The Billion Dollar Movie Boom: Hollywood’s New Golden Age

We are barely halfway through the year and already three movies have surpassed a billion dollars in global box office revenue. Furious 7 completed the feat in record time, only to be beaten by Jurassic World just two months later, not to mention the expected success of Age of Ultron which almost caught up with its billion grossing predecessor Avengers Assemble.

And if you thought 2015 peaked too soon, think again. With 2012’s Skyfall taking over a billion, Sam Mendes is back in October with Spectre – perhaps the most anticipated Bond movie of all time. Then there’s November’s epic finale to The Hunger Games backed by Lionsgate’s no expense spared advertising. And to cap off a huge year is the almost inevitably record breaking Star Wars: The Force Awakens on December 18th.

By the end of this year, it is a genuine possibility that over half of the top ten highest grossing films of all time were released in 2015. It’s easy to attribute rising ticket prices to this, but the average cost of a cinema ticket in the US has actually fallen to its lowest in three years.

So if cinemas are charging less, how are films making more?

“Show me the money!” – Jerry Maguire (1996)

Advertising constitutes a significant part of a film’s budget in the twenty first century. Last year The Hollywood Reporter published THIS ARTICLE on the soaring marketing costs in Hollywood, which is estimated to reach $200 million per picture for the big blockbusters. This is in part due to the booming international markets, and more on that later, but does this recent surge in advertising costs suggest our consumption habits are evolving?

Back in the Golden Age of cinema, the standard theatrical distribution strategy was otherwise known as ‘event cinema’. In other words, films such as Gone With the Wind would tour across the country, spending a period of time in each location and moving on to the next. Therefore the experience of seeing the next big film is akin to us seeing a West End show nowadays. Films were made on an epic scale and sold as such – it was a big deal.

It was Jaws that redefined this model in the 1970s. It was thought that this event style sell was great for films that generated positive word of mouth, but not so great if the papers might not take kindly to it. The response was simple – spend more money on a wide release, thus bypassing word of mouth which cannot be controlled and relying more on hype, which anyone with a budget can buy. The result is a quick in and out – everyone goes to see a film before everyone tells everyone else that the film is actually not very good. The movie spends a lot but makes a lot more, as opposed to making nothing at all.

At first this type of release was expensive, as costs of a theatrical release included producing film reels and transporting them to every screen in every cinema that played the film. Nowadays films are distributed via USB sticks, so the logistics are far cheaper than ever to stage not just a national release, but a global one. On top of this, studios are constantly improving their ability to sell films in the right way to the right people. Just look at American Sniper – it’s surprising box office to many was the result of a calculated marketing strategy that was focused on the domestic and awards markets.

Could it be then, that because more films are making so much money without ticket prices rising in the domestic market, that we are returning to these event style cinema marketing strategies? Ergo studios are taking bigger risks on blockbusters and tent-poling their slate around one or two huge box office money-spinners? All the while utilising the potential of a single wide release to get a lot of people through the door in one go.

Jurassic World and Furious 7‘s record breaking race to a billion certainly gives this theory credence, and when compared against previous years’ top earners it makes a lot more sense.

In 2014 only three movies took over $300 million at the US box office, but ten more films reached the $200 million mark. Similarly, in 2013 only four films hit $300 million but a further nine reached $200 million. So far this year, four films have already surpassed $300 million but only two more films have made over $200. In contrast to this, the number of films to make $100 million or more is quite consistent, with this year looking to hit 30-35 just like the previous two.

What this suggests is a reliable audience of moviegoers paying to see the biggest movies every week. However, the disparity at the top is striking and suggests the studios are re-prioritising more of their marketing budget on a handful of the biggest films, thus increasing those films’ earning by more than the others are decreasing.

It’s a sound move by Hollywood that effectively integrates two very successful strategies to create a potent promotional campaign.

However, it must be noted that some films are not wholly reliant on their producers’ ever deepening pockets, but in some cases, like Furious 7, the context in which they are released generates significant interest and gives the film a dimension that was never anticipated, nor could be planned for.

Domestically, the US box office looks set to recover from 2014’s slump and hit back with a bumper year. Maths dictates that if films are taking more but charging the same, then volume (i.e. bums in seats) must have significantly increased. But there is another more important reason why films are suddenly capable of generating billion dollar returns at the box office, and the answer is Eastwards.

“Winds in the east, mist coming in. Like somethin’ is brewin’ and bout to begin” – Mary Poppins (1964)

The Motion Picture Association of America release an annual Theatrical Market Statistics report summarising key figures and trends throughout the previous year, and offers a useful comparison between the US and international markets. The first point in their introduction is perhaps the most significant:

Global box office for all films released in each country around the world reached $36.4 billion in 2014, up 1% over 2013’s total, due to an increase in international box office ($26.0 billion). Growth was driven primarily by the Asia Pacific region (+12%). Chinese box office ($4.8 billion) increased 34% in 2014, becoming the first international market to exceed $4 billion in box office.

In actual fact, the total box office in the last five years in the US has stayed relatively still. The increase in global box office has come from the huge rise in international box office takings, particularly the Asia Pacific region.

China is now the first country in the world to surpass $4 billion in annual box office outside America. Transformers: Dark of the Moon became the country’s highest grossing film of all time, and there are major signs that this market is about to go stratospheric. Such indicators include the regional five year box office takings; Latin America has seen a respectable rise from $2.1 billion in 2010 to $3 billion last year, but the Europe, Middle East and African markets actually show no signs of rising, sticking around the $10.5 – 11 billion year on year. But the Asian Pacific market has risen by an almost staggering 50% from $8.5 billion in 2010 to $12.4 billion in 2014.

This region took over $2 billion more than the total US market in 2014, so actually the question isn’t why Asia is booming but why isn’t Hollywood investing more? As this New York Times article investigates, Hollywood are getting actively involved in the Chinese markets, with DreamWorks even setting up its own Chinese division. Lionsgate and others also have lucrative distribution deals, but the country is heavily regulated so it will be a few years yet before the big studios are able to set up properly.

However, Variety even go as far as to suggest that someday a Chinese conglomerate [could] acquire a U.S. studio. Whatever happens between the two film industries, it’s clear that China has a huge market to be exploited, whether by Hollywood directly or homegrown studios. Going back to our three billion dollar movies this year, Furious 7 made over $390 million in China, Age of Ultron did $240 million while Jurassic World made $228 million.

The Asian Pacific market is no doubt the biggest emerging market for Hollywood, and a no brainer when it comes to advertising efforts, but there’s another more distinguished group to be considered, one which has gained power and influence in cinemas across the land, a group which has earned itself the affectionate title of ‘The Grey Pound’.

“I don’t want to grow older. I don’t want to be condescended to. To become marginalized and ignored by society. I don’t want to be the first person they let off the plane in a hostage crisis” – The Best Exotic Marigold Hotel (2012)

According to the MPAA Theatrical Market Statistics 2014, every age group from 2-39 has seen a decrease in the number of frequent moviegoers in the past five years, but every age group from 40+ has seen a considerable improvement. What makes this statistic more important is that it doesn’t just take the total number of cinema attendees, but the number of frequent moviegoers. These are the ones who want to be entertained, who are loyal to Hollywood.

It goes without saying that the more money a demographic generate for a particular business or industry, the more influence they hold over what service or product that business or industry manufactures.

The grey pound has been criticsed by some and lauded by others, mainly those who profit from it. Nonetheless the rise in older audiences is noticeable, and largely the result of increased communication between producer and consumer. Films such as The Best Exotic Marigold HotelQuartet or anything with Maggie Smith in it have drawn more mature audiences in their droves. As a result, Hollywood have discovered a new audience to reach out to, and it turns out they may not be exclusively interested in watching films about old people making jokes about how old they are.

It’s clear where this article is going, but let’s just point out the obvious: older audiences like to watch blockbusters too, and maybe they are one of the key drivers in the recent success of films such as Jurassic World et al.

One glaring criticism that can be made of this is 3D attendance, which falls sharply among older demographics, so if most of the highest grossing films of the year are screened in 3D then this does not correlate? And that’s why most films also screen concurrently in 2D.

The Grey Pound is merely an example of the main point this article is trying to make.

The biggest films of the year are films that we would expect to do very well. The number of films that look to be on course for a billion dollar box office in 2015 is incredible, but not entirely shocking because of the emergence of multiple markets that suggest the global cinema audience is more diverse than it ever has been, at least since the Golden Age.

More effort is put on selling the bigger films because their breadth of appeal is much wider than Ant-Man, for example. The action-heavy blockbusters are an easier sell to foreign non-English speaking audiences, while family adventure movies are also more relatable to a broad demographic, i.e. a families. Maybe these films are doing so well not just because marketing strategies are more refined, or because the Asian market is booming, or because more older people are going to the cinema more frequently, but because all of these things are happening at once.

The global box office never was struggling, but 2015’s billion dollar movie boom proves it still hasn’t reached its ceiling. The production, promotion and consumption of media is an ever-evolving tripartite between producer, exhibitor and consumer. The disparity between the top few films of the year and everything else may be a worrying sign to some, but maybe it demonstrates a period of unprecedented synergy between the three, and if that isn’t worth a billion dollars then I just don’t know what is.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s