Last week, we talked about the remarkable historic resiliency of movie attendance and the potential impact home entertainment can have on the industry going forward. So what has Hollywood done recently to curtail some of this potential movement?
Movie production is up, from 557 movies in 2009 to 694 movies in 2014 (5 percent growth per year). But major-studio releases are down, from 111 to 91; all the growth came from independent and mini-major releases.
Nevertheless, movie studios are still spending money. So what are they spending it on?
The large Hollywood studios continue to shift budgets toward high-cost tentpole films. In the last 15 years, average production budgets have gone up more than 50 percent (or approximately 3 percent per year). Films with budgets greater than $100 million now account for more than 15 percent of films.
As large studios pour more money into tentpoles, they are pulling back on small-budget films (those with a budget of $5 million to $20 million) and pushing medium-sized films (budgets of $50 million to $100 million) into tentpole territory.
So how much money has actually shifted to big-budget films? Probably more than you think.
Total production spend by large Hollywood studios has increased by roughly 50 percent since 2000, reaching almost $9 billion in 2014. Nearly all of the growth has come from big-budget films, with $100 million-plus films adding more than $1 billion in total spend since 2010.
Studios are continuing to bank on consumers’ willingness to pay for big-budget films with scenery and visual effects that must be seen in the theater to be fully appreciated. This was the whole premise of the 3D revolution, which we will explore in next week’s post.
9 Biggest, Baddest Box Office Showdowns of 2016 (Photos)
Feb. 12: "Deadpool" vs. "Zoolander 2"
"Deadpool" is one of 2016's most high-profile movies due to a great social media campaign. However, "Zoolander 2" is the sequel to a successful comedy, and many fans have been waiting 15 years for it.
Marvel/Paramount
March 25: "Batman v. Superman: Dawn of Justice" vs. "My Big Fat Greek Wedding 2"
Comic book fans have been clamoring for Zack Snyder's buildup to a Justice League Movie, with Ben Affleck as the Caped Crusader. But Nia Vardalos' original "Greek Wedding" was one of the top-grossing indie films ever and could be canny counter-programming.
Seth Rogen, Rose Byrne and Zac Efron return for some new fraternity high jinks -- and will face off against a 1970s set film starring Ryan Gosling and Russell Crowe.
Universal/Warner Bros.
May 27: "Alice Through the Looking Glass" vs. "X-Men: Apocalypse"
Two big sequels with wide appeal: "Alice" is a four-quadrant movie, meaning the movie offers something for every demographic. "X-Men" is another film in the popular franchise that already has a huge following, and let's be honest -- Marvel movies do extremely well at the box office. The box office winner may depends on which movie gets the IMAX screens.
Disney/Fox
June 10: "Conjuring 2" vs. "Now You See Me 2" vs. "Warcraft"
This summer day marks the release of two sequels to surprisingly successful movies, while the new movie "Warcraft" will vie for fans of the popular video game.
Warner Bros./Lionsgate/Legendary
July 1: "BFG" vs. "Legend of Tarzan"
Two classics are hitting theaters in the prime of summer. Steven Spielberg's adaptation of the Roald Dahl children's book faces a giant challenge from Alexander Skarsgard's jungle-raised man.
Disney/Warner Bros.
Oct. 7: "The Girl on the Train" vs. "Gambit"
Although both of these films have completely different target audiences, the Emily Blunt thriller "The Girl on the Train" and the Marvel comic book movie "Gambit" with Channing Tatum are both high-profile movies with amazing casts.
Universal/Marvel
Dec. 28: "Passengers" vs. "Jumanji"
A sci-fi movie teaming Jennifer Lawrene and Chris Pratt will blast off against a reboot of the classic "Jumanji" starring Robin Williams.
Sony/Columbia
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TheWrap takes a look at the most competitive faceoffs of the year, like ”Alice Through the Looking Glass“ opening against ”X-Men: Apocalypse“
Dan Schechter is a Managing Director and Partner at L.E.K. Consulting, and he leads the firm's Global Media, Entertainment & Technology practice. He has broad experience within the media, entertainment and technology sector, including TV, film, Internet content and commerce, radio, magazines, theme parks, advertising and news. He also has experience working with retail, consumer products, travel and industrial clients. Dan was awarded his MBA from Stanford University and his BA, cum laude, from Harvard University.