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Moviegoers were in the mood for allegorical science fiction this past weekend. According to Boxofficemojo, District 9, distributed by Sony (NYSE: SNE) and produced by Lord of the Rings helmsman Peter Jackson, grossed an estimated $37 million at domestic theaters.
Viacom's (NYSE: VIA) G.I. Joe: The Rise of Cobra, based on the famous Hasbro (NYSE: HAS) toy brand, was second with $22.5 million. And coming in third was The Time Traveler's Wife from Time Warner (NYSE: TWX), a romantic drama that captured $19 million in ticket sales.
Did you expect, as I did, that District 9 would come out on top? Honestly, the marketing campaign behind the concept was strong. The trailers were mysterious and engaging, and the look of the film made you want to explore more of this particular cinematic landscape. Besides the marketing campaign, the concept itself was compelling. If you know anything about the subject matter, then you probably would agree that the ideas within the piece constitute an attractive opportunity to exercise the intellect while being entertained by the typical sci-fi trappings of aliens, spaceships, and evil futuristic corporations.
Which brings me to the movie's budget: District 9 cost $30 million to make -- an economically reasonable figure. And although I didn't see the film, it looks like the creators of the project got a lot out of such a relatively small amount.
Hollywood should pay attention. You don't always need $200 million to bring a script to life. All you need is a really edgy, unique story that doesn't rely on expensive special effects. You can add special effects, certainly, but if you mostly concentrate on concept and execution, then you can eliminate a lot of the expenditures associated with visual tricks. Plus, you won't require costly name talent.
Of course, Peter Jackson is an expensive guy. I don't know the specifics of his deal, but I'm assuming he'll be getting a lot of the cash flow that is generated from this picture. From a shareholder's perspective, that isn't desirous. I'm sure studios can make District 9-like products without pricey individuals. The best thing movie companies can do is program the summer with a higher quantity of projects that exploit the economics of great scripts combined with lesser budgets. Revenues might go down, but returns will probably be higher. I impatiently await next weekend's results to see how District 9 fares once word of mouth has spread.
Of all the stocks mentioned, Hasbro and Time Warner look to me to be the best long-term ideas right now. Do your due diligence before buying.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
8-17-2009 @ 10:00AM
ebrandler34 said...
To your point, if you don't cast Brad Pitt, Johnny Depp, Will Smith, Angelina Jolie, etc. in leading rolls that leaves lots of $$$$$$ out of the budget.
I do wonder if Hollywood will ever wise up to the financial reality that making 30% over a $200 million budget is not as rewarding as making 150% on a $30 million cost.
Sad truth though, is that it takes all the aforementioned names to get the 30-50 year olds in the seats. I was on a college campus this past weekend and the "buzz" among the 20-25 year olds was positively frothy. . . . but they are going to download bootlegs because they don't have $8.00 for a ticket and $8.00 more for drinks and popcorn.
8-17-2009 @ 12:01PM
ktchong said...
Without the name "Peter Jackson" attached, District 9 would have never gotten made. Peter Jackson is the guy who pulled together the budget to finance his (unknown) protege's first film.
The *reported* budget is $30 million, which is most likely a deflated number. The reported budget of a movie has a marketing function, so the marketing department frequently manipulates/adjusts the number to get attention. Studios either inflate the budget, (i.e., "It costs $200 millions, you have to check out what $200 millions looks like on the big screen!) or they deflate it ("You would not believe it costs $30 million! You'll be amazed!") I learned about that from a film marketing class I audited. Film studios are not going to announce the real real costs (and earnings) anyway.
I think the actual cost of making "District 9" could be in the vicinity of $50 to $60 million. So for marketing purpose, the advertised cost was cut in half. The "it costs $30 millions and looks like a $100 million movie!" has certainly gotten a lot of attention (and audiences,) so it has served its marketing purpose.
Next time, don't believe whatever movie budget you hear in the media or advertising.
9-14-2009 @ 3:03AM
row said...
I agree with ktchong, it probably cost more than 30 mil.
"You can add special effects, certainly, but if you mostly concentrate on concept and execution, then you can eliminate a lot of the expenditures associated with visual tricks."
^Did I just hear that District 9 didn't have VFX wizardry? Sure it wasn't Transformers 2 but come on...
I really do think Peter Jacksons attachment did wonders for the film looking at it from a marketing perspective. I mean if you think about it everybody loves PJ but since King Kong he hasn't done much. (he's been working on stuff but we havn't seen anything yet) Plus he got "sleighted" on the Halo project and is now "coming back all in a rage". Do I feel some pop culture vengence for the mistreatment of a hero?
At the end of the day, however, I agree that you don't have to spend 150+mil on a movie to make a lot of money on a movie. But I thought we already knew this long ago with numerous examples. One thing I don't get though is all the political undercurrents to the film. I mean movies that typically involve preacy political viewpoints or try to teach anything (in short, non-Bay films) are not doing well these days. I guess people go to the movies to run away from all of that. (look at movies on terrorism, they suck at the box office) But I guess the Alien theme surrounding it made up for this.. is that the key? A revival of the Alien/sci-fi genre?