General Electric's (NYSE: GE) studio division didn't have a great summer at the box office. This past weekend, though, the company's new comedy made waves at the box office.
According to Box Office Mojo, Universal's Couples Retreat, starring Vince Vaughn, took in about $35 million at domestic theaters as of early estimates, more than enough to capture the top slot. Sony (NYSE: SNE) took the next two spots on the chart with Zombieland, and the resilient cartoon Cloudy With A Chance of Meatballs, respectively. Don't get too cocky, though, Sony, because Disney (NYSE: DIS) was right behind you with its Toy Story 3D special release.
And now, we come to the movie in the fifth spot on the chart. For those who have followed any of my box-office ts, it will come as no surprise at all that this is the most significant story of the weekend to me. It is actually quite important from a shareholder point of view. The question is, will media CEOs take the lesson of movie number five to heart?
Viacom's (NYSE: VIA) Paranormal Activity grossed approximately $7 million at 160 theaters. The per-theater average is obviously enormous. What's so amazing about this release is that Activity, which Mark Fightmaster discussed over the weekend, was produced by some enterprising filmmakers for only $11,000. While this the generally discussed number, I have absolutely no idea if that is completely accurate or not because I remember when The Blair Witch Project came out there were a couple different numbers floating about concerning its true cost. Whether or not $11,000 is the actual number or not doesn't matter. The point is this: you don't need to spend a lot of money to make a marketable film. I'm sure a bunch of capital was allocated to sell the piece, but let's be real: Activity should return a decent amount of profit.
Concept, not budget or presence of celebrity thespians, can be the ultimate factor of success. No, I'm not arguing that Hollywood should focus exclusively on films with budgets akin to the minimum deposit in a mutual fund. What I am saying is that films should be lensed for several million dollars instead of several hundred million dollars. Produce more product, yank films out of theaters as soon as they've made a decent profit, put them on DVD as soon as possible. A crazy scheme? Media leaders should get a little crazy, because we live in crazy times. Who would have thought that the home-video market would be brought to its knees by the disruptive effect of digital technologies? And what about dollar rentals? Everyone is going nuts about that, too.
New ideas about distribution will need to go hand-in-hand with lower budgets. The old Hollywood model can no longer sustain itself. Sure, that could be an example of hyperbole, but check in with the studio divisions of many media companies. They've been a drag on their corporate masters. And if you want to perform any cash-flow models on earnings derived from celluloid investments, you better be ready to add a lot of leeway for future risk.
I don't think Activity will be as financially successful as Blair Witch, but I can't wait to see what next weekend brings for Viacom and its haunted little film. Every executive in Tinsel Town is paying attention. Whether they're learning or not is up for debate...
Disclosure: I own Disney, GE; positions can change without notice.
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Reader Comments (Page 1 of 1)
10-13-2009 @ 5:47AM
Dan Barnett said...
I've heard the figure $16,000 for "Activity". No difference, the joke is that $16000 wouldn't buy the cappucino on a major budget film.
Michael Moore's "Capitalism" is also doing well on a limited number of screens. While I've said it before, focusing on the dollar amount without factoring in the number of screens is misleading. Dollar per screen is the relevant figure. I'll bet that "Activity" will do well on a decent number of screens. But now you're getting the "hype factor" and we have to start asking the question, can it live up to the increasingly extravagant claims for it?
A number of films are now direct to DVD. A scary trend if you view the trend to be a future where we all sit, "Matrix-like" in front of our computer screens, with absolutely no social interaction beyond the electronic world.
11-20-2009 @ 2:03AM
goksi.st said...
dont read, havent time.