April 2009

Summer Movie Preview

The thermometer might say spring but for Hollywood it might as well be summer… Summer Blockbuster Season that is. What used to start on Memorial Day weekend now begins on May 1st with X-Men Origins – Wolverine and continues with a string of hilarious comedies, adrenalized action films and engaging animated flicks. Or that’s what we pray for every year. So put your brains on autopilot and prepare your bladder for 48 -ounce drinks… summer is here!

Here at Media Mogul, we’re all about tracking the money. Luckily, so are the studios. Who will be the winners of summer 2009? With our extensive research, inside scoop and some mystical business skills developed over two decades in the industry we place our bets. Here are our predictions (estimates are for worldwide box office).

May 1 | X-Men Origins – Wolverine
This film looks back and explores the origins of one of its most beloved characters, Wolverine. The producers hope to regain the audience interest lost after the third X-Men sequel, The Last Stand, was such a disappointment. Initially, this film seemed like a slam-dunk but with the negative buzz from a rough copy circulating the Internet, I’m not so sure. Most X-Men fans will go see the movie but it will fail to capture a wider audience.

Box Office Prediction: $400 million. Benefits by being the first film out of the gate but isn’t the blockbuster hit Marvel was hoping for.

May 8 | Star Trek
The old warhorse gets a makeover by director J. J. Abrams… taking it where no one has gone before. We’ll get a look at how Kirk, Spock and McCoy met using everyone’s favorite plot device, time travel. Cue the Alexander Courage theme… now! I’ve trusted J.J Abrams in the past (think Mission Impossible 3) but I’m not convinced he can pull off a reimaging of the Star Trek universe. I might be wrong as the buzz has been tremendous and Star Trek has the largest fan base next to Star Wars.

Box Office Prediction: $500 million. Becomes the largest grossing Trek film of all time but not the biggest film of summer.

May 15 | Angels and Demons
Tom Hanks returns with better hair but with a weaker plot in this prequel to DaVinci Code. Based on the Dan Brown book, this time Harvard religion expert Robert Langdon races against time to save the Catholic Church from a secret society called the Illuminati. Several signs don’t bode well for the film. Prequels usually earn less than their predecessors and A&D doesn’t have the name recognition of DaVinci Code. Even with a wide potential audience and a returning cast and crew, Angels and Demons is stuck in purgatory.

Box Office Prediction: $450 million. Can’t measure up to DaVinci Code.

May 22 | Night at the Museum: Battle of the Smithsonian
With the box office success of 2006’s Night at the Museum, a sequel was a forgone conclusion. The action moves to Washington D.C. where Ben Stiller and his “friends” wreak havoc on the Smithsonian Museum. Like many sequels, studios assume we want more of everything and we get it here… bigger cast (Amy Adams, Robin Williams, Owen Wilson, Jonah Hill, Ricky Gervais, Dick Van Dyke, Bill Hader and many more), more characters (Abe Lincoln, Al Capone, Ivan The Terrible, and Amelia Earhart among others) and innumerable comedic set pieces. Even with that largess, the comedy and clean family fun make it hard to bet against.

Box Office Prediction: $500 million. Children of all ages never tire of Stiller and Williams fooling around.

May 22 | Terminator Salvation
Christian Bale stars in this prequel, which traces the mythic beginnings of the series when John Connor first becomes the rebel leader when a war breaks out between man and machine. Honestly, I wasn’t excited about this film but two things have changed my mind. First, the third Terminator film underwhelmed me. The story didn’t hold up and not surprisingly didn’t perform up to franchise expectations. After T3, I felt that the series had run its course. Second, based on the trailers shown it looks like every other apocalyptic war movie. Unless the studio is sandbagging, the lack of originality will hurt prospects. But with Bale starring and the fact that all three earlier films made buckets of money I wouldn’t write it off…

Box Office Prediction: $300 million. The franchise loses steam. Next up, Terminator: The Rest Home Chronicles.

May 29 | Up!
How can you bet against Pixar? Their nine straight box office hits represent the film equivalent of Joe Dimaggio’s 56 game hitting streak. But all good things must come to an end. Although it’s the only kid movie in theatres until Ice Age arrives in July and represents Pixar’s first foray into 3-D, the story has left me cold. Do kids really want to see a film about a cranky old man? I’m betting they don’t.

Box Office Prediction: $300 million. Comes up with decent box office but becomes Pixar’s first disappointment.

June 5 | Land of the Lost
How this made it to the screen is anyone’s guess. The Saturday morning series from Sid and Marty Krofft was know for cheesy special effects and simple moral lessons that kids could understand. But the highlight for me was the Sleestaks, a race of evil lizardmen that scared the hell out of me as a kid. As with most big budget cinematic remakes, my guess is the low-tech charm that made the series fun will be lost and made it into a bunch of CGI nonsense with occasional bouts of stupid humor. See this at your own peril.

Box Office Prediction: $150 million. Will Ferrell’s miserable track record with nostalgic television series (see Bewitched) continues.

June 12 | The Taking of Pelham 123
In a summer of remakes this one takes a gritty 70’s subway thriller and puts director Tony Scott at the helm to spice things up. Expect style over substance with flashy cinematography and lots of quick cuts. Based on the trailers it looks like Inside Man on a train instead of in a bank. Denzel Washington is the cop who’s charged with bringing down a psychotic John Travolta holding the New York City transit system hostage. Tension ensues. Please… watch the closing doors.

Box Office Prediction: $250 million. Two weekends at the box office all to itself without serious competition helps the numbers.

June 19 | Year One
Here’s one of the few movies on this list that’s not a remake or sequel. Then again, it’s produced by Hollywood’s current cash cow Judd Apatow and stars Michael Cera and Jack Black. Sound familiar? The duo play a pair of cavemen wandering through history. The movie follows no logical timeline, jumping from Adam and Eve to the Sacrifice of Isaac to Roman times. Might be the funniest cavemen since History of the World, Part One. Think of it as Superbad meets Sunday school.

Box Office Prediction: $200 million. Comedies have a tough time in the summer.

June 24 | Transformers: Revenge of the Fallen
Movies based on toys… I still don’t get it. But after the success of the first you knew this was coming. Apparently people want giant robot action films. Who knew? The sequel looks like an amped up version of the first. The trailer doesn’t show much more than ships, airplanes and other objects exploding. But they explode in style. Some would say that’s all a summer blockbuster needs and a little dumb fun is fine by me.

Box Office Prediction: $750 million. If it does close to the same box office as the first it has a chance to be the summer’s highest grosser.

July 1 | Public Enemies
Johnny Depp plays 1920’s Chicago gangster John Dillinger, while Christian Bale plays his FBI nemesis Melvin Purvis. Like Bonnie and Clyde, Dillinger became a ‘folk hero’ for an American public who had little sympathy for the banks that had sent the country into the Depression. Sound familiar? I’m a huge fan of Michael Mann and with this cast you’d think he’s got hit on his hands. But releasing a period piece in the summer feels wrong to me.

Box Office Prediction: $250 million. Best to be expected given it has to compete with Transformers and other blockbusters.

July 1 | Ice Age: Dawn of the Dinosaurs
Fox rolls out a third installment of its Ice Age cartoon franchise with the Manny the Mammoth and his friends, this time doing battle with dinosaurs in a secret underground world. Wait a sec… dinosaurs AND mammoths? Good thing this is a kids film. Voices of the original cast are back (Ray Romano, Denis Leary and Queen Latifah) and Simon Pegg is introduced as a one-eyed weasel who hunts dinosaurs. This installment is Fox’s first 3-D film, which the studio hopes will be another hook to draw in the kiddies.

Box Office Prediction: $600 million. The first two Ice Age films combined to gross more than $1 billion in worldwide box office.

July 10 | Brüno
Following the breakout success of Borat, fans were eagerly awaiting Sacha Baron Cohen’s follow up. Three years later, Cohen brings another of his Da Ali G Show characters to the big screen - Brüno, a flamboyant gay fashionista. With a similar premise as Borat, Brüno claims to be from an Austrian television show wanting to talk to Americans about subjects ranging from fashion to homosexuality. Will audiences embrace this movie like they did Borat or will it turn out to be a one-trick-pony?

Box Office Prediction: $200 million. Sacha Baron Cohen’s comedy does well stateside but doesn’t translate well to the rest of the world.

July 15 | Harry Potter and the Half Blood Prince
If one movie on this list is a sure bet, it’s this one - no other Harry Potter movie made less than $795 million. The series is so popular that sometimes it seems like they could’ve just shot J.K. Rowling reading the book onscreen and made a fortune. Although the stories continue to get darker, it’s all about teen romance at Hogwarts School of Witchcraft and Wizardry as Harry begins to fall for his best friend’s little sister. Warner Brothers delayed the film’s release from last November to this summer to take advantage of a mid-July window devoid of serious competition. Smart move.

Box Office Prediction: $900 million. It’s Harry Potter, after all.

July 31 | Funny People
After way too many Executive Producer credits, Judd Apatow gets back into the director’s chair for a third time. This bittersweet tale stars Adam Sandler as a stand-up comedian who finds out he has a terminal disease. Definitely a departure from the hilarity of 40-Year Old Virgin and Knocked Up but Apatow has a way of making any topic funny.

Box Office Prediction: $250 million. Good for a summer comedy and Apatow shows he still has the magic touch.

August 7 | G.I. Joe: The Rise of Cobra
I can see the pitch meeting for this. Eighties toy franchises are really hot so let’s adapt another one. Smurfs? Nah, too politically incorrect. What about G.I. Joe? It’s got soldiers, patriotism and machines… great choice! Problem is G.I. Joe doesn’t have the same nostalgia value (think Teenage Mutant Ninja Turtles) and director Stephen Sommers is no Michael Bay. This is a recipe for disaster.

Box Office Prediction: $100 million. Maybe the early August release will help catch kids before they go back to school but I see this one being a dud.

Media Mogul’s ‘Box Office Champ of 2009′ goes to:

Harry Potter and the Half-Blood Prince

William Morris and Endeavor Team Up

In a major shift within the talent agency business, leaders from William Morris and Endeavor voted to merge forming WME Entertainment. The new agency combines the music and television assets of William Morris with the client-rich roster of Endeavor. Most insiders believe it is designed to challenge the dominance of Creative Artists, regarded as the biggest and most powerful talent agency in Hollywood.

The merger has been driven by an economic downturn that has prompted studios to cut costs. Combining the two agencies is expected to generate significant cost savings. Significant layoffs are expected on the William Morris side as it has nearly four times the number of agents compared to Endeavor.

The move also represents an attempt to reassert the power of talent, and the agents who represent them, by creating an industry giant with the negotiating power to demand better deals for their clients. In recent years, several big names have started to use management companies or even abandoned the agency system to deal directly with studios, effectively challenging agents’ power as the brokers of entertainment industry.

William Morris is the grand dame of talent agencies. It was founded in 1898 by a German immigrant in New York to represent stage acts, and became one of the world’s most powerful agencies through a string of acquisitions. Previous clients have included Humphrey Bogart, Steve McQueen and Marilyn Monroe, as well as some of the biggest names in music, including the Rolling Stones and Elvis Presley.

Endeavor was formed by four ex-partners who left rival agency International Creative Management in 1995. Their client list includes Jennifer Garner, Ben Affleck and Matt Damon as well as up and coming stars like Javier Bardem and Sacha Baron Cohen.

Foreign Pre-Sales Dry Up

For decades, independent movie producers have been able to fund their films by selling the rights in advance to distribute them abroad. If the production featured a big-name actor or director, these foreign pre-sales might provide producers with 50% or more of their production budget. With a portion of their budgets in hand, producers could more easily secure loans or equity for the rest of their financing.

But today, due to factors ranging from the credit crunch to burgeoning online piracy, even the biggest names aren’t always enough to sell an American film abroad.

When Graham King, a Hollywood film producer who won an Oscar in 2007 for “The Departed,” sent marketing packages for two of his coming projects to the Berlin Film Festival earlier this year, he figured they would attract crowds of buyers. “The Rum Diary” features Johnny Depp, star of the “Pirates of the Caribbean” franchise and one of the most bankable actors in Hollywood.

But very few buyers bit. Mr. King had projected that foreign sales would account for roughly 60% of the $45 million budget for “The Rum Diary.” “In a normal market, with Johnny Depp, we’d be sold out by now,” he says.

For years, distributors in such markets as France, Germany, Japan and Latin American nations at times would pay millions of dollars for the rights to distribute American movies. Recently, last year’s teen hit “Twilight” from Summit Entertainment and indie sensation “The Wrestler” generated significant coin.

Although piracy and increasing competition from local films have held a lid on presales of foreign rights in recent years, it wasn’t until the current credit crunch that pre-sales dried up. Today, producers feel lucky if pre-sales cover half of their budgets… if anything at all.

Moreover, the billions of dollars that Wall Street poured into the film industry before the crunch created a glut of independent films that allowed distributors to be more selective… or simply to wait until a film was finished to make a decision.

Many foreign distributors used sales of films to television to finance their film purchases. Without those deals, they can’t spend the same money on acquisitions. All of that has caused some distributors to shut their doors.

The Cannes Film Festival next month will serve as a bellwether for the foreign market. But with credit drying up across the globe, many foreign distributors simply don’t have the capital to buy. “At some point these buyers have to find some product for 2010 and 2011, so Cannes will be interesting,” adds King.

Still, he says the film industry has never seen the foreign-sales market slow across the board as has happened in recent months. “You always had economic woes somewhere, and you could make it up by selling to another country,” says King. “But now it’s on a global basis, and the independents overseas have lost all their credit… so without that credit they can’t buy movies. It’s very, very worrying.”

Adobe Plays Matchmaker for Studios and Silicon Valley

With a global recession in full force, Silicon Valley and Hollywood are suddenly cosying up to each another. Considering that the two business and pop culture forces didn’t acknowlege each others existence for years it’s a bit of a surprise. But tough economic times make for strange bedfellows. Entertainment companies need the Valley to help cut costs in moviemaking and show viewers it is hip to the latest tech innovations.

The tipping point might be the recent advancements in Adobe System’s Flash, the standard for online video. Flash has been used in websites for the past ten years but is now being employed to display Facebook applications, interactive advertisements and video clips featured on YouTube and Hulu.com.

Adobe wants to widen Flash’s influence even more. The company announced on Monday its latest version of Flash will be on Internet connected TVs, set-top boxes, Blu-ray players, and other digital home devices later in 2009. TV and consumer electronics optimized for Flash will allow viewers to see high-definition video, interactive applications and new user interfaces right on their TVs.

At NAB, David Wadhwani, general manager and vice president, Platform Business Unit at Adobe elaborated on the benefits.

“Adobe Flash Platform for the Digital Home will dramatically change the way we view content on televisions. Consumers are looking to access their favorite Flash technology-based videos, applications, services and other rich Web content across screens. We are looking forward to working with partners to create these new experiences and deliver content consistently across devices whether consumers view it on their desktop, mobile phone or television.”

As part of the announcement, the company revealed a number of partners that plan to use the technology including Intel, Comcast, Disney Interactive and Netflix.

The companies involved will trumpet the advantages of Hollywood and Silicon Valley working together. And with the obvious benefits of melding of content and technology together it’s true. They might not always get along but cooperation like this might be the only thing that saves them in these rough and tumble economic times.

SAG and Studios Finally Reach Agreement

After nine months of bickering, picketing and union infighting, negotiators for the Screen Actors Guild and the studios have reached a tentative agreement on movie and prime-time TV productions. The new two-year agreement for the union’s 120,000 members was finally agreed to when SAG gave up its fight for more compensation on Internet content.

The agreement is essentially what studios presented last year and is what writers, directors and another actors union (AFTRA) have already agreed to. What did SAG accomplish by holding out so long? Nothing. In fact, the Guild lost both money and respect. In allowing the contract to lapse for nearly a year, SAG actors lost wage increases amounting to nearly $70 million according to studio estimates. That’s a heavy price to pay for posturing.

The damage goes beyond money. Many insiders who follow the industry say the Guild is worse off than where it began. Jonathan Handel, an entertainment lawyer who followed the talks closely was quoted as saying,

“Their endless stalemate really amounted to them pouring sugar in their own gas tank. The SAG hard-liners have inflicted serious damage on their own union.”

Observers say it is unlikely the deal will lead to an increase of new production because of the poor economy. Film production had already been cut because of the credit crunch and falling sales of DVDs, a major earner for of studios. Last month, the Motion Picture Association of America said the number of films produced in 2008 plunged 21 percent to 520, compared with 656 the year before. Until the economy turns around and financing loosens up, SAG members are facing lean times.

YouTube Strikes Deals with Studios to Acquire Content

YouTube’s vast lineup of programming just got a lot more interesting. The company has brokered content deals with Sony, Lionsgate, the BBC, Starz, Discovery, National Geographic and others to offer up full-length movies and TV shows for free on the site. The new content will only be available in the United States.

YouTube needs to do something to become profitable. A recent report by Credit Suisse says that Google is expected to lose $470 million this year on YouTube. That can’t go on forever. So how will YouTube monetize these new deals? Initially, they plan to sell advertising during commercial breaks in TV shows. That model has had limited success so eventually YouTube will have to make the decision whether or not to charge for this ‘premium’ content.

These deals are considered one way for YouTube to compete aggressively with rival video sites like Hulu to attract more advertisers with access to premium content. A large part of Hulu’s success revolves around a focused approach to content. By only providing movies and TV shows, it feels like a free HBO. Contrast that with YouTube whose niche of showing short videos of cats playing pianos, Axe deodorant flamethrowers and waiters spitting on food make it appear to be something akin to a public access channel.

Like many Internet companies, YouTube is growing up. Since Google’s acquisition, YouTube has gone through a makeover, starting with making the service more attractive to big movie and TV companies. The site has upgraded the quality of its streaming video and began filtering content to eliminate pirated material. As the leading video destination on the Internet (with 41% of the online audience according to comScore), there’s plenty of time for YouTube to outdistance Hulu and its ilk.

3-D, the Ultimate Blast from the Past

Although we’re not even to summer, 2009 might be remembered as the year 3-D saved Hollywood. Studio executives bullish on the future of 3-D are pointing to the recent success of “Monsters vs. Aliens.” The 3-D release by Dreamworks has already eclipsed $100 million and is likely on its way to $200 million in North American box office. Much of that success can be attributed to 3-D. About 2,000 of the initial 7,000 screens were equipped for 3-D broadcast, which costs viewers $2 to $4 more to see. That represents about 56 percent of total ticket sales thus far, a nice haul for less than one third of the total screens.

The movie could set a benchmark for a host of other big-budget 3-D films. Robert Zemeckis’s “A Christmas Carol,” an animated remake of the Charles Dickens tale about Scrooge starring Jim Carrey, is planned for release in November. James Cameron is at work on “Avatar,” a $200 million 3-D film set for December in which a war veteran named Jake travels to another planet. And Steven Spielberg’s “The Adventures of Tintin: Secret of the Unicorn,” based on the popular Belgian comic strip about a reporter and his dog, is due out in 2011.

According to a report released in January by Piper Jaffray entitled “3D from Our Perspective: A Comprehensive Analysis of the Emerging 3D Ecosystem,” new 3-D technology will drive content production, displays and related technology to a sizeable market over the next few years, reaching an estimated $25 billion by 2012.

It’s not all sunny for 3-D though. Even with the wonders of an old-is-new technology, content is still king. Titles like “Beowulf” and “Bolt” left critics lukewarm and underperformed at the box office. The draw of 3-D couldn’t overcome poor storytelling. Theater owners have also been slow to embrace the technology, which carries a price tag of up to $75,000.

Without more screens, the 3-D films coming out over the next few years could find themselves with limited venues at which to play, resulting in lost revenue. In fact, after DreamWorks completed the 3-D version of “Monsters,” its filmmakers created 2-D prints because the company knew not every theater would have the capabilities to show the film in the new format.

While 3-D is off to a good start, a poor economy and slow adoption by the theatre chains will slow it down. Only several years of hits like “Monsters vs. Aliens” will convince studios and theatre owners alike to pony-up on a reinvented technology.

March Madness Hits… and Misses

Like a sunny spring day in Milwaukee, March Madness defrosts sports fans out of the February deep freeze. As the second biggest sporting event in the U.S. after the Super Bowl, it’s not only highly anticipated but commercially successful. This years NCAA Men’s Basketball Tournament had mixed media reviews.

Last Monday night’s final matchup between North Carolina and Michigan State came in as the lowest-rated championship game ever, drawing a 10.8 household rating/18 share among households and 17.6 million viewers, according to final figures from Nielsen Media Research. Overall, March Madness basketball coverage on CBS averaged 8.9 million viewers this year, up 2% from 2008’s all-time low average. Among the all-important male demographic, tournament averages were down 14% in men 18-34, 4% in men 18-49 and 2% in men 25-54. Since it’s sports there’s always some viewership variations depending on how good the games are, but the statistics are a cause for concern.

On the bright side, CBS’s ‘On Demand’ service performed impressively, demonstrating that sports are the one TV genre that translate smoothly and non-competitively onto the Web. According to the CBS release, unique visitors who checked out at least one game or highlight on CBS’s player was 7.52 million, up 58% from 2008’s 4.76 million. The total hours streamed were 8.6 million, up 75% from 2007’s 4.92 million.

Growth in the total number of viewers continues to increase, indicating people are willing and eager to watch NCAA basketball games on the computer at home and at work. If CBS can continue to increase their internet audience, it should help offset declines in television. As the Internet matures, March Madness on Demand is transforming from phenomenom to real growth business for CBS.

Don’t Mess with Wolverine… or Fox

It seems like this happens every summer. Last week a rough cut of the new Wolverine movie was leaked. Even without special effects or final music it spread like wildfire through the Net and awoke Fox from it’s slumber. You don’t tug on Superman’s cape, you don’t spit in the wind and you don’t mess with Fox. One unlucky film critic found that out.

Looking to scoop the competition, an online reviewer for Fox News named Roger Friedman saw the movie and gave it a glowing review in his column.

This may be the big blockbuster film of 2009, and one we really need right now. It’s miles easier to understand than “The Dark Knight,” and tremendously more emotional.

Let’s see now… a reviewer for Fox News writing about an unreleased film distributed by none other than 20th Century Fox, both of which are owned by News Corp. You can see where this is heading. Friedman is now out of a job and an entertainment conglomerate has once again made its priorities clear:

We’ve just been made aware that Roger Friedman, a freelance columnist who writes Fox 411 on Foxnews.com — an entirely separate company from 20th Century Fox — watched on the Internet and reviewed a stolen and unfinished version of ‘X-Men Origins: Wolverine.’ This behavior is reprehensible and we condemn this act categorically — whether the review is good or bad.

Seems to be much ado about nothing, especially given how widely the rough cut has been downloaded. According to the Bit Torrent news blog TorrentFreak, the “Wolverine” rough cut has been downloaded over one million times in the past week and ranked at Number 1 on its download chart. It also happens to be the only film on the charts that hasn’t been released. That comes with the territory of being a hotly anticipated blockbuster. Ease up Fox - you’ve got bigger fish to fry than going after a lone reviewer toiling away at one of your media outlets.