A Summer Slump – The Perils of High Costs and Low Box Office and What Actually Defines a Bomb

So  a peculiar thing has been happening over the last month.  2023, by all accounts, was supposed to be a great big comeback year for the Summer box office season.  With the Covid-19 pandemic now thankfully in the rear view mirror and all restrictions having been lifted across the market, we could now finally get the movie going experience back to the roaring engine that it once was.  And up to this point in the year, things were actually looking good for the theatrical market.  We had a strong spring season, buoyed by films like John Wick Chapter 4 (2023), Creed III (2023), and also the surprise juggernaut that was The Super Mario Bros. Movie (2023); the year’s first and only entry into the billion dollar club.  But, there were also some warning signs in the Spring box office.  The normally potent Marvel brand suffered an underwhelming box office run for Ant-Man and the Wasp: Quantumania (2023), but that was nothing compared to the historically low box office for rival DC’s Shazam: Fury of the Gods (2023).  Hopes were still high, however, for the movies coming out in the summer.  The summer 2023 outlook looked especially promising given that many of the titles being lined up were from tried and true franchises that had served the studios well in the last couple decades.  Disney didn’t just have another Marvel film up their sleeve; they were also calling up a remake of one of their most beloved classics as well as a return of Indiana Jones.  Paramount had their Transformers; Universal their Fast & Furious crew; and Warner Brothers was about to give one of their key Justice League members the spotlight with The Flash (2023).  But, despite a bit of a promising start with Marvel’s Guardians of the Galaxy Vol. 3 (2023) opening the summer season, the Summer 2023 theatrical market has been less defined by it’s successes and more by it’s failures.  A big box office bomb in the Summer movie season is not very uncommon to see, but for a string of them to happen all in quick succession is enough to startle the industry and make them wonder where things have gone awry.

Now of course it’s easy for a lot of us armchair media experts to pinpoint exactly what went wrong, and in many cases we sometimes make excuses that merely just fit into the narratives that we want to put into place about the state of Hollywood.  For instance, there’s a segment of the online chatter that tries to put a political spin on why Hollywood is not seeing the success it would like to have; with one misinformed refrain being pushed that says, “Get Woke, Go Broke.”  Of course scrutinizing the actual data of the Summer box offices grosses shows that being “woke” doesn’t in fact affect box office.  Quite contrary, the movies with the highest grosses this Summer (Guardians 3, Spider-Man: Across the Spiderverse, and The Little Mermaid) are the most “woke” ones in theaters right now.  And that’s just a subjective reading of these movies, because “woke” is such an ill-defined term that most people just use to slander something rather than critically analyze it.  Seriously, can someone please explain what makes Indiana Jones and the Dial of Destiny “woke”?  The main hero is an 80 white man who reads maps and punches Nazis.  Politics aside, there is another reasoning as to why Summer box office is decidedly off this year compared to before, and it has a lot more to do with economics than ideology.  We are at a point where movies are underperforming because they are costing too much to make.  It’s hard to believe that we’ve gotten to the point where a movie now has to gross a billion dollars worldwide just to break even, and that a movie that takes in $300 million domestic is considered a disappointment.  But, that’s the reality we are in right now, and it’s starting to make the film industry reconsider it’s priorities.

A lot of what we are seeing right now is residual fallout from the economic shock wave that was the pandemic.  With movie theaters shuttered for significant amounts of time (including the key markets of Los Angeles and New York being closed for over a year), a lot of investment suddenly shifted to streaming, because it was the only avenue of distribution.  Much of that shift ran under the assumption that when the movie theaters were going to finally re-open fully, that it would be a significantly diminished market, and that streaming will have supplanted it as the foremost mode of distribution.  But, something happened that many in the industry didn’t quite expect; theatrical made a miraculous comeback, thanks to strong, record breaking box office performances from the like of Spider-Man: No Way Home (2021), Top Gun: Maverick (2022) and Avatar: The Way of Water (2022).  These movies not only brought in big audience numbers in their opening weekend, but they maintained those audiences over the months that followed.  Suddenly, the the studios which had put themselves into a streaming mindset had to readjust to capitalize on a renewed interest in theatrical exhibition.  But, as evidenced by this year, not all movies are the same and as Hollywood is finding out the hard way, it really all depends on the kind of movie that’ll drive up box office numbers.  Sadly, it would appear that Hollywood saw the successes of these previous movies and misinterpreted it as business returning to what it was before the pandemic.  There is very much a fundamental difference today to how a movie will perform at the box offce compared to how it did in the past.

One big difference is the increased presence of streaming within the market.  In the last summer season before the pandemic, 2019, there were only a small handful of streaming platforms (Netflix, Amazon, and Hulu).  Since that summer, the market has been flooded with new competitors, most of them coming from the big studios (Disney+, Max, Peacock, and Paramount+).  This really fundamentally changed not just the kinds of movies that were being made, but also what audiences would be paying extra to go out to the theaters for.  With the pandemic complicating things further, we saw what is likely the biggest shift in audience viewing habits since the invention of television.  But, there were those movies that indeed break through and were undeniably must see films in a theater.  Top Gun: Maverick drew in audiences with it’s incredible stunt work on screen, while Avatar: The Way of Water dazzled with it’s fully immersive environments.  These were not cheap films to make, but they still managed to capture their audience in a way that many others in the industry seem to fail to grasp.  So, what made these films soar while others are failing so miserably.  The primary reason is that the films being made are not justifying the exorbitant costs that are attached to them.  Relating back to the big push made during the streaming wars, a lot of the studios wanted to flex their muscles by delivering movies and programs that would outshine their rivals and put greater value into the library of projects that were going to be found on their streaming platforms.  This meant a greater investment on the most popular brands that are a part of each studios portfolio.  If people were excited about the ability to stream all the Tranformers movies on Paramount+, or all the Marvel movies on Disney+, or all the DC movies on Max, then it made sense to the executives to continue to invest a bunch more money into expanding those library titles; no matter the cost.  But, as we’ve found out, not everyone is as thrilled about these franchises as we thought.

In some cases, the cost associated with some of these movies seem excessively frivolous.  To have an Indiana Jones movie cost nearly $300 million in just production alone is particularly hard to justify, especially considering that it’s more than the past 4 movies in the franchise combined.  Whatever accounting made this acceptable for Disney has got to be based on pretty suspect or outdated consumer research.  Sure, Indiana Jones is a valuable brand that has produced some of the greatest action films that have ever been made, but it’s heyday was over 30 years ago.  A more accurate reading of audiences today will tell you that Indiana Jones as a franchise will not perform like a Star Wars or a Marvel project would.  And yet Disney still poured a fortune into this movie.  Disney would be in a much precarious position if this wasn’t a problem affecting all the major studios.  Pretty much every studio has seen slumping box office returns from this Summer.  Fast X (2023) and The Flash (2023) are just as big of disappointments as Dial of Destiny for their respective studios because of their out of control costs, though Fast X has saved face a bit from better international numbers.  The studios are having to come to the realization that not only have they miscalculated the value of their franchises at the box office, but they have also inadvertently undermined their ability to convince audiences that these movies are worth seeing in theaters at all thanks to their years of aggressively pushing their presence in the streaming market.  There are a lot of audiences now who would rather stay home and wait for these movies to release on streaming, which is knee-capping these films upon their initial releases and making it appear like the brands themselves are failing.  One of the most illogical choices made during the streaming wars was taking so many movies that were clearly made for theatrical exhibition and pushing them straight to streaming instead of waiting for theaters to recover.  This made sense when the pandemic was at it’s peak, but when Hollywood was still doing it a year out, it just undermined their brand because now you had made an audience more used to seeing these movies appear on streaming.  No more brand suffered from this more than Pixar, which saw three of their films go straight to streaming; Soul (2020), Luca (2021), and Turning Red (2022).  The necessity could be made for the first two, but Turning Red should have absolutely been given a full theatrical release based on it’s critical acclaim and broad appeal.  Because Pixar’s brand has been associated more with streaming as of late, it has shackled the releases of their films that have made it to theaters like Lightyear (2022) and Elemental (2023) because their audience is more inclined to wait for them to be on Disney+.

It should be understood that while the box office slump looks bad now, it doesn’t mean that this is somehow a sign of Hollywood’s downfall.  Hollywood has gone through these boom and bust cycles before, and they have often involved big adjustments that the market had to undergo in the past.  In the 1950’s, America had a booming post-war economy that helped to grow the middle class, who were keen on spending their disposable income on entertainment.  And yet, movie theaters initially struggled in these post-War years, because there was a new challenger to their business model; television.  To bring people back to the movies, a lot of experimentation in the presentation of movies began to occur, which included 3D, smell-o-vision, and the one that took hold the most, Widescreen.  With the advent of widescreen technologies, movies began to feel bigger than ever and that helped to make the theatrical experience more of a draw for audiences, because it was something that television couldn’t replicate.  However, to take advantage of the widescreen process, the movie industry invested more into movies that would be bigger than life and spectacles worthy of the more massive size of the image.  In the late 50’s and early 60’s, the film industry was deeply invested in the business of biblical and historic epics as well as over-the-top musicals, and while in retrospect all of these movies are wonders to behold for their scale and artistry, they were also drains on their studios bank accounts.  The catastrophic production of Cleopatra (1963) in particular became a wake-up call for Hollywood.  While the 4 hour epic was extravagant and later became one of the highest grossing films of that year, it’s enormous cost could not be overcome, and it nearly sank it’s studio (20th Century Fox) into financial ruin.  The excesses of the spectacle driven era of Hollywood eventually gave way to the more modest budgeted films of the radical 70’s, though even this era came to a head later on when maverick filmmakers from that era also saw budget overruns occur on their own vanity projects; most notoriously with Michael Cimino’s Heaven’s Gate (1980).  As history has shown, these cycles occur all the time, and are often a teaching moment for Hollywood.  The same is likely happening now as the industry is learning to adjust to a post-pandemic and streaming wars world.

It should also be understood that a movie bombing at the box office in it’s initial release isn’t necessarily a sign that the movie is bad.  None of the movies this year that have underperformed are doing so because people hated them.  At worst, people just find these movies to be okay or mildly disappointing.  Unlike what a lot of naysyaers out there are trying to project upon the performances at the box office, these movies are not losing money because of outright rejection; that nobody wanted these movies and that Hollywood is forcing them down our throats.  The disappointments are more to do with the ratio of box office compared to cost, and Hollywood’s inability to properly sell these films on an audience who’s viewing patterns have changed.  Hollywood needs to find a way to make opening weekends of $60 million seem impressive again, and that means that the movie costs really need to be brought under control.  The worry is that making things more cheaply also means loss in quality and artistry.  But, one thing that Hollywood should observe is what is actually working in the industry right now and how that can be applied industry wide.  A big change certainly should be made to the marketing of movies.  Emphasize why movies should be seen in a theater.  Perhaps the industry should reconsider it’s shortened theatrical window push that occurred during the pandemic, because theatrical gives movies a stronger up front boost.  And I hope both audiences and the studios realize that initial box office returns are not the end of the story for most movies.  In fact, for most films they find new lives beyond the big screen.  There was one animated movie in the Summer of 1999 that performed so poorly that it actually shut down the animation studio that made it.  That box office failure was called The Iron Giant (1999), which is now universally praised as one of the greatest animated films of all times.  Great films always find their audiences eventually, so we shouldn’t be looking solely at box office performance as a barometer of the quality of a movie.

All those spelling doom right now for Hollywood should keep this in mind; the Summer season isn’t over yet, and there is still a chance for the 2023 season to rebound.  Sure it was a bad couple of months, but the upcoming films this next month are actually promising.  Amazingly enough, it may come down to Tom Cruise coming to the rescue again for movie theaters, with his highly anticipated new Mission: Impossible sequel coming next week.  We’ll also see how well that Barbie vs. Oppenheimer social media feud actually translates into strong box office for both films.  And some wild cards could be Disney’s Haunted Mansion and DC’s Blue Beetle, considering that they were more modestly budgeted tentpoles than the films earlier this summer.  And even with the low attendance out of the gate for most of the films this summer, it should be noted what films have legs and what films don’t.  Movies like Transformers: Rise of the Beasts and The Flash have fallen like a rock since their opening weekends, but Pixar’s Elemental, which had the lowest opening weekend in the legendary studio’s history, is still holding strong week after week with small drops; having now grosssed $100 million and quadrupling it’s opening weekend.  It may still be a money loser for parent company Disney, but hopefully they see that Pixar films can still maintain audience growth over time and benefit from strong word of mouth.  For some movies, it’s a marathon and not a sprint,  which may not be ideal for people wanting to see immediate riches, but good in the end for long term strength in a brand.   Hopefully, the lessons learned from this season lead to improved investment in the future that will benefit both Hollywood but also the theatrical business too.  Hollywood has got to learn that it’s muscle flexing when it comes to budgeting their summer tentpoles is not generating the kind of business that it once did, and that they could still do well if they invest more in their marketing capabilities and less on the unnecessary spectacle elements of their films.  Your movies don’t need 20 minute action scenes that needlessly bloat the films to make them feel more epic.  They just need good stories and good characters to get audiences invested.  We are definitely not in the last days of Hollywood like so many who don’t know what they are talking about are trying to express right now as punishment for the industry going “woke.”  Disney in particular is not going away any time soon.  They’ve weathered box office bombs before, and if they can survive Treasure Planet (2002), The Alamo (2004), Prince of Persia: The Sands of Time (2010), John Carter (2012), and The Lone Ranger (2013), they can survive Dial of Destiny too.  The same goes for most of the other studios too.  It’s about recognizing a pattern of success and failure and adjusting to meet the changing market.  We are in the grips of an industry trying to find it’s identity post-pandemic and streaming wars, and a couple box office disappointments will tell them exactly what isn’t working.  For someone like me, theatrical is still ideal, and I hope the best outcome of this era of change is that Hollywood’s presence on the big screen gets better and not worse.