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June 06, 2007
Summer Box Office Update
The big three summer movies have now each been in theatres for more than two weeks. Together they are on track to gross about $900 million domestically, a huge number by any means (only 23 movies have ever grossed $300 million), but one that is a modest disappointment to many observers including myself.
Spiderman 3 looks like it is headed to $330 million with Shrek The Third heading towards the low $300 million range and Pirates of the Caribbean: At World's End probably finishing between the other two. I think Spiderman and Shrek will wind up about $40 million below where many expected and Pirates may finish $60 million short. These shortfalls are irrelevant to the financial performance of the studios involved (Sony (SNE), Dreamworks Animation (DWA), and Disney (DIS) but they do dampen enthusiasm toward the box office slightly. I think optimism will pick up over the next 8 weeks as comparisons remain pretty favorable.
In an interesting twist, foreign box office for Spiderman and Pirates is running well ahead of the previous films in those franchises even as domestic performance is running 15-20% behind (Shrek will be released in international markets this weekend). In fact, Spiderman 3 will likely end up the highest grossing of the three films on a global basis. This bodes well for ancillary revenue streams from these films and is reminder that international theatrical exhibition is a growth industry for U.S. studios...
Returning to the domestic front, from June 1 onward last year, the summer saw six films released that grossed in excess of $100 million. The Break-Up, Cars, Click, Superman Returns, The Devil Wears Prada, Pirates of the Caribbean: Dead Man's Chest, and Talladega Nights totaled $1.4 billion with Pirates alone bringing in over $400 million. This summer industry observers see as many as one dozen movies still to be released that could reach box office of $100 million including seemingly sure things like Ratatouille from Pixar, the next Harry Potter film, The Bourne Ultimatum, and Rush Hour 3. Fantastic Four, Oceans 13, Transformers, and the just released Knocked Up are also seen as members of the $100 million club.
Predicting movie grosses is always difficult and the rapid fall-off of the initial big three is being chalked up to competition among major blockbusters but I'd be willing to bet that comparisons remain quite favorable for the rest of the summer, particularly after mid-July when the biggest weeks of Pirates 2 are lapped. This is good news for theatre stocks like Regal Entertainment (RGC), Carmike Cinemas (CKEC), and Cinemark Holdings (CNK). Theatre advertising leader National Cinemedia (NCMI) should also benefit. And, of course, the big movie studios including DIS, News Corporation (NWS), Time Warner (TWX), and Viacom (VIA) will be collecting the bulk of the box office receipts. Add those dollars to a bountiful summer abroad and the movie business is in the sweet spot for the next few months. Finally, don’t forget that getting fannies in the seats requires advertising. Movie studios are showing caution in the upfront advertising market due to worries about delayed viewing via DVRs but for right now, TV networks and stations, radio companies, internet portals, and newspapers are likely to get a boost as the studios try to make sure ticket buyers remember which blockbuster is opening which weekend.
Posted by Steve Birenberg at June 6, 2007 11:38 AM in Box Office
