One could be forgiven for finding the underlying mathematics of the Hollywood film industry as perplexing as Darren Aronofsky’s ‘mother!’ (is it a metaphor? Is its purpose simply to visually punish viewers? I have no clue). On one hand, America is experiencing a downward trend in the number of movie tickets sold, from roughly 1.57 billion in 2002 down to 1.23 billion in 2017. On the other hand, Hollywood churns out sequels to franchise films at dizzying speeds. Not to mention that, as of July, 5 of the top 10 highest globally grossing films of 2018 are either American reboots or part of franchises. The question is this: how can these seemingly contradictory facts be reconciled?
That sequels top the charts given their production costs (heavily outweighing average outlay for Hollywood films) predictably raises eyebrows.
Firstly, talent costs can balloon when companies have a hit on their hands. Robert Downey Jr was reportedly paid less than US$1 million for starring in the first ‘Iron Man’ film (2008). However, four years in (when ‘The Avengers’ was released and subsequently caused a seismic shift in the industry), Downey Jr’s earnings (combined with bonuses and back-end profit shares) rose to US$50 million. Jennifer Lawrence too, reportedly took home US$1 million for the first ‘Hunger Games’ film which then became US$10 million by the second film in the series.
As with most industries in this day and age, profitability dictates much of the direction taken. So, if this is the case, why is Hollywood so smitten with such a high-maintenance mistress?
Familiarity: the franchise cash cow bread crumb trail
‘Familiarity breeds contempt,’ so goes the old adage, yet the modern film industry seems to operate in flagrant contradiction of this. Rather, in a time of drooping ticket-sales, the film industry seems to view familiarity as breeding contentment.
In that regard, sequels are a brilliant way of building familiarity, franchises, and thus, contentment. If an audience is familiar with a movie-verse and characters, profits may be more secure given the existing market for the films. Sequels can also prop up bottom-lines because they incur less marketing costs. The hard and costly task of convincing people that they want to pay temporary admission into the these particular characters’ universe for two hours is already done by the time a sequel comes out, it’s merely a matter of letting people know the sequel is coming.
Building a universe around sequels and spin-offs is also popular because it naturally gives rise to another money-making avenue: franchising. Since the first Avengers film in 2012, Marvel’s approach has been a remarkable modern masterclass in building profit-powerhouses upon source-material that branches off not only into a staggering legion of sequels but also spin-off films and television shows. Marvel has made at least 20 films in the last ten years whilst 2018’s Avengers: Infinity War broke records for box-office weekend numbers and is well-poised to claim the spot for the year’s globally top earning film. It goes without saying that the inevitable merchandising and licensing possibilities also sweeten the deal.
Film franchises and the Great (industry protectionist) Wall of China
The familiarity-breeding-contentment approach can explain the tactics of many Hollywood-executives trying to tap into the world’s latest goldmine: China.
It’s a strategy that makes even more sense in the context of the features unique to the Chinese market. Firstly, the Chinese government protects its burgeoning film industry with fervour. Quotas essentially allow 34 slots for big-budget foreign films. The current system is such that film distribution is handled by Chinese state-owned companies (who pay the print and advertising costs as well as local taxes) whilst the foreign film-backers can access 25% of the gross Chinese revenues from their films.
Similarly, censorship restrictions are notoriously stringent. In the past few years, state censors adhering to socialist values have banned time travel, one-night stands, and Chinese mega-star Fan Bingbing’s cleavage.
For those who brave this inhospitable market, the prizes can be significant. Case in point, the first quarter of 2018 saw China’s total box office earnings surpass that of North America for the first time. China’s Q1 grosses equalled US$3.17 billion USD (up 39%), compared to US$2.85 billion (down 2%).
In light of the barriers to entry, Hollywood’s franchise-oriented strategy to make use of established audiences could simply be a pragmatic tactic to get their foot in the door. The evidence seems to suggest this is a formula that is paying off – of the top 10 all-time highest earning films in China, the three lone foreign films are all from Hollywood franchises (The Fate of the Furious, Furious 7, and Transformers: Age of Extinction, in that order).
As of July 2018, the top grossing films in China for the year include the Avengers: Infinity War (4th place) and Jurassic World: Fallen Kingdom (6th place).
The evidence seems to largely suggest that strong franchises stand a better chance at penetrating this challenging and competitive market.
The number of sequels and spin-offs coming off the Hollywood conveyor-belt can easily sound mindboggling. However, upon closer inspection, this reliance on the power of franchises can perhaps be instead interpreted as a pragmatic crutch. One that the old Hollywood giant must deftly wield as it ventures out on a quest to find new audiences overseas in unexplored territories and amidst shifting global markets.
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