In film terms, you’re nobody unless you’re a part of a cinematic universe. Today, the dominance of franchises, sequels and intellectual property drives the box office forward. David Hancock explores the impact the marriage of technology and “comic book” creations have had on the global box office in recent years… Kapow!
The truism today is that the way we can make and screen movies has an impact on the type of films that drive the box office on each year. Since cinemas went digital, a twin track of trends has led inexorably to a world where a range of superheroes fight or collaborate with each other, be that for good or bad. Technology trends are partly responsible for that. Starting with 3D, which had an impact on which type of films were greenlit to exploit fully the extra premium to be made, all new technology trends play a role in which films end up on our screens. Premium Cinema is the latest to favour a certain type of film, those with vibrant colours and fast action sequences that work best on the big screen.
After the financial crisis hit the wider world, studios decided that their response to this would be to cut their production slates and focus on fewer, bigger films. These films needed to display less riskier profiles and they needed to make more money at the global box office, while often dovetailing with wider corporate strategies. Helpfully for my premise, this was around the time that Disney acquired Marvel Entertainment and began to unlock the potential held in the panoply of characters that the company had developed over the years, while spurring on Warner to do the same with DC Comics. This type of source material is becoming more prevalent, spreading from these two in to the world of toy manufacturers. The latter have generally stuck to TV and physical media for programme making.
The output of the cinema sector is dependent on many things but chief among them is probably the six major US studios. These entities control around two-thirds of the world’s box office revenue, but they do have cyclical slumps as they try to adapt to new audience tastes and/or new consumption patterns.
The call for Harry Potter-style magic
In 2005, the six major US studios (Fox, Paramount, Sony Pictures, Universal, Walt Disney, Warner Bros) had a market share of 72.5%, but after this point, cumulative market share was above 80% (apart from 79% in 2007) until 2012. However, in 2013, the studios accumulated a combined market share of 71% which was the lowest share of the North American box office market they registered between 2005 and 2017. This slump coincided with the lack of major IP franchises, with “Harry Potter” ending in 2011 and “Star Wars” (which revived the studio share) not beginning until 2015. Marvel/DC product also didn’t kick in until the mid-part of the current decade.
So good they made it again (and again)
The subject of sequels and franchise films (not to mention remakes and reboots) is not a new one and the market has come to depend on this type of film to keep box office levels up. In fact, they have been around since the very early days of cinema’s history, even if they only really took off as a major driver of the cinema business in the 1970s. The relatively recent expansion of superhero and comic book characters has taken their importance to the North American, and therefore, global box office to new levels. In 2017, nearly two thirds of the box office generated by the Top 50 films came from franchise/sequels, compared to less than half in 2013 and 2014. The beauty of a franchise/sequel is that it can tap into existing fan bases, without the need to build up a new understanding of the characters.
Films in the Top 50 that can be defined as a sequel or as a part of a franchise numbered 20 in 2013, contributing $3.8bn or 48.2 % of the $7.9bn generated by these films in North America. By 2017, the 29 films that can be counted as a sequel or part of a franchise earned $5.5bn at the box office, or 64.6% of the $8.5bn grossed by the Top 50 titles. The success of these 20-30 franchise/sequel films are key to the health of the global cinema sector.
Drilling down a little, we can identify a highly successful sub-plot developing. It is no secret that our screens are full of superheroes, and with (a supposed) 7,000 Marvel characters to choose from, and 153 major DC Characters in play too, we may be seeing a lot more. So far this decade, Marvel Entertainment, under Disney’s ownership, has been the pre-eminent source. Over the past five years (data taken from Top 50 films at the North American box office between 2013 and 2017) there have been 16 films including Marvel characters released, which have grossed $4.5bn at the North American box office at an average of $281.6m per film. As a comparison, six films from the DC stable have earned $1.8bn in cinemas at an average of $297.1m. Warner had only released one DC film by end of 2015, compared to Marvel’s nine and it is only in the past two years that the DC characters have begun to be exploited more frequently. In 2017, “Wonder Woman” was the highest grossing film from either of these two comic book universes, the first time in the past five years that DC has ruled at the box office. Conversely, so far in 2018, four of the top seven films have been Marvel characters, with “Black Panther” exceeding $700m at the North American box office and “Black Panther” and “Avengers: Infinity War” becoming the two highest grossing comic book adaptations of all time.
Serious stuff comes out of the comics
What can be said is that both these comic-book inspired lines of film-making have been advantageous to their parent companies, with Disney’s box office market share rising from 11.5% in 2009 to above 20% in both 2016 and 2017. As for Warner Bros, their market share was nearing 20% back in 2010 but was tailing off in the mid part of the current decade and the DC franchises have helped it back up to near the 20% mark in 2017, with “Wonder Woman” and “Justice League” in particular contributing. These two companies now dominate the North American box office, taking 40% plus between them, very much on the back of these comic book characters.
Even though Marvel and to a lesser extent DC Comics are a growing element within the box office make-up, they are not the only strong assets out there. The strongest is probably Disney’s “Star Wars”, which has put in place a pipeline of product and spin-offs for the next decade at least. The franchise genre also includes highly visible properties like Middle Earth, Harry Potter, Pirates of the Caribbean, Bond, Jurassic Park, Despicable Me and so on. In fact, if we include “Avatar” as a sequel (in the sense that it is scheduled to be the first of several films in a series) and “The Grinch” as part of the Doctor Seuss universe, then in the past 20 years the only film to top the yearly box office that was not a franchise or a sequel is “American Sniper” in 2014.
Making money — it’s child’s play
Outside of the two very visible examples of comic-book characters coming to life on our screens, toymakers are also entering the movie business to revive their fortunes in the face of a declining market for traditional toys, as is evidenced by the demise of retailer Toys ‘R’ Us. The movie business is a rich potential source of growth for toymakers, and Hasbro has had great success with the Transformers franchise, which it produced and Paramount distributed. The franchise has grossed $4.4bn globally in cinemas. The two companies also worked on G.I. Joe, also controlled by Hasbro. This was less successful than Transformers, but by no means a disaster, bringing in $678m globally in the two films. In late 2017, Hasbro created Allspark Pictures and Allspark Animation to extend its collaboration with Paramount, for both live-action and animated projects, under a co-financing exclusive deal with a five-year lifespan.
Mattel Toys (whose intellectual property includes Barbie, He-Man: Masters of the Universe, Hot Wheels, Thomas & Friends, Monster High and Fisher-Price) has launched a film arm to develop and produce films based on its toy-related brands. Drawing on the success of not only Marvel and DC Comics, but also rivals Hasbro and Lego, Mattel believes it has a range of valuable IP that can be better exploited in cinema and other media, and sees the refreshed exhibition sector as a viable way to achieve that. An alternative route has been that followed by Lego, which used its toy brand in conjunction with Warner Animation that kicked off with “The Lego Movie”, and encompassed collaboration with DC Comics in “Lego Batman”. Lego has character deals for its building blocks with both DC Comics and Marvel.
With the dominance of franchise movies at the box office established, and with the folding of Fox into Disney offering new opportunities for super-hero interaction, as well as a decade of Star Wars and Avatar ahead of us, it seems that technology developments in Premium Cinema allied to a business necessity have led us to a world of superheroes, toys, action, humour and fantasy. As long as these films continue to be seen in large numbers, you won’t hear exhibitors complaining.
David Hancock is Research Director, Cinema at IHS Markit and President of the European Digital Cinema Forum.