Very interesting piece:
Very interesting piece:
The fact that Disney made $1bn on merch in a year an Avengers film didn’t come out may explain some of the crazy budgets for these films.
Fox without that luxury are going for the lower budget which I think is a canny move. Looking at those projection for Deadpool if they are anywhere close they’ll be making a very tidy profit as with Kingsman.
It can be done if people take care, Vaughan doesn’t spend much and his films don’t look cheap. There was an interesting interview with Ridley Scott on the 5 Live film show where he said every film he’s done has come under the budget set. The way he said he does it is by detailed pre-production and storyboards where he knows exactly what he’s going to do and reduces the filming days which is the really expensive bit.
I read something similar from Christopher Nolan when he was talking about Batman Begins or Dark Knight. He was asked whether there were going to be deleted scenes or a Directors Cut version and he said that he tends to plan ahead and be very economical in terms of what he does. He tries to film what he needs, so there aren’t a wealth of deleted stuff on the cutting room floor.
I think Fox is missing out by not doing a deal with Marvel/Disney, like the Sony deal… I mean, from that article, you can go read this:
Which is what I’ve been saying, the deal benefits both Sony and Marvel, whereas as it is right now with Fox, Marvel will inevitably profit much much much more from Fox’s movies than Fox itself (since both Fox and Sony movies basically serve as advertisement for Disney’s IPs), which is kinda weird but hey, the power of merch. Speaking of merch, and again from the same article:
Holy crap! Well, yeah, you can see how the budgets are almost irrelevant at this point, like Gar says… Plus I suppose it reinforces what I’m always yapping about, that even if a Marvel proper movie “flops” at the B-O, it doesn’t really matter, since Disney is in fact in the merch business… the losses from a movie will be recouped from merch sales at some point. And to think that they can get 1B in merch in a non-Avengers year, now imagine how much they made in Star Wars merch last year alone… I’d really like to see the numbers for SW merch in 2015, because I’m pretty sure they’re waaay above the 2B, easily.
But getting back to Fox… I think this “new strategy” is indeed a good gamble, but I’m not sure it’s a “new strategy” yet… Two movies don’t make a strategy, and the problem is that if let’s say Deadpool or one of those smaller flicks tanks badly, they’ll probably get cold feet (specially after the F4 fiasco last year).
In a perfect world though, I’d prefer if Fox stopped doing Marvel movies altogether and went ahead with the “indy” projects. Having Diseny and Warner and Sony is already plenty enough tbh… actually it’s already overkill… As much as I like comicbook-SH flicks, I also want to see some new stuff in the vein of Hancock, Chronicle, Jumper, Push, Wanted and that sort of movies that came out in the 2000’s… You know, something fresh that’s not necessarily tied to decades of comicbook continuity
Yeah, I remember when X3 was filming a lot of the stunts allegedly cost double because Ratner hadnt planned meticulously and costs blossomed.
A lot can be said for thorough and exhaustive pre-production.
I don’t quite agree Jonathan.
Yes Marvel and Warners have their additional revenue stream but I wouldn’t say it is all just an ad for merch, they don’t have 2015 numbers but the revenue from the last Avengers film was more ($1.4bn) than the merch ($1bn) and we don’t know the profit that returns to them. Films have around 50% margin on revenue, other products can be much lower. (My employer sells computers and entry level laptops get you 10% at best).
We don’t know what Sony will actually get out of their deal. Fox are now (FF aside) turning movie profits from what they have. Unless you know the fine print of how it all works out it is hard to say Fox should co-produce other than from a fan perspective that we’d like the properties united.
I don’t think any of them are out to only make money from films or merchandise or comics, they look at the whole combined package. In 2008 when Iron Man was a huge hit it only brought in double profit that their publishing did (and actually less as foreign reprints were covered under ‘licensing’).
Very cool. I’m looking forward to Deadpool. I’m hoping it will fill the Kingsman sized hole in my Valentine’s Day.
I don’t think Ratner had much of a choice. At the time, Fox was dead set to compete with Superman Returns to spite Bryan Singer and refused to delay filming despite changing directors several times.
The anecdotes about Ratner and x3 are pretty disasterous… Notice his long line of blockbusters afterward…
I think Ratner much maligned when actually quite a fun director. I love Red Dragon.
Oh I’m not saying it absolves him but he was at least the third director after Singer and Vaughan left and was pretty much left to go forward with what was already in play mostly so Fox could try to screw over Singer for doing Superman Returns instead of X-Men: The Last Stand. He hasn’t done horrible since then. It appears he’s moved into more of a Producer role.
He was always a producer interested in directing, like Vaughan.
Unlike Vaughan he couldnt manage a production of that size and I think most studios know that now, after X3.
So, @Mark_Millar - you have become “legendary”.
It’s a whole lot more comfortable than “mythical”!
Well, yeah but consider that merch sales aren’t just limited to the 4-6 months a movie is in theaters… Merch sells constantly and will keep on doing so in the decades to come, so they’ll be generating billions in merch through the years, not just 1 on a given year. Also, look at the article above:
They say that Spider-man generated also 1B (with the renewed interest after the Sony deal) in merch sales in 2014, so when you combine the many Marvel properties, the money piles up quite a bit one assumes.
Of course, that’s not to say that the movies’ revenues don’t matter… of course they do and particularly because they’re a gauge of interest. If they make a bad movie, it’ll have an effect on the merch side as well (which is probably why Marvel must be pretty angry with Fox after F4) since they could harm a whole merch franchise. It’s the reason why they went so “safe” with the Force Awakens, because they needed people to buy into the hype to sell the merch. I think that’s their primary concern at any rate.
At any rate, yes I do think Disney is in the merch business, above anything else. And yes, I do think their movies have the main function of being advertisements for the merch… Yes it is a bit weird to think of it in those terms but you only have to look at the massive cultural/social penetration that Disney’s had in most of the world for decades to see this. They make their money from selling Lion King pajamas, not from selling movie tickets (although I’m sure it’s a rather nice cherry on top =P). Even with Disneyland/EuroDiseny/etc… they make most of their revenue in merch sales in those as well. Now, Warner is a bit different indeed because they’ve been in the movie business forever as well, so yeah, they probably give more importance to that side, but Warner’s got a huge merch division as well… probably not as huge as Disney’s, but they ain’t far behind at all. Warner probably had a better merch output than Disney in the 90’s for exemple, since they were killing it on TV.
As for what Sony will get out of the deal? the only thing the can: revenue from the box-office. I’m willing to bet that the next Spider-man flick will go over the billion mark… So that’s an upgrade as far as Sony is concerned. Also, I think Sony does have some claim in some of the merch, like videogames derived from the movies and such (I think, I’m not 100% sure), so they’ll also benefit from that good will the announcement generated.
But yes, granted, it’s difficult to say without having the details of the deals on hand, but hey, Sony went for the deal, so it must be beneficial to them, otherwise they wouldn’t bother. Also, Sony isn’t “co-producing”, they’re fully producing their movies like before, they’re just allowing Disney/Marvel to put the character in their movies as well. The deal won’t change anything where money is concerned, Sony pays for the movies and reaps the benefits, Marvel does the same for theirs. So a Fox deal would be similar… It would just put them all under the “same universe/continuty” and boost the hype, thus the interest in the franchises and the sales numbers at the end of the line.
Edit: Case in point, I was just browsing CBR right now and saw this article:
Yeah… Gotta sell them Spider-hoodies
I would imagine lots of Marvel merchandise sells regardless of the movies. Considering most of that revenue must come from kids stuff, the cartoons would be a big factor for ongoing sales.
Disney make about 70% of their revenues from the TV channels and the parks. That info is freely available online. Sure the movies are just adverts, but it’s more for the Disney brand than just selling toys. The profit margins on that kind of thing is pretty small.
They make it from both and other activities, you repeating it every post won’t change that.
A quick bit of research with their 2014 financial statements so I can tell you that in fact ‘consumer products’ is their 4th most profitable line of business below their film studios, the one that currently brings in the most profit is ‘media networks’ which is their TV business.
As I mentioned last post, be careful trying to equate revenue with profit, as Jim says margins are very important.
However if you add that to the films as well as other related revenue it does show the immediate box office isn’t all.
Thats looking at it hierachicly though.
The total of Disneys film covers a lot more than just Avengers, Star Wars and Frozen. But their merchandise is pretty much that + Cars, yes?
Discounting merchandise as less profitable doesnt discount the impact those franchises have in merch sales holistically. Its not about what medium is profitable, but what is profitable across the board. And I disagree where Jim says the margins are low (on merch); theyre the opposite.
Frozen, for example, may have accounted for 30% of Disneys cinema gain in 2013, but 60% of merch sales in 2014.
Cars is not an audience smasher, but it is a merch giant, thus sequels are guaranteed. Star Wars and Marvel have the virtue of being both, thus we get 3 films a year.
ESPN remains Disneys most profitable asset for entirely different reasons.
Film margins average at 50% a ticket though, that’s very high. That’s very rare in retail as usually the retailer takes at least 50% and then in Disney’s model they license it out to third parties who would take their cut.
It’s a good point that not all properties are equal but in this case we did get given the specific revenue for Avengers.
Im not denying how profitable some of Disneys properties are in pure Box Office, but theres a trend here to consider merchandise sales as negligible to the company.
I think thats woefully untrue. Its obviously a big, big part of their business decision making.
I did the opposite and said the $1bn Avengers merchandise revenue showed how they may be able to justify large budgets.
What I disagree with, and I think with some evidence, is Jonathan’s assertion that they make all their money through the merchandise and the films are merely ads to promote that*.
(*although in the specific case of Cars 2 I’d probably agree).
Cars is probably the exception that proves the Rule; it was to merchandise what Avengers was to film.