“The year was a really good mix of refreshed IP … combined with a big effort to take risk on very original storytelling,” Chairman Tom Rothman tells TheWrap
In the shadow of Hollywood’s mammoth film and TV studios, Sony Pictures steadily carved out a successful 2019. Thanks to box office breakouts like “Once Upon a Time … in Hollywood” and “Spider-Man: Far From Home,” the Culver City studio had an impressive turnaround with nearly $1.4 billion in domestic ticket sales and almost $3.4 billion worldwide.
This week, the studio’s comeback was validated with 20 Oscar nominations — including Best Picture nods for “Once Upon a Time” and Greta Gerwig’s “Little Women” — the most of any legacy Hollywood studio. (Netflix garnered 24 nominations.)
“It’s definitely one of our better years. Any year when you can have the biggest movie in the studio’s history and two Best Picture nominations, you’re doing a good job,” Sony Pictures Chairman Tom Rothman told TheWrap. “We’ve worked very hard for a number of years to turn the studio around, and it’s absolutely and categorically been a team effort across the board.”
Sony is the only legacy studio to gain in market share last year aside from Disney, which was supersized to 36% of domestic box office thanks to its acquisition of 20th Century Fox as well as megahits like “Avengers: Endgame.” Sony’s 2019 market share was roughly 11.2%, up from 10.8% in 2018 and 9.5% the prior year.
Despite Sony’s growth, as well as its history as one of the major Hollywood studios, it still sits below the likes of Disney, Warner Bros. and Universal Pictures in domestic and global box office. In recent years, those studios have scaled up operations through mergers and acquisitions to better compete in a changing entertainment arena.
Sony, meanwhile, has continued chugging along as the entertainment division of an electronics company — managing to enjoy more success than several smaller studios, such as Paramount Pictures and Lionsgate.
“Sony needs to be commended. They really had a good year,” ComScore senior media analyst Paul Dergarabedian said. “Market share is just one metric, but you have to look at the company’s margins and profitability, as well.”
In terms of profitability, 2019 was expected to be Sony’s best year, according to investors who spoke to TheWrap. For Sony’s most recent fiscal quarter, the studio reported that profits had improved to $366 million, compared with $211 million in profits during the same quarter a year ago.
There’s a saying in Hollywood: You’re only as good as your last hit. Sony’s 2019 saw several huge box office hits.
The studio has laid the groundwork for a successful franchise — a much-needed commodity — with “Jumanji: The Next Level,” last month’s sequel to the family adventure franchise it rebooted in 2017 with “Welcome to the Jungle.” The new film has pulled in $671.1 million worldwide.
Last summer, Sony also struck gold with Quentin Tarantino’s “Once Upon a Time … in Hollywood,” which Rothman noted was a big risk for the studio, taking on the singular director’s first film within the traditional studio apparatus — a nearly three-hour revisionist history dropped in the middle of a blockbuster-heavy summer. But the brought in $141 million at the domestic box office on a reported budget of $90 million, and earned 10 Oscar nominations, including one for Best Picture.
Even the studio’s fall “Zombieland” sequel performed well with moviegoers despite arriving 10 years after its predecessor. The comedic horror film raked in $121.6 million worldwide on a $42 million budget.
Then there’s “Spider-Man: Far From Home,” which has grossed more than $1 billion worldwide and broke records as Sony’s top-grossing movie ever. Sony shares Spider-Man rights with Disney’s Marvel Studios and splits the film’s theatrical gross. (Plans for a third standalone film with Tom Holland as the webslinger were nearly derailed over the revenue share between the two studios that was eventually resolved; terms have not been disclosed.)
As with any studio, Sony also released its share of films that either didn’t work or straight-up bombed. There was the better-off-forgotten box office performance of “Miss Bala” ($15 million domestically) and the tepid performance of a trio of sequels and reboots: “Men in Black: International” ($80 million), “The Angry Birds Movie 2” ($42 million) and “Charlie’s Angels” ($18 million).
“They had as good a year in terms of hits vs. misses as any other studio,” Dergarabedian said. “The diversity of their content speaks to the strength of their slate. They’ve made some really good choices, and it seems the studio is finding really interesting properties to put under its wing.”
Rothman admitted that the “Men in Black” reboot didn’t go as the studio planned, though he said the film’s $253.9 million worldwide gross wasn’t as bad as it was made out to be. The reception of that film aside, Rothman said Sony is committed to continuing to invest in franchise IP while taking risks on original stories such as “Once Upon a Time… in Hollywood.”
“The year was a really good mix of refreshed IP — with “Zombieland,” “Spider-Man,” “Jumanji,” and even “Bad Boys” coming hopefully — combined with a big effort to take risk on very original storytelling,” Rothman said. “We need to do both, and for us and our competitive position in the industry, we believe we have to keep investing in original filmmaking.”
Insiders have credited the leadership of Tony Vinciquerra, who succeeded Michael Lynton as Sony Pictures Entertainment CEO in 2017, for helping to turn around what was at the time a studio embattled by poor box office performance as well as a high-profile hack that leaked often embarrassing internal studio documents.
Sony investors have also praised Sony Pictures’ management team, as well as the studio’s library and breadth of content. Some view the company’s stock as undervalued based on the recent performance of the film studio.
Private equity firm Third Point Capital has been one of Sony’s most vocal supporters, calling for the parent company to spin off its semiconductor business, allowing the studio and other entertainment assets from the company’s Japan-based electronics business to stand alone and potentially unlock more value.
“As one of the five largest Hollywood studios, Sony Pictures benefits from a rich library of iconic intellectual property that spans nearly a century,” Third Point investors wrote in a letter to investors last June. “Sony Pictures is among the largest film and TV content production studios globally, but has potential for operating margin improvement. Sony Pictures could be worth between $13 billion and $15 billion on a standalone basis by 2021, with potential upside to $20 billion based on transaction comps.”
Sony, which has been an attractive acquisition target as consolidation sweeps the industry, has re-emerged as a healthy and successful studio — a small player, perhaps, but with operating margins that are also smaller. “Sometimes the currency isn’t just in dollars and cents,” Dergarabedian said. “There are other studios that maybe have bigger brands than Sony at this point, but I would say they haven’t built the good will with audiences like Sony.”