Disney (and others) at the Box Office - Current State of Affairs

[Sirwalterraleigh]

The way I read the end-of-year Deadline pieces (and other folks can correct me if I'm wrong here) is that it's literally recording (or perhaps merely estimating) the amount that Disney+ (and other outlets) is paying to the movie production side of Disney for that particular title. TP, etc. like to hand-wave this as imaginary and/or presumed far future earnings (the preferred joke is future sales of Blu-rays, I think?), but it's not that. It's literally money that is paid into the production house for that particular title when it goes digital. And that money comes from the revenue that streaming is already making from subs and/or individual digital purchases/rentals of that title.

That means they’re financing flops with a broadcast platform…

Explain to me again why that’s a “good”
Thing?

4th dimension stuff

As a reminder: broadcast paid the lions share of the bills for the entire Walt Disney company until around 2010…and it has fallen since…putting more pressure on all the other business (notably parks) but including the movie studios.

This is beyond the most silly thing ever. There is zero possibility that flops are “acceptable”…to the financial interests

 

[easyrowrdw]

Studios are a separate line item on financial reports from Steaming. It's very easily quantified what they wind up with at the end of the day. We can all argue to the moon and back and surely will. But that's the actual inarguable end point.

Being as you seem to have looked at the reports most closely, I wondered if you could answer a question for me. Does Disney+ pay markedly different prices for the movies they stream? For instance, do they have to pay (themselves) a lot more for box office successes like Endgame vs. poor performers like Cap 4?

 

[Sirwalterraleigh]

Studios are a separate line item on financial reports from Steaming. It's very easily quantified what they wind up with at the end of the day. We can all argue to the moon and back and surely will. But that's the actual inarguable end point.

I listed the January 2023-March 2024 above. And granted Way of Water surely did some hard work covering it up a little. But that's how the fiscal period fell. They've been comfortably in the green ever since. Thanks to a LOT of hard work from IO2, Deadpool 3, Moana 2, Mufasa and now Stitch. This is why I've said the baseline goal is if they can get two movies to hit big, they have long tails that cover up subsequent quarters. If they can hit three in a year, the studio machine is churning along swimmingly.

We only have one so far, it will cover Elio, it won't cover Fantastic Four falling flat. Then the back half of the year needs Avatar to show up for the mess that will be Tron

Having a couple movies a year cover the flops is not the goal…never was the goal.

That may be the industry “reality”…but it doesn’t “unflop” a tent pole…and neither does Disney plus.

And were we are back at go and around the board again. It’s been played out. Good day

 

[Wendy Pleakley]

Being as you seem to have looked at the reports most closely, I wondered if you could answer a question for me. Does Disney+ pay markedly different prices for the movies they stream? For instance, do they have to pay (themselves) a lot more for box office successes like Endgame vs. poor performers like Cap 4?

One thing to note is that they do have to pay proper market value in these cases, even to themselves.

There have been lawsuits in the past because someone who was entitled to profit sharing on a show sued because a studio sold the rights to themselves at a low price.

 

[Disney Irish]

That means they’re financing flops with a broadcast platform…

Explain to me again why that’s a “good”
Thing?

4th dimension stuff

First, welcome to Hollywood baby. This has been happening for a very long time.

But, so since you seem so convinced that this is "unacceptable" and doesn't happen that a movie makes money after theatrical even the "flops", why would any actor or writer take a backend deal where they don't get paid upfront for their work instead forgoing that for the "chance" to get paid after a studio recoups their costs?

Also if this didn't happen how do you think many studios survived for a very long time? Do you think every single one of them was producing hit after hit after hit? No of course not. So how do you think they recoup their costs during those times when they weren't producing hits? Also since we know that independent movies almost never make money during theatrical, how do you think they recoup their costs? Why would any studio produce an independent movie if they relied solely on theatrical knowing that independent movies almost never are hits?

As a reminder: broadcast paid the lions share of the bills for the entire Walt Disney company until around 2010…and it has fallen since…putting more pressure on all the other business (notably parks) but including the movie studios.

That should tell you something, that if broadcast was paying the bills for a majority of the Disney companies life it wasn't the box office that was doing the heavy lifting in a movies earning potential. So why all of a sudden is this now changed and it must be that only theatrical is paying the bills? So that should indicate it never changed, and that the reality is that post-theatrical is JUST as important as the box office and always has been, and in many ways even more important now since the box office is as discussed before imploding right before our eyes.

This is beyond the most silly thing ever. There is zero possibility that flops are “acceptable”…to the financial interests

No one said flops were "acceptable", just that there is a certain amount of risk in releasing a movie to market and that they still find ways to make money from it even if it does flop during theatrical, maybe not profit but to try and find money to recoup their costs. And that is the post-theatrical market, which includes many revenue streams and yes includes streaming.

 

[Disney Irish]

One thing to note is that they do have to pay proper market value in these cases, even to themselves.

There have been lawsuits in the past because someone who was entitled to profit sharing on a show sued because a studio sold the rights to themselves at a low price.

And again part of that strike that shutdown the industry for months in order to get more visibility into the streaming numbers in order to ensure they were getting the money they were owed on shows.

 

[easyrowrdw]

One thing to note is that they do have to pay proper market value in these cases, even to themselves.

There have been lawsuits in the past because someone who was entitled to profit sharing on a show sued because a studio sold the rights to themselves at a low price.

Thank you!

 

[Wendy Pleakley]

No one said flops were "acceptable", just that there is a certain amount of risk in releasing a movie to market and that they still find ways to make money from it even if it does flop during theatrical, maybe not profit but to try and find money to recoup their costs. And that is the post-theatrical market, which includes many revenue streams and yes includes streaming.

I assume it's also like any industry where there's an expectation that some products will lose money, and the ultimate goal is overall profitability.

A retail store might know that some products will simply not sell. It's impossible to predict. Some products will end up being sold at a discount, even a loss. They would build in enough profit margin overall to cover those.

There is no reality in which a movie studio only releases profitable hits.

 

[Disney Irish]

I assume it's also like any industry where there's an expectation that some products will lose money, and the ultimate goal is overall profitability.

A retail store might know that some products will simply not sell. It's impossible to predict. Some products will end up being sold at a discount, even a loss. They would build in enough profit margin overall to cover those.

There is no reality in which a movie studio only releases profitable hits.

Yep exactly. Many many industries do this, heck the grocery industry coined a term for it, loss leader. And you can bet your last dollar that movies studios do actually release movies that they know will fail at the box office in order to make money in the post-theatrical market and bring awareness to their IP. Independent movie studios are widely known to do this. This is actually what I think Disney/Pixar did with Elio knowing that it might fail especially given the state of Pixar in the audience minds.

 

[BrianLo]

Being as you seem to have looked at the reports most closely, I wondered if you could answer a question for me. Does Disney+ pay markedly different prices for the movies they stream? For instance, do they have to pay (themselves) a lot more for box office successes like Endgame vs. poor performers like Cap 4?

Yup! We’ll never be privy to the formula, but it is very much performance based and seems to be informed both pre-emptively by how it already did in the box office but also how well it is doing on streaming and how old of a product it is. Probably partially modeled off how it was with Netflix.

This is particularly important for residuals and participation. Disney would actually be otherwise motivated not to pay anything at all (both to make their streaming service seem more profitable and to not pay anyone externally).

 

[DisneyWarrior27]

More predictions sure to go “untrue”?

More like will be true

 

[Sirwalterraleigh]

More like will be true

I don’t think I’ve seen you be close yet? But to be fair…no way I’m watching whatever lame pod or vlog you have to be sure

 

[Wendy Pleakley]

Yup! We’ll never be privy to the formula, but it is very much performance based and seems to be informed both pre-emptively by how it already did in the box office but also how well it is doing on streaming and how old of a product it is. Probably partially modeled off how it was with Netflix.

This is particularly important for residuals and participation. Disney would actually be otherwise motivated not to pay anything at all (both to make their streaming service seem more profitable and to not pay anyone externally).

It'd be interesting to see all the nuts and bolts behind these decisions.

Let's day RDJ is entitled to a percentage of the next Avengers movie gross. Is Disney obligated to shop that movie around in a bidding war scenario? They have to pay market value to themselves, but does the lack of a competitive process potentially lead to some issues regardless?

Do they sell it based on past performance - you want to stream an Avengers movie, you have to pay upfront based on how well Endgame did.

On a semi-related note there's a reason actors tend to get a percentage of the gross nowadays, versus profit sharing. Avoids the issues where studio accounting claims a huge hit actually lost money. Forrest Gump famously had this issue.

 

[brideck]

That means they’re financing flops with a broadcast platform…

They're not merely financing flops. They're helping to finance their entire slate of movies with monies derived from streaming, so that, you know... they have more they can put on to those platforms in the future. Some parts of that slate end up being winning lotto tickets that also help the company's bottom line from their box office proceeds, etc.

 

[Sirwalterraleigh]

They're not merely financing flops. They're helping to finance their entire slate of movies with monies derived from streaming, so that, you know... they have more they can put on to those platforms in the future. Some parts of that slate end up being winning lotto tickets that also help the company's bottom line from their box office proceeds, etc.

And I don’t disagree with that at all. The math is far from certain…but the premise is correct.

But that’s not why I even bother commenting. My beef is and always has been that failures at the box office still are failures. They fail to meet the objectives of a single frame of film ever shot. The whole point is to find/strengthen an audience. Trying to twist/splain away failures is just a pointless endeavor and moving the goalposts

And if the theaters go and it’s all at home (which would really suck on so many levels) the goal will still be the same.

 

[easyrowrdw]

Yep exactly. Many many industries do this, heck the grocery industry coined a term for it, loss leader. And you can bet your last dollar that movies studios do actually release movies that they know will fail at the box office in order to make money in the post-theatrical market and bring awareness to their IP. Independent movie studios are widely known to do this. This is actually what I think Disney/Pixar did with Elio knowing that it might fail especially given the state of Pixar in the audience minds.

Of course the downside is that you potentially (further) dilute the value of your brand. You can sell it to streaming to make up for losses, but there can still be a long-term reputation cost. Then again, given how much is known about movies pre-release, if you just bury a movie that could be the same thing or worse. It's an interesting situation.

 

[easyrowrdw]

Yup! We’ll never be privy to the formula, but it is very much performance based and seems to be informed both pre-emptively by how it already did in the box office but also how well it is doing on streaming and how old of a product it is. Probably partially modeled off how it was with Netflix.

This is particularly important for residuals and participation. Disney would actually be otherwise motivated not to pay anything at all (both to make their streaming service seem more profitable and to not pay anyone externally).

Thank you!

 

[Disney Irish]

Of course the downside is that you potentially (further) dilute the value of your brand. You can sell it to streaming to make up for losses, but there can still be a long-term reputation cost. Then again, given how much is known about movies pre-release, if you just bury a movie that could be the same thing or worse. It's an interesting situation.

Sure that can happen, but that is the risk of the movie business, nothing is guaranteed. Why do you think that studios tend to flood the market with the "what's hot" trend, and usually to the determent of cannibalizing each other.

 

[AdventureHasAName]

I'm trying to figure out where you got this "new" metric for break even you are using from.

I thought it was common knowledge. It was common knowledge in and around Hollywood going as far back as the Star Wars Prequel Trilogy. It was one of those films where Lucas insisted on (and received) a 100% cut on the opening weekend. That's at least 20 years. And more specifically, the rule of thumb was: On true summer tentpole films, the number would be more like 1.5 instead of 2.5 because of the increased opening weekend percentage going to the studio.

 

[Disney Irish]

I thought it was common knowledge. It was common knowledge in and around Hollywood going as far back as the Star Wars Prequel Trilogy. It was one of those films where Lucas insisted on (and received) a 100% cut on the opening weekend. That's at least 20 years. And more specifically, the rule of thumb was: On true summer tentpole films, the number would be more like 1.5 instead of 2.5 because of the increased opening weekend percentage going to the studio.

Obviously not common knowledge if the people that track the box office here don't know about it, especially since you now say its an old metric going back 2 decades. Doing searches for it also doesn't produce any results, so it can't be that common.

I'm happy to learn about it if it really is common knowledge. So that is why I keep asking where you got it from. Do you have some site that I can view that shows this breakdown? I mean if its common knowledge there has to be some industry coverage of it, like an article from THR, Variety, Deadline, I'd even settle for Vulture or someone right now if you got it.