2013 Review: The Studios’ Performance

2013 did indeed turn out to be a record-breaking year for Hollywood. $10.92 billion box-office collections for the year in the domestic market of North America usurped the $10.84 billion collections of the previous year. It’s a big feat to achieve, and for those who believe that each year surpasses the previous, then know that this ain’t true. The record prior to 2012 was held by 2009 (which means 2010 and 2011 collections were lower than 2009), and before that it was 2007. But there is indeed a ballooning of box-office revenues over the past two decades, due to inflation and more importantly the growing popularity of Hollywood cinema and its continued preference as the source of entertainment even in trying economic conditions. Years back, the domestic box-office collections stood at $3.77 billion in 1983, the year that marked the last Star Wars film of the original trilogy; it touched $5 billion for the first time in 1989 when Tim Burton released his adaptation of Batman; it took eight more years to cross $6 billion in 1997 when the then biggest worldwide film Titanic was released; it jumped above $7 billion very quickly in 1999 when George Lucas returned with the prequel trilogy of Star Wars; in two more years the $8 billion mark had been breached in 2001 as the world was introduced to Harry Potter for the first time on the big screen; the $9 billion figure was achieved just a year later in 2002 as Spider-Man began his journey in the theatres; but it took quite a while to reach the $10 billion mark which happened in 2009 as James Cameron released another blockbuster with Avatar. There is a general upward trend in the box-office earnings, which had sharpened in the 1990’s but became relatively meeker in the 2000’s. For the last five years, the domestic box-office collections have not gone below $10 billion, and they are unlikely too. Will the next level of reaching $11 billion happen soon enough? Or is it still some years away? If I had to take a guess, then 2015 seems a good bet to make when the domestic box-office collections could be crossing the $11 billion mark, given the multitude of potential blockbusters in store. But that’s a story for another day, for now, Hollywood would be rejoicing over the numbers achieved in 2013.

So which studio has been the biggest contributor? Which studio took the flak? The table below will throw some light as to how the big Hollywood studios fared.

Studios in 2013_Earnings Figures

Warner Bros. and Disney had a terrific year, and even though they had a few misses, their big blockbusters safely saw them sail through the year in triumph. Warner Bros. had the expected big hits in Man of Steel and The Hobbit: The Desolation of Smaug, but more of the surprising ones like Gravity, We’re the Millers, The Great Gatsby and The Conjuring. Disney stole the show with Iron Man 3, Monsters University and Frozen along with successes from Oz the Great and Powerful and Thor: The Dark World. Universal really had the tremendous success of Despicable Me 2 and Fast & Furious 6 to thank for a great year.

Sony has to be the biggest sufferer of the year, dropping from the top spot in 2012 to fifth in 2013, with the likes of After Earth and White House Down ensuring its doom, for the year at least, though success of Grown Ups 2 and Captain Phillips provided some respite. These above mentioned seven major studios had about 85% of the share of the domestic market for the year. Warner Bros. jump in earnings also comes from the higher number of movies it released, 19, while Disney had only 10 releases. Lionsgate had 21 releases (as the studio releases quite a few indie flicks), as opposed to Paramount’s 10 releases, while the remaining studios had about 15 releases each.

Studios in 2013_Warner Bros.

So while these numbers tell about the scales the studios are reaching in terms of revenues, they don’t give any indication about the profits earned on a film. So compare for example, Disney’s The Lone Ranger with Fox’s The Heat. The Lone Ranger earned $260 million, while The Heat earned $230 million worldwide. So has the Disney film fared better? Nope. The Lone Ranger was made on a production budget of $215 million and is probably the biggest flop of 2013, while The Heat had a budget of only $43 million and is one of the surprise hits of the year. The profitability of a film is one of the toughest things to calculate, further compounded by the lack of willingness on the part of the studios to provide any indication on this figure. All we get is the domestic revenues, the foreign revenues and the production budgets. The marketing costs are at times revealed, but nothing more. The ancillary costs in a movie release, say the costs incurred on the movie premiere, the after-movie parties, etc. are unknown figures. Even the percentage of revenues routed back to the studios is not accurately known (as part of revenues goes to the theatres as well). The revenue stream continues even later, DVD sales, pay-per-view, rentals etc. which are again not shared. In short, there is still a black box when it comes to understanding the profitability of a film, and simply knowing the revenues of a film does not tell the whole story.

But then do we dismiss off the revenues figures as a hogwash way to know the success of the movie? Well, that would be too harsh. The revenues figures do give a picture, only not the complete picture. They do tell the impact of a film, the reach it has, the popularity it enjoys. The $1.2 billion earnings of Iron Man 3 is something that cannot be waved away; it tells you that this film is immense in its global appeal and reach, that this franchise can get masses into the theatre halls. The revenues can be used for comparison between similarly budgeted movies to understand their relative popularity. And when we talk of simply huge earnings, the likes that Iron Man 3 and The Hunger Games: Catching Fire have achieved, it does not require too much knowledge to know that the studios would have earned a big chunk of profit on these ones. So without knowing the detailed costs of the movies, I can safely hazard a guess that the film divisions of Warner Bros. and Disney would have made healthy profits this year, which would keep the executives happy. For investors, deeper knowledge and understanding on the costs behind the making and marketing of a movie might be a must; but for a fan, the revenues do not always blindside you, but tell you how many people around the world are watching the same movie that you are seeing in the theatres. So till the day that the studios start becoming more transparent in revealing the costs and profits behind a film, we can still gauge a lot from the movie’s earnings alone. Now we wait and watch as to how things fare for these studios in 2014….


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