“The movie business is incredibly resilient,” says Paul Dergarabedian, senior media analyst at comScore. “People have been sounding the death knell for the theatrical experience for a long time, but if the movies deliver, people show up.”
Still, not everything broke in the movie business’ favor, and not everyone would claim that the pictures were the best that Hollywood has to offer. Attendance for the year will be flat or down slightly, buoyed by rising admissions costs. Globally, a slowdown in China took a chunk out of ticket sales; box office in the Middle Kingdom slipped roughly 5% after years of explosive growth that saw routine jumps of more than 20%.
Final numbers are still being tallied, but analysts believe the worldwide box office will fall at least $800 million short of last year’s $38.8 billion haul. Disney’s share of worldwide profits will be 57%, according to estimates by Cowen and Co., drawn from studios’ earnings reports.
Domestically, many studio executives and Wall Street sages are pleased that the box office didn’t fall by 4%-5%, as the most bearish analysts had initially projected. Much of the unexpected success is attributable to Disney, which loomed large, racking up nearly $3 billion in domestic receipts from blockbusters such as “Finding Dory,” “Rogue One: A Star Wars Story,” and “Captain America: Civil War.” Among Disney’s accomplishments in 2016: Four of its films will likely shatter the $1 billion mark globally; it had six of the 10 top-grossing domestic releases; and it controls more than a quarter of North American market share, despite releasing fewer films than each of the other major studios.
Disney executives insist there’s more at play than simple brand recognition. Distribution chief Dave Hollis says the company owes its hot run to quality control: Every Disney-produced film in 2016 had an audience CinemaScore in the “A” range and enjoyed average “fresh” scores of more than 80% on Rotten Tomatoes — increasingly a guide for audiences trying to choose from myriad entertainment options.
The studio’s success can also be chalked up to old-fashioned salesmanship. The conglomerate’s marketing team makes each film an event, so people feel compelled to go to the theater.
“We are creating almost this fear of missing out,” says Hollis. “You can’t create that feeling unless you make something that has spectacle and action … something where [audiences] can’t settle for just having the experience on a tablet.”
Imitation may be the highest form of flattery; other studios have attempted to replicate the Disney model of releasing a few special-effects heavy, tentpole films.
“Everybody is trying to do it, but there is only so much room for big-budget franchise pictures,” says Doug Creutz, a Cowen & Co. analyst. “And when others try to do it, they often fall on their faces.”
Creutz says the industry is trapped in a “tragedy of the commons,” with six major studios and Lionsgate overcrowding a theatrical field that is bringing out fewer viewers. Even as budgets balloon and risks escalate, no studio wants to be the one to back down. The year’s costly flops, such as “Ben-Hur” and “Gods of Egypt,” are a reminder that a big budget isn’t enough to guarantee success.
“It would probably be a healthier industry if we had five studios instead of seven,” Creutz says. “We need 20% fewer big, expensive movies. But if you are the one who blinks and stops making them, or you make fewer of them, it takes you out of the running for big hits.”