Summer kicked off with a history-maker and ended with the Oogieloves—what happened?

Number Crunch: The Untold Story of Summer 2012

on September 04, 2012 by Shawn Robbins
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summer_2012.jpgSummer's over, folks.  And to describe the box office of 2012's dog days as a roller-coaster somehow isn't even apt enough.

Before May, the industry was knee-deep in a strong first four months of the year following the massive success of The Hunger Games and other break-out hits such as The Lorax, Safe House and The Vow. January was stronger than expected following a very weak holiday season, and February carried the momentum forward with over $814 million in domestic revenue—the all-time best for February (though not quite a record in actual tickets sold). March and April were more top-heavy with The Lorax and The Hunger Games eating up the lion's share of audience demand, but still, 2012 was on pace to break some serious records when considering that the majority of the studios' (supposedly) best arsenals had yet to be unleashed.

And then came The Avengers.

You know the story: Marvel's big plan paid off to the tune of a $207.4 million opening. Even when considering the help it had from 3D prices, it also broke the record for most tickets sold during any three-day period (which was still held by 2008's The Dark Knight despite having lost the opening gross title to Harry Potter and the Deathly Hallows — Part 2 in 2011).

The summer couldn't have started any better. The question was if the line-up for the rest of the season would be enough to continue that record-setting pace of the first quarter. Clearly, it wasn't. Here's why:

MAY

Let's get this out of the way upfront: one film grossing over $600 million domestically and attracting audiences of all ages is going to affect demand for other films in the market on some level. Marvel's The Avengers did exactly that, but when all was said and done, its calendar gross for May ($532.5 million) represented an astonishing 52% of domestic market revenue for the month. To put that into perspective: May 2011's highest-grosser, Pirates on the Caribbean: On Stranger Tides ($166.8 million), represented just a 16% market share. In fact, the next highest market share by a film in May was 2002's Spider-Man (37%).  The average share of the top-grossing film in May since 2000 was about 27% entering this year.

The Avengers' heavy advantage in 3D price premiums is a contributing factor in the larger share, but not nearly as much as the sheer lack of appealing films that released after it. Dark Shadows failed to generate much interest and ultimately disappointed most audiences. Battleship compounded that problem one week later on its way to becoming one of the biggest bombs of the year. The Dictator, although a strong overseas performer, couldn't muster up much attention here in the States. And even Will Smith himself wasn't quite the box office draw of yore as Men In Black 3 opened to a modest $54.6 million (more than 25% behind its 2002 predecessor's opening weekend admissions, which didn't even open on Friday). Though it grew respectable legs, MIB3 still ended up selling fewer tickets overall than 1999's summer flop, Wild Wild West.

The verdict: Hollywood can only blame itself for what happened in May. Most of those films were met with lukewarm critical reactions and just as poor audience reactions (excluding MIB3). The total gross for May 2012 hit $1.023 billion, representing the second best May gross ever. But look at it this way: that figure fell by 1% from May 2011 ($1.037 billion) despite being led by Avengers—a film that grossed more than three times as much as the leader (Pirates) of May 2011. Top-heavy, much?

In actual tickets sold, May 2012 clocked in around 127 million (based on NATO's reported average ticket price of $8.02). The real figures are probably a bit lower when factoring out the surcharges added to each 3D ticket, but even giving that 127 million number the benefit of the doubt yields only the 8th best-attended month of May since 2000—and the second-lowest since 2006. With no other highly-demanded or truly well-received films (exception going to The Best Exotic Marigold Hotel and its successful sleeper run), where would May have been without Marvel, Disney, and Joss Whedon?

JUNE

A new Pixar flick. Ridley Scott's return to the sci-fi franchise that gave him a name. A fantasy pic starring K-Stew and Thor. Surely June would turn things around, right?

In some ways, it did. Snow White and the Huntsman kicked June off the right way with a $56.2 million opening, and despite modest word of mouth was able to leg out to a respectable $155 million total.

The biggest and best surprise of the calendar month, however, had to be Madagascar 3: Europe's Most Wanted. As the first animated movie of the summer, family demand was huge and despite the relatively weak legs (for family movies) shown by its 2008 predecessor, audiences dug this one more. Meanwhile, "Circus Afro" became a mini pop culture sensation not terribly unlike 2010's "IT'S SO FLUFFY!" campaign mounted by Universal for Despicable Me.

Disney/Pixar's Brave opened on average terms ($66.3 million) compared to their previous history, and Prometheus's $51.1 million opening was a commanding number for an R-rated sci-fi flick. Nevertheless, while the former generated the usual Pixar summer legs, the latter didn't catch on with many audiences and led to Prometheus having to rely on international success to carry its weight.

Meanwhile, Rock of Ages, That's My Boy and Abraham Lincoln: Vampire Hunter all flopped. Marvel's The Avengers and Men In Black 3, however, played quite well throughout the month as some audiences reverted back to what they knew was worth watching.

The verdict: the good news is that June ultimately banked $1.055 billion—virtually tying 2010 for the second-best June ever, only behind June 2009's $1.087 billion. Looking deeper though, that success hinged largely on two family films (relatively easy sells during the middle of summer), a modest hit in Snow White, and a couple of films that didn't even release in June itself. The end result was a total ticket tally of 131.5 million. That figure was up 4% from June 2011, but nevertheless, still the third-least attended June since 2000.  Only 2011 and 2000 themselves saw fewer butts in the seats.

JULY

Although both films opened on June 29, Ted and Magic Mike were excluded from the June analysis due to the fact that most of their money was actually made during July. The weekend of June 29 through July 1 was a breath of fresh air for the industry as both of the R-rated films broke out, received very positive critical and commercial approval, and showed the legs to boot—Ted in particular, which has reached nearly $216 million after an already massive $54.4 million debut. Magic Mike opened to a strong $39.1 million itself, further solidifying 2012 as "The Year of Channing Tatum."

Another pleasant surprise would come in the form of a superhero reboot. Though many were skeptical, The Amazing Spider-Man was able to bank $137 million during its first six days in release over Independence Day weekend. That represents a 9% drop from Spider-Man 3's non-3D-aided $151.1 million opening weekend (in half the number of days) back in 2007, but that film also left a huge dent in Spidey's box office name thanks to awful word of mouth. Recasting and retelling the origin story made this new entry a huge wild card, but it ultimately passed the test and will finish with around $260 million domestically. Oh, and its definitely getting a sequel—Hollywood's tell-all sign of how they feel about successful movies these days.

Next up, the third Ice Age sequel opened on July 13 to numbers slightly less than that of its predecessor but still solid enough (in conjunction with its massive overseas performance) to declare it anything other than a disappointment.

But July 2012 was always meant to belong to another comic book character. Christopher Nolan's Batman finale, The Dark Knight Rises, was generally considered the box office heavyweight favorite entering 2012. Following a $533 million-grosser, Nolan's increasingly popular name and follow-up success through 2010's Inception, and the intended huge draw of the film acting as a true ending to Bruce Wayne's story (something never remotely attempted on screen before), it was hard to conceive many reasons why Rises wouldn't at least blow past its predecessor's $158.4 million opening from four years prior and contend for $500 million again with a well-received film.

Unfortunately, tragedy intervened on the morning of July 20, 2012—the film's opening day. It's become abundantly clear in the weeks since that dark day that not only was Rises hugely impacted by Aurora, so was the entire market. As we discussed a few weeks ago, there is a psychological toll that news like that takes on the public consciousness. That cannot be discounted when considering what average moviegoers now had on their minds when taking their spouses or children or other family members to a movie theater.

Moreover, Rises became the movie synonymous with that tragic event. If any movie theater experience was going to become less desirable for average Joe and Jane, it was—and may still be—The Dark Knight Rises.

We'll never know what the film might have achieved under normal circumstances or how the market itself might have performed in the weeks after Rises' release. That said, what we do know is that the finale achieved the best midnight gross ($30.6 million) of any movie not named Harry Potter or Twilight. That figure was almost 70% higher than The Dark Knight's 2008 midnight haul (a record $18.5 million at the time). Once news of the attack broke on Friday morning, Rises' weekend pace quickly changed and ended up scooting by its predecessor's opening by just less than 2% (a gap of less than $2.5 million). With strong reviews and word of mouth, The Dark Knight Rises achieved everything it could on its own in order to ensure a hugely successful run under the circumstances.

The verdict: The entire market on the weekend of July 20 was hit, and by the end of the month the impact was already showing as revenue reached $1.313 billion for the calendar month—down 6% from July 2011 and representing less than 164 million tickets sold (a 7% July-to-July drop). In fact, this July saw fewer ticket sales than every July of the new century except for two: 2009 (156 million tickets) and 2005 (163 million tickets).

AUGUST

By all accounts, this August was already a wild card. Big-name releases like The Bourne Legacy, The Expendables 2, Total Recall and a Will Farrell-Zach Galifianakis comedy were the headliners for the final quarter of summer. Each had their own advantages and disadvantages, but their weaknesses were compounded by the long-term impact of Aurora. For example, the first weekend of August grossed a market total of $113.8 million—down a massive 28% from the same weekend in 2011, a huge decline even when accounting for the competition by the London Olympics this year.

The Dark Knight Rises would continue to carry August thanks to word of mouth and an impressive IMAX run. The Bourne Legacy fell a bit shy of industry expectations due to either franchise fatigue, the change in actors, the lack of demand for anymore sequels, or any combination therein. The Campaign started off well for an R-rated political comedy, but ultimately failed to gain much traction or tap into Ferrell's usually larger audience. Meanwhile, The Expendables 2 didn't nearly reach the success of the first film from two years ago and Total Recall became the biggest box office failure since Battleship.

Disappointing and undesired films were certainly a factor in the disappointing August, but its hard to argue those were the only reasons because, frankly, that's a factor even in the "good" months. Case in point: May 2012's slew of disappointing films after The Avengers.

Typically, today's higher ticket prices can offset the lower admissions in a given month. But not this time. August 2012 grossed approximately $776 million, down an alarming 14% from August 2011 despite what was—on paper—a much stronger release calendar this year. It was the lowest-grossing August since 2006 ($753.4 million) and the fourth-lowest of the past 13 years. Looking deeper into the numbers, it only gets worse: this August was the first that failed to crack 100 million tickets sold and "beat" 2005 as the least-attended August box office of the new century.

SUMMER 2012: The Final Verdict

Big picture: this summer probably left a lot of money on the table for Hollywood studios. Some of that is their fault, and some of it isn't. When the first movie of the summer sells more tickets on opening weekend than any other in history, there's naturally a lot to live up to after that. But the beginning of this year proved that audiences were willing to drop their cash on the right films at the right time. Despite that strong start, however, this summer finished with a total gross of less than $4.3 billion. That's down nearly 3% from 2011 and only marginally ahead of 2010's $4.2 billion take—a summer that included one of the worst months of May on record and was part of a widely-regarded box office slump during 2010 overall.

Sure, the gross is ultimately what matters (to bean-counters) and it does stand as the third-highest of all-time in non-inflation-adjusted revenue.  But here's the real story: despite becoming the first summer to ever yield multiple $400 million domestic-earners (Avengers and Dark Knight Rises), the estimated number of tickets sold will amount to roughly 532 million using the average ticket price of $8.02. Again, factoring out 3D prices that skew upward the estimated tickets sold by films such as The Avengers, The Amazing Spider-Man and Brave among others, that figure is arguably less than 530 million in actuality. Either way, even the 532 million ticket estimate represents over a 4% drop from summer 2011 and the lowest total since 1997 (520 million tickets).

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It would be easy to use The Avengers as a scapegoat for destroying everything in its wake, and The Dark Knight Rises for being affected by outside factors beyond its control. But that's the easy way out and it won't do anything to make Hollywood realize that the quality of the product is more important to audiences than ever. Between rising gas prices, a slow and uncertain economic recovery, and a rising number of lazily-produced films finding their way to the big screen, regular moviegoers are utilizing their more fiscally responsible options of staying at home and renting movies from Redbox, Netflix, and On-Demand.

Just because The Avengers draws the largest audience of any film since Avatar and represents more than 14% of all tickets sold this summer doesn't mean that people aren't willing to go see *other* movies if they're worth their time and money. And therein lies the crux of the problem: movies are increasingly becoming worth less than the value of the ticket audiences buy to see them.

A large number of factors go into the microcosm of analyzing individual months at the box office.  Sometimes those microcosms evolve into something much bigger and more profound, such as the Aurora shooting.  Ultimately though, for the movie industry, summer represents one-third of the financial year.  From the first weekend of May and through Labor Day in September, these are four crucial months for the business.  This summer started with The Avengers, and it ended with the biggest wide release flop ever in Oogieloves—the bookends of summer 2012 are a perfect metaphor for the heights reached and fallen. There's nothing the studios could have done to keep moviegoers piling into cinemas immediately after July 20, 2012, but that still leaves the short-comings of May and June—and the rest of the poorly-chosen summer tent poles—resting solely on their shoulders.

The unfortunate reality is that, lately, the measure for success has become "Did we beat last year?  ... You know, when we hit a record low?" Even when the answer is yes it's damning with faint praise. After all, we're talking about an industry that had seen overall summer revenue increase every year but twice between 1992 and 2005. Since 2008, and including this summer itself, we've already seen three modest declines in a much shorter time span.

For as long as Hollywood continues to supply audiences with stale concepts, audiences will keep pushing back and spending their money more wisely elsewhere. As a result, theater owners are forced to cut their losses over products they can't creatively control. One way they cut those losses is by increasing ticket prices, thereby creating even more frustration for us as patrons when we drop 12 bucks each on a movie that, after the fact, we wouldn't even care to rent at Redbox for a buck four months later.

It's a vicious cycle inherent to any industry, but it's one that endangers the theatrical landscape more and more each year. This is a problem that not many care to admit, but it's one this industry needs to address head-on in the very near future because sooner or later, reality will hit. We just have to hope that it comes before the majority of our culture embraces lesser products through inferior distribution methods (i.e., watching movies at home)—otherwise the movie theater could go the way of the drive-in.

In an industry that struggles daily to find the balance between sound business practices and wholly supporting a creative art, it's time to start taking more calculated risks and occasional leaps of faith on the latter. Because some of those current business practices—including but not limited to the over-reliance upon rehashed concepts and over-extension of franchises—just aren't working, and audiences have caught on. If you look closely enough, this summer proved it.

Have a comparison idea or interesting topic for a future Number Crunch article?  Share it!

Summer season data tabulated from the first Friday in May through Labor Day in September.  Monthly data tabulated from the first through the last days of each month.

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Tags: Marvel's The Avengers, Dark Shadows, Battleship, The Dictator, Men In Black 3, Snow White and the Huntsman, Madagascar 3: Europe's Most Wanted, Prometheus, Brave, Rock of Ages, That's My Boy, Abraham Lincoln: Vampire Hunter, Ted, Magic Mike, The Amazing Spider-Man, Ice Age: Continental Drift, The Dark Knight Rises, The Bourne Legacy, Total Recall (2012), The Expendables 2, The Campaign, Oogieloves in the BIG Balloon Adventure
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