Summer 2017 - An Analysis
It has been fairly widely reported that this has been one of the worst summers in recent memory for films - certainly in America, at least. The question then becomes - why? What has caused this year to be so down, when normal scapegoats like Netflix or sports have been so conspicuously absent. Why has 2017 seen such a massive downturn in box office receipts?
The answers to these questions are not straighforward, despite what many pundits or prognosticators may argue. However, the purpose of this post is not simply to try to examine what has occured this year at the domestic box office (interestingly the foreign box office was 3% up on previous years - but more on that later), but to also form what can be best described as a 'primer' for those who may not understand the rather complex ins and outs of the box office and studio finance structure.
In order to demonstrate this, I will be looking at a variety of films that have been released over 2017, but first and foremost I wish to look at a primer behind film financing, so that in a second post I can therefore drill down into specific problems with 2017's line-up. It is important to understand several key concepts, so that, when the numbers do arrive, we are able to look at them in totality, not simply as figures. To do this, there have been two films released this year that exemplify the dichotomy between money earned and money costed.
War for the Planet of the Apes, 20th Century Fox (2017)
and also
Valerian and the City of a Thousand Planets, Europacorp (2017)
Both Valerian and War released in the mid-point of Summer 2017, and to present, the worldwide box office takings are as follows (figures correct as of 29/8/17, or 8/29/17 for Americans)
Valerian - $172 million USD worldwide from a $177 million USD production budget
War - $359 million USD worldwide from a $150 million USD production budget
On the face of it, the numbers tell a very clear story - War was a far more successful film. Yet if we were to discuss with the heads of studios as to which film they would rather be invested in, it is likely that the consensus would argue Valerian. The reasons for this are many, however they do also help to illuminate the tricky world of film financing.
Production Budgets
When we look at what a film has cost to make, whether that be on respected sites such as Box Office Mojo or the IMDb, what we are seeing as a figure (when given - studios are becoming more reluctant to offer these, where once they had been badges of honour) is what is known as the 'production budget'. Essentially, this is the budget of the film to make it through from the initial storyboarding to post-production phase. In Hollywood cinema, this was often a fairly standard aggregate of what the film cost to make; however, in reality, modern Hollywood cinema runs in a cycle of test-screening, focus-designed precision.
One infamous example of a production budget not reflecting reality is 2016's Suicide Squad. The film, directed by David Ayer, famous for grittier films such as Harsh Times, End of Watch, Sabotage and Fury, was somewhat counterpointed with a lighthearted trailer, soundtracked by Queen's Bohemian Rhapsody. Such was the audience response to this more knockabout vibe to the film that Warner Brothers decided that Squad, to put it bluntly, needed more jokes. It is rumoured that up to $50 million USD were spent on adding jokes and one-liners to the script, overseen by senior writers. This costing is not part of the initial production budget, and whilst it is an extreme example, it reflects the now standard policy of studios reshooting or adding to key sequences of their film as a result of the reactions of test screenings.
Reshoots do not form part of the production budget. Therefore, it is important to consider that when we look at what a film has earned. We should assume that both Valerian and War went through a reshoot process - however with a tighter rein on budget, it may be (unproven - please mind) that the former was not as eligible as the latter for much tweaking - perhaps also affecting the subsequent responses to the films.
Print and Advertising Costs
Known as P&A, these are the hidden costs behind a film; sure, they're fairly logical to figure out, but as they are never considered part of the initial budget, it is easy to ignore them. In essence, P&A costs are what it costs to get the finished film out there. In recent years it has been estimated that for big budget, high profile films these may cost northwards of $200 million USD. Consider that for a moment. Your film, which has cost $150 million USD to see the light of day, may need more than double that before it becomes profitable. More than double. A notable casualty of that this year was Universal Studio's The Mummy (2017) which cost roughly $150 million USD to make, yet took over $407 million USD worldwide. A success, you might argue?
In reality, the film has been considered a failure. Supposed to launch Universal's Dark Universe expanded world (a la Marvel et al) the film was publicised in a massive push worldwide, given star Tom Cruise's appeal, and the ubiquity of the Mummy story. Add to the production budget the expected costs of P&A (as above) and you see a film that, at best, may have broken slightly above even. The question then becomes one of whether or not the investment is viable.
As a result of these factors, War is likely going to be considered a failure, despite its box office success (or at least seemingly so). The publicity run for the film began 10 months before release, and culminated in early screenings, funded by 20th Century Fox due to the positive word-of-mouth. All of this sadly increases the costing of the film overall, however, and means that, of the three PoA films, this one, whilst critically adored, will be considered the least successful.
So, then, the question is - how can Valerian be considered a success?
In absolute terms, this is a relative concept - the film has not been making millions for its producers or production company. However, the film was notable for being one of the most high profile French productions ever - and certainly the most expensive. In order to mitigate costs, however, the producers of the film managed to spread these widely, which, with tax credits through filming in France (as a 'foreign language' film) managed to consolidate a lot of the costs. Many film websites are incorrectly calling Valerian a massive box-office flop, up with the Cutthroat Islands of the world. However, a closer look at the financing of the film reveals that this is not the case. In one day at the famous Cannes film festival, director Luc Besson, through strength of name and reputation (something that Apes director Matt Reeves does not have - yet) and a series of sketches, managed to fund $80 million USD of the costs of the film by pre-selling it to other territories. Whilst such a risky gambit is unlikely to ever pay off in the long-term for the film's profitability (once VOD and DVD/Blu-ray sales are factored in, Apes will likely come off the better), in the immediate term, through canny marketing deals, a smaller, more intense advertising timeframe, and considering tax benefits, Valerian seems to be the safer bet - perhaps why there was acceptance in making this the most expensive French film of all time.
Of course, there are many other mitigating factors at play here; it seems that Reeves' film, with a far superior critical response, will have much longer legs than Besson's - although like much of his work, it may also find a spiritual, and financial, success with a home audience.
What is clear is that nothing is clear (to paraphrase every high school essay I ever wrote). It is simply not enough to gauge the success of a film by comparing the production budget to profit. This is why, despite many individual successes, Summer 2017 will not be fondly remembered by Hollywood. There are obviously many other issues to consider, such as the types of films released, and the overall make-up of film-going audiences. However, that is for the next post...
