Friday, June 7, 2013

Looking at 2013's Summer Blockbusters' Profitability Margins

"Iron Man 3," left, and "Fast & Furious 6"

This story first appeared in the June 14 issue of The Hollywood Reporter magazine.

After a rocky winter and spring, the North American box office boomed in May, with revenue reaching $1.14 billion to surpass the record $1.04 billion earned in 2011. Heading into the month, revenue for the year was down a troubling 12 percent over 2012. Now, the gap is 7 percent.

The bonanza was led by global blockbusters Iron Man 3 and Fast & Furious 6. But they weren't the only profit-generators. Star Trek Into Darkness has held in especially well, while The Great Gatsby exceeded expectations. Even The Hangover Part III will make money.

All of this is great news for Hollywood, considering the staggering amount of money it takes to make and market a summer tentpole. Numerous studio insiders tell THR that marketing a film worldwide can now cost $175 million.

Below is a glimpse at the financial health of the May tentpoles.

Iron Man 3 (Disney/Marvel Studios)

Budget/marketing:?$375 million
Projected global gross:?$1.2 billion

Revenue analysis: May's biggest grosser is on track to generate profits upward of $400 million for Marvel and Disney, even after gross participants -- including?Robert Downey?Jr.?-- take their fees, along with the $90 million or so owed Paramount because of its previous distribution deal with Marvel.

The Great Gatsby (Warners Bros./Village Roadshow Pictures)

Budget/marketing:?$280 million
Projected global gross:?$345 million

Revenue analysis:?Thanks to generous Australian tax incentives, the budget for?Baz?Luhrmann's?3D epic was a modest $105 million. With a surprisingly decent domestic haul ($129 million to date) and predictably good global business,?Gatsby?should result in profits in the $25 million range.

PHOTOS:?26 of Summer's Most Anticipated Movies: 'Man of Steel,' 'Wolverine,' 'The Lone Ranger'

Star Trek Into?Darkness (Paramount/Skydance Productions)

Budget/marketing:?$365 million
Projected global gross:?$490 million

Revenue analysis:?J.J. Abrams' sequel is on track to exceed the $385.7 million earned by his 2009?Star Trek. Fueled by a better showing internationally (Paramount expects overseas box office to hit $260 million), it won't earn as much domestically as that film, but profits should reach $75 million.??

Fast & Furious 6 (Universal)

Budget/marketing:?$335 million
Projected global gross:?$730 million

Revenue analysis:?The sixth installment is a blockbuster domestically and abroad. It should turn in a franchise-best performance (Fast Five did $626.1 million in 2011) and reap profits of $200 million or more for Universal and Elliott Management after gross players Vin Diesel and Dwayne Johnson are paid.

PHOTOS:?'Fast & Furious 6' Roars Into Hollywood: Vin Diesel, Michelle Rodriguez Hit the Carpet

Hangover Part III (Warner Bros./Legendary Pictures)

Budget/marketing:?$253 million
Projected global gross:?$375 million

Revenue analysis:?The final?Hangover?won't reach the level of the sequel ($586.8 million), but it is performing well overseas and has a lower budget than its May rivals, so it still should generate profits of $25 million or more after director?Todd Phillips?and other gross participants are paid their fees.

Source: http://www.rottentomatoes.com/m/1927621/news/1927621/

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