive analysis is true in the most simple way, it is not true financially in a healthy theatrical environment.

I was expecting to come up with a rationalization about the top openers of 2019 and how they were so big (Avengers: Endgame opening to $357m) that they skewed the analysis unfairly. But just the opposite is true. Endgame is, indeed, the least HIT friendly, with domestic theaters grossing just $45 million more than the opener overall. But that is still a better result than any opening in the last 19 “recovery” weeks when the top grosser did more than $31 million.

Top Opener HIT for 2019
Avengers: Endgame - $357m open - HIT $45m
The Lion King - $191m - HIT $72m
Star Wars 9 - $177m - HIT $71m
Captain Marvel - $153m - HIT $58m
Frozen 2 - $130m - HIT $75m

Those huge opening numbers are really important. I don’t want anyone to think I am suggesting otherwise. But the HIT number is equally important. That stat is what gets exhibitors through the weeks and months where there are not massive openings (only 13 weekend opens over $60m in 2019). And this is where shortened windows do real damage.

In the current environment, it is hard to tell what the specific effect of more shortened windows is or will be… which is to say, it WILL damage theatrical revenues, but it is hard to tell whether those damages will be under 15% or much more like taking a significant percentage of theatrical and throwing it off the side of a cliff.

Which leads us to the flip side of HIT, the TIH (Theatrical Invasion Hedge). This simple equation is the percentage of revenue beyond the top grosser of any weekend. The optimal TIH seems to be between 25% and 35%. In this stat, the massive opening of Avenger: Endgame does represent an anomaly, with a TIH of just 11%. It truly ate the weekend. But remember… there was still room for $45m in domestic gross above that.

What we have seen in the 19 recovery weekends this year is that TIH goes off the charts the weekend after each of the 5 big openers we have had. From 40% to 63%, 29% to 67%, 33% to 66%, and 32% to 43%, with the second weekend of Venom: TWBC to come.

Why did the Shang-Chi TIH drop less than the other 2? It would seem because the overall domestic box office dropped more precipitously than the others. There was only one weekend as poorly attended as the weekend after Shang-Chi’s big open since the release of F9.

What made this last weekend the biggest of the pandemic with $128m overall is obviously the biggest opening… but on top of that, The Addams Family 2 open, weekend 5 of Shang-Chi at over $6 million, even though it disappointed and was on HBO Max, the Sopranos movie open, 2nd weekend of Dear Evan Hanson, weekend 8 of Free Guy, etc.

The surprise size of the Venom: TWBG open is great not only on its own, but because it will give us the first back-to-back openings over $35 million since May. I fully expect that another new record will be set for pandemic-era domestic total gross, even if Venom drops by a full 2/3rds. The HIT will be in the 40s or 50s and the TIH should be right in the 30% zone.

Then the weekend after will drop off significantly. And while this is not at all unusual for the middle of October in any year without any pandemic to monitor, it will be unneccesary. There is a lot of content sitting in the pipeline that could have used this date better than what is scheduled (especially after Universal agreed to go Peacocking with Halloween Kills).

Then it’s up to Dune and HBO Max (still zero releases opening to more than $32m domestic) to turn the volume back up. But then, another week “off” (sorry, Soho) before Eternals… week off… Ghostbabies… 2 weeks off… West Side Story.

There are a bunch of movies with serious opening potential. But there really isn’t a scheduled run of even 3 straight weeks with a big opener until June 2022… unless distributors step up. So expect fits and jerks until then.

Until tomorrow…