Are Franchise Films on Decline?
Are the biggest tentpoles becoming a relic of the past? Should they? It’s actually not too complicated…we’ll explain.
Power in Blockbuster IP
Franchise films have become an unprecedented force in the film industry, captivating moviegoers across the globe. These films, characterized by their interconnected storylines and recurring characters, have managed to create a loyal fan base eagerly awaiting each new installment. Whether it's the superhero universe or a long-running saga set in a fantasy realm, franchise films offer an immersive experience that keeps fans engaged and, supposedly, hungry for more. Beyond their entertainment value, franchise films also generate substantial revenue—making them a lucrative business venture for studios. Marvel Studios and Star Wars alone account for $16.8 billion dollars in profits, domestically [not accounting for global markets]. Disney sure isn’t complaining about those numbers. Elsewhere, nine of the top ten highest grossing films of all time are high-demand franchise IP.
In addition to staggering profits for studios, franchises have given audiences riveting, escapist stories from this universe and beyond. People not only invest in the material reality of these fictitious worlds, but are parasocially enraptured by the characters within. Ask yourself: could you imagine a world without the likes of Dr. Alan Grant, Princess Leia, or even Marty McFly? For some, that answer will always be an unequivocal “yes.” Yet, the vast majority of people consume media—including films—at a much higher volume than ever before. This made possible due to the evolution of the digital age and an ever-growing list of streaming apps designed to make watching your favorite TV show or movie from the comfort of your own home. This means more people have even more choice of what kinds of stories they seek to watch. Netflix has been the perfect case study for why populous IP is so precious to production companies, and even streamers: successful movies like Extraction and Bird Box are given additional treatments as they have been crucial in obtaining—and retaining—a thriving subscriber base.
Theatrical-funded projects are not too dissimilar. Ideally, a franchised property would be able to secure an unwavering base of support. From there, the box office returns compound with each new installment. But it’s not just about releasing a product people desire. Facebook, Threads, Reddit, and X—R.I.P. Twitter—have become a place where fans and critics engage with each other and form a coalition of positive [and often negative] public opinion. To truly maximize the profitability of a franchise product, you need both a pre-inclined audience and a ground swell of new eyes. Marketing is a critical tool for studios to dial up the hype surrounding their respective properties—and social media marketing has become somewhat of an art form to attract new viewers. Fans are paying attention to these strategies now more than ever. Prior to theaters shuttering their doors in 2020, Hollywood was generating an absurd amount of money with nine films breaking into the Billion Dollar Club in 2019 alone, up four from the previous year.
Theaters were shuttered during the COVID-19 pandemic
Post-Pandemic Landscape
However, a post-COVID landscape has added new dimensions on how general audiences respond to these box office juggernauts and spend their hard-earned money. Moviegoing habits have been greatly impacted, with a notable shift towards home entertainment. As theaters temporarily shuttered their doors and implemented strict safety measures, movie lovers turned to streaming platforms and video-on-demand services to satisfy their cinematic cravings. The convenience and safety factor of watching movies from the comfort of our own homes became more appealing, as did the option to pause, rewind, and watch at our own pace. Additionally, the pandemic forced movie studios to reconsider their release strategies, leading to more simultaneous theatrical and digital premieres. As a result, the traditional experience of going to the movies was temporarily replaced by intimate home screenings, influencing a remarkable transformation in moviegoing habits that may continue to shape the industry in the post-pandemic era.
We haven’t really seen day-and-date streaming in recent months, with the exception of the Five Nights at Freddy’s. The Josh Hutcherson and Matthew Lillard-starring game adaptation released with an impressive $80 million domestic debut, and a total international haul of $132.6 million; a rather impressive open for a film with on a reported $20 million dollar budget. But that success didn’t carry into the second weekend, where audiences likely turned to Peacock to watch the horrifying animatronics—resulting in a 76% decline at the box office from week one. Nevertheless, it’s almost a given that a sequel is on the way and the same mistake (day-and-date) won’t be repeated. Five Nights at Freddy’s may have had extraordinary numbers, but the production costs were reasonable. Horror is generally able to stave off high production costs, leading to a better bottom line. Studios’ expanded focus on strengthening their streaming figures in the last few years have lead to an increase in overall production costs as the theatrical market returns to pre-COVID normalcy. But there’s a problem: the landscape has shifted entirely.
Indiana Jones and the Dial of Destiny had a budget reportedly around $300 million dollars. Before the film’s release, box office analysts cautioned that the domestic opening weekend numbers would fall between $60-65 million—raising many industry eyebrows. The typical break-even point for any theatrical release is roughly 2.5x the budget, accounting for production and the actual cost to market the product. Similarly, the most recent Fast and Furious film, Fast X, landed in the early summer window and only garnered $67 million in the states. The franchise had two films that passed the billion dollar threshold [before COVID, of course], so Universal Studios deemed it acceptable to give the tenth installment a reported cushion of $340 million dollars. A devastating end result. Even the superhero genre, littered with various Marvel and DC properties that saw prior success, have suffered from diminishing returns of late; The Flash, Black Adam, and more recently, The Marvels, flatlined upon release. The once guaranteed cash-cows have reached a tipping point for big studios, and more importantly, the audience. Even Tom Cruise’s death-defying stunts weren’t enough to convince people to rush out and see Dead Reckoning Part 1, the seventh entry in the Mission Impossible franchise. The movie ended its domestic run with only $172 million in the bank on a budget in the neighborhood of $300 million.
The market has shifted—and the mistake studios consistently make is solely relying on franchises to carry the vast majority of the financial success.
Still from Mission: Impossible - Dead Reckoning Part 1
A Crisis of Purpose
There's no denying the enduring popularity and impact that franchise films have had in shaping the landscape of modern cinema. Many pundits attribute the weakening box office results to a growing sense of franchise fatigue, especially for the superhero genre. In addition to souring attitudes with the broad proliferation of these films, they argue that originality and daring storytelling have ultimately taken a backseat. A point that I can agree has had some significant ramifications for certain franchises. For Dead Reckoning Part 1 and The Dial of Destiny, however, both critics and fans seem to welcome the beloved characters and films into their growing catalogues. With audience scores of 94 and 88 on Rotten Tomatoes, respectively, and positive critical consensus, it’s clear that not all major franchises are suffering from diluted narratives or fatigue. So what’s really going on here? It’s not the price of tickets, even as they continue to rise. Moviegoing is generally very cost-effective even in today’s economy. Looking at the data, two factors are attributing to the major shift in moviegoing: ballooning studio budgets that have not adjusted accordingly to emerging cultural trends and, even more simply, a crisis of purpose.
In October, the National Endowment for the Arts found that “significantly fewer American adults are attending cultural activities such as classical music concerts, theater productions and movies than they did before the coronavirus pandemic.” The Washington Post reported earlier in the year that “25 to 30 percent of theater audiences have not returned since the shutdown…” The exhibition industry has been raising a giant red flag—indicating that traditional audiences have changed their practices when it comes to physical attendance. Instead, the National Endowment for the Arts found that Americans were increasing their attendance at concerts, comedy shows, and circus acts. People demand an experience. Theaters have started to shift towards event programming in recent years; UFC and NFL fans have been treated to a true, theatrical event at some of the biggest exhibition chains. E-Sporting events have found their way to the silver screen, illuminating a new revenue stream for movie theaters who host tournaments and their own auditorium-turned-arcades.
Taylor Swift’s The Eras Tour carved out $172.9 million dollars domestically, with the superstar’s concert film being shot over three nights in August at SoFi Stadium in Inglewood, California, on an estimated budget between just $10-20 million. To no one’s surprise, the concert film was welcomed in theaters via premium large formats (PLF) and even IMAX. PLFs have more than doubled over the past few years and general audiences are increasingly eager to enhance their experience in D-Box, Dolby Cinemas, and Ultra Screens across the globe. The benefit of premium large formats is that they are branded and defined by an “experience” over a more traditional presentation—especially true for special programming such as sporting events or concerts and for blockbuster franchises in general. Gone are the days of catching the latest art-house film at your local cinema on a Wednesday [for the vast majority of moviegoing audiences]. These films remain important for theaters, though, in that more diversity among the theatrical calendar means stability.
Barbenheimer according to InsideTheMagic
The Perfect Marriage
Essentially, a marriage must exist between between a heightened sense of narrative (and cultural) purpose and unforgettable presentation. The prime example of this marriage being the event of the summer, Barbenheimer; all at once a cultural phenomenon and marketing sensation that will be studied in the years to come. Both films had a run in IMAX and various PLFs, with a modest production budget between $100-150 million dollars. Originality in presentation and purpose in thematical intention, led to a combined global haul of nearly $2 billion dollars. Unprecedented financial and critical success for the filmmakers and respective studios should be a glowing sign for Hollywood to focus on quality control and proper budgeting. This doesn’t mean that the major franchises that have dominated the box office for the better part of a decade won’t succeed, or even that incredible movies like Dead Reckoning Part 1 and Indiana Jones and the Dial of Destiny won’t fail yet again.
I’m simply suggesting that mitigating the potential financial risks by slashing budgets, diversifying the types of stories told, and being wholly original with a sense of purpose, is in the best interest for studios—and for the fans.
