Chillin' out till it needs to be funded
As recession-weary Americans flock to the cinema, Hollywood has had good fortune in a year when most other industries are fighting for survival. According to Box Office Mojo, theatrical receipts are tallying close to 12% ahead of 2008. But which studios have lured moviegoers into theaters in this recession, and how can you turn a profit with them?Studios like Warner Bros. and Paramount are outperforming expectations, jam-packing the summer movie season with anticipated blockbusters. However, the real success seems to be coming from small and mid-size films. Warner Bros., a unit of Time Warner TWX – news – people , saw its comedy The Hangover pass the $180 million mark, and if it follows the path of Wedding Crashers, a comparable R-rated comedy, it could end up making north of $225 million by the time its out of theaters. What makes The Hangover all the more impressive as a moneymaker is that it was made on the cheap–by Hollywood standards–for a mere $35 million.
At this point last year, Iron Man had already crossed the $300 million mark, with Indiana Jones and the Kingdom of the Crystal Skull closing in. A 2009 movie of this genre–most likely Transformers–may not break the $300 million threshold until mid-July.
But 2009 may still eclipse 2008’s total revenue and take the crown as the highest-grossing year at the box office. One executive at Time Warner cited a “diverse film slate” for Warner’s success in particular, pointing to its investment in both large and small films.
James Marsh, senior research analyst at Piper Jaffray ( PJC – news – people ), was bullish on the sector though he mentioned that not all studios are created equal. “I think the guys that have the most exposure to theatrical [releases] seem to be holding up well,” he said. This, he pointed out, worked in favor of smaller companies.
Though small- and medium-budget films don’t necessarily have the built-in audience recognition of a Batman or Star Wars franchise, their profits are still very realistic. The Proposal, only two weeks into its run, has out-grossed Land of the Lost, a film that cost more than twice as much to produce and had the kitsch value of a campy canceled TV series behind it.