Underdog nets 12 million at box office

[KMovies]

The first Pirates of the Caribbean had sales of 654,000,000 worldwide. Based on the success, Disney green-lighted not one but two sequals. That was good for 31st largest worldwide grosser.

How well would the second and third voyages perform. As always, sequals generally cost more to produce and more often than not, perform worse that the originals. Would Disney be able to strike gold a second and third time.

Pirates of the Caribbean 2 had sales of 1,066,000 - an increase of 63%.
Pirates of the Caribbean 3 had sales of 957,400 - down 10% from 2 but 46% above POC 1. #s 3 and 5 of all time.

But somehow, POC's increases of 63% and 46% were not enough to justify a profit and a sound decision by Disney. Exactly how well did these two films have to do to be judged a success???

No one ever predicted that POC 2 would be so successful - and then for POC 3 to come close (in fact, overseas POC 3 was the most successful of the 3).

Exactly, how many sequals would get made if they had to increase well above 63% and 46% to be successful - and that is on top of being the 31st biggest film of all time. When even #3 and #5 worldwide of all time wouldn't be good enough???

Explain, explain, explain.

 

[Another Voice]

Let's get out of the business if something like Pirates 2 and 3 can't make money - because there is no hope at all.

That's exactly the point.


Oh - for your "evidence", Disney's Q3 Operating Income from "Studio Entertainment" (the period when all that cash was flowing in from Pirates) was down 20% from the previous year.

Maybe Underdog can make up the shortfall.

But somehow, POC's increases of 63% and 46% were not enough to justify a profit and a sound decision by Disney. Exactly how well did these two films have to do to be judged a success???

Success is measured by Revenue less Costs equals Profit.

No one has the exact figures, but At World's End is rumored around Hollywood to have cost between $300 million and $350 million to make. It was a rushed film filled with massive amounts of last minute special effects. They were litterally making up the script as they went along. It's also estimated that marketing would have cost Disney another $200 million to $300 million dollars. All those ads run all over the world cost money - you can't just promote a movie by selling pirate trinkets in Tomorrowland.

Added to this are all the other "costs". Theaters keep on average about 45% of the "box office" numbers you want to throw around. Jerry Bruckheimer gets a cut of the first dollar. That alone is rumored to be between 15% and 20%. So basically - cut whatever numbers you're slinging out there and cut them at least in half. Beyond that Johny Dipp gets his cut as well, Orlando and Ms. Knightly get a sliver, IFM gets to take a decent chunk ('cause Disney canned all their SFX people to save money...irony) and all of Jerry's friends that end up as "producers".

Getting the point yet?

At World's End is going to end up making lots and lots of people rich. But the Walt Disney Company isn't going to be in that crowd. It's because Disney was so eager for a "hit" they made really stupid deals and made a really bad movie. It's because Disney is so mismanaged these days that the production ran out of control. It's becasue Disney couldn't make a good enough film to even equal the box office of their last one.

So take it whichever way you want - World's End either cost too much money to make or World's End to be bloated and bad of a movie to recoup the money spent making it.

 

[KMovies]

Studio profits down 20% - let's see why.

Studio Entertainment
Studio Entertainment revenues for the quarter increased 4% to $1.8 billion and segment operating income decreased 20% to $192 million. Lower segment operating income was primarily due to a decrease in worldwide home entertainment partially offset by an increase in international theatrical distribution.
The decrease in worldwide home entertainment was primarily due to lower
DVD sales, reflecting the strong performance of The Chronicles of Narnia: The Lion, The Witch and The Wardrobe in the prior-year quarter.
The improvement in international theatrical distribution was driven by the
strong performance of Pirates of the Caribbean: At World’s End in the current quarter. At domestic theatrical distribution, the strong performance of Pirates of the Caribbean: At World’s End was offset by higher distribution costs driven by marketing expenses for Disney/Pixar’s Ratatouille, which was released late in the current quarter.

Let's see - it was no Narnia DVD and the fact that they paid the marketing expenses for Ratatouille (which came out the last 2 days of the quarter) when the revenue for Ratatouille would cime in during the next quarter. It doesn't say it was due to the weak performance of At World's End

Cost of the films, per boxoffice mojo was 225 million per peice. Yes, Disney will get around 55% of the domestic take and around 35 - 40% of the international take. Yes, they paid marketing costs (though I bet they are less than Sony spent on Spiderman 3). Yes, like most contracts, the producers and actors get their share.

Yet, Studio Entertainment made 192 million but lost their shirt on At World's End - I think not.

Besides, you haven't accounted for future revenue (DVDs and TV). See how Narnia DVD pumped up Disney's numbers in the prior year?

 

[EUROPACL]

225 million?? HA!!!!

...and what does one bomb like spiderman 3 have to do with these two Disney bombs?

 

[Another Voice]

At domestic theatrical distribution, the strong performance of Pirates of the Caribbean: At World’s End was offset by higher distribution costs driven by marketing expenses for Disney/Pixar’s Ratatouille,

So you're saying Disney spent all the profit from At World's End to sell a movie about a rat!!!!!

That deserves a

 

[YoHo]

KMovies, you realize you're arguing with some who is actually in the industry you're arguing about right? I mean, AV has said so a couple of times in this thread, but I just wanted to make sure, because it seems to me that you're trying to suggest you know more on the subject then he does. Now while this thread is devoted essentially to how dumb hollywood is, I don't think that means AV is incapable of understanding the industry he works in.

 

[doconeill]

Actually I've heard from a couple of "insiders" (producers) that it is a common tactic among studios to write off net profits of the one or two hits they may have against the losses of everything else. At least according to the books, "no movie ever made a profit" was one quote.

That's why you never want "net points" as compensation...

I don't know how accurate that is, but it did come from someone involved in Hollywood.

 

[Another Voice]

I do not want to go around waving my credentials. I'm just trying to explain the highly bizzare nature of Hollywood. It's more than the politics out here that are beyond rational thought.

The town has had nearly a century to come up with all kinds of tricks, scams and frauds to hide all kinds of money. Things became even worse when weekend box office totals became "news" and a major source of a film's marketing campaign. There is so much money flowing around that people have very strong incentives to divert as much as possible to them, and away from others as possible. Hollywood is a town based on individuals, not corporations. No one thinks about getting collectively rich, as in "I own stock, a hit will drive up the stock price and then I can cash in!". Hollywood is very much a cash up front, cash into my pocket, cash up my nose kinda town. Wall Street hasn't figured that part out yet.

That's because, in part, they're dazzled with $900 million box office takes while they remain ignorant about what's going on behind their backs. It's much easier to believe in easy money when you don't lool hard. Using Disney's Q3 numbers - the studio kept just 11 cents of every dollar it took in; the theme parks (known as a miserable business) did double that. And this was a good quarter for the studio!

Now throw all of this into a corporate environment - another system designed to cloud issues - and the "truth" becomes impossible to see. All we can do is estimate and guess.

 

[DancingBear]

The wierd thing is that one of the things Eisner did right, at first, was doing several lower-budget movies (using some talented actors that for one reason or another were out of favor at the time) to make Down and Out in Beverly Hills and Ruthless People. But now there's such focus on the huge blockbusters, even though "smaller" movies like The Princess Diaries seem to be the ones that make the best returns.

 

[YoHo]

It's all about the size of your churro and The prince diaries makes for a pretty limp sad churro with no dipping sauce....OK, I'm not sure where that metaphor went, but I'm stepping back from it now.

 

[KMovies]

I guess I will say this, I know more about the industry than one might think.

Most films do not make a profit in theatres - that is given. The stakes are very high. The numbers are also very unreliable.

Part of the costs of a film are studio rentals. For example, a movie may spend $5 million to rent a studio, owned by the studio. There is profit for the studio in the $5 milllion dollar charge.

In 3rd quarter, Disney would write off a lot of Ratatouille's marketing costs. This would show a loss for Ratatouille since the revenue the picture will generate will come in the 4th quarter. So paying for Ratatouille's marketing costs will impact 3rd quarter numbers.

A studio such as Dreamworks is very profitable for quarters that they do not release films. This is due to revenue from DVD sales and TV contracts. When a film is released, profit or losses result based on the movies themselves and the timing of the marketing and revenues. When Dreamworks released Flushed Away, they saw the boxoffice numbers and wrote down much of the costs of the film knowing they would never see profit from this release.

Where did 192 mil profit come from? Yes, its only 11 cents per dollar whereas the parks did 20 cents per dollar. But these are very different operating divisions. When Pirates is released on DVD, you should see a very large profit from the studio division.

I feel that Boxoffice.mojo is very reliable when it comes to the cost of films - so I will stand by the 225 million for each of the Pirate films.

Wonder why Disney and Sony want to make more Spidermans and Pirates, if in fact, both were bombs.

But yes, films like Superbad which cost 20 mil to make are the nice pictures that make huge profits. High School Musical and Musical 2 are expected to make 100 mil profit for Disney. That's great. And even Underdog has grossed 36 mil and counting. Entertainment Weekly said that was a good number for a film with no name stars.