Blockbuster Economics

I recently took a one-day course on the blockbuster, and it’s inspired me to dig a bit deeper into this topic. Blockbusters are one of those “I know it when I see it” phenomena that are notoriously difficult to define in a meaningful way: Is it about box office? Is it about production budget? Is it synonymous with “event movie”? Is there a certain look, genre, or story that signifies “blockbuster”? Yes, all of the above. 

One of my favorite definitions comes from Anita Elberse, author of the aptly titled book, “Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment” (2013). Her view is that the blockbuster is a business model. It’s the strategy of using resources, influence, and access to talent to make sizable (and, yes, risky) investments in products (films, books, even pharmaceuticals) that have the potential to pay off big. Her conclusion is that, even though blockbusters can be unpredictable, they’re still, on balance, a better investment than “long-tail” properties (i.e. a larger number of low-risk, low-revenue products). 

Elberse argues that, instead of shifting to a long-tail economy, mass-market media industries are actually becoming more hit-driven. Most media consumers are light users, who tend to gravitate towards the most visible bestsellers and are overwhelmed by the multitude of niche offerings. Thus a “blockbuster strategy” may be the best way forward for major media companies, as greater resources and deeper pockets would allow them to outflank niche competitors. Even with lower margins, if a firm has the clout and resources to pursue blockbusters, one hit contributes more profit than many niche titles.

That explains why we seem to be seeing more and more blockbuster attempts in cinemas each year. Even Spielberg has theorized that the future of the film industry may be even more blockbuster-centric. Cinemas would focus on creating complete experiences around visually stunning event films, charging $50-100 per ticket, while mid- and low-budget films will go straight to on-demand, to be enjoyed in the comfort of our living rooms. 

While blockbusters are certainly here to stay, they can still be an enigma. To return to the initial question — what makes a blockbuster? — there’s no single element that guarantees success. It’s actually helpful to flip the question around: Why do some would-be-blockbusters fail spectacularly at the box office?

In this spirit, I turned to “John Carter and Gods of Hollywood” (2012) by Michael D. Sellers. While Sellers isn’t an academic, he writes a well-researched account of what went wrong from the position of a fan and an independent film producer. JOHN CARTER is probably best known today as one of the biggest box office flops of all time. The film is based on a 100-year-old science fiction series written by Edgar Rice Borroughs, who is considered to be the father of modern sci-fi/fantasy storytelling and has influenced modern blockbusters such as STAR WARS and AVATAR. Disney developed the film adaption and hired Andrew Stanton, who made FINDING NEMO and WALL-E at Pixar, to direct. Disney eventually committed $250 million to make the film, as well as an additional $100 million to market it. With a global box office of $284 million ($73m domestic, $211m global), it resulted in an estimated loss of $200 million for Disney. 

As Sellers explains it, JOHN CARTER was a perfect storm of story problems, director hubris, and near-complete marketing failure. Although director Stanton was a fan of the source material and tried his best to imbue the film with the magic he had experienced in the books, the reviews were mixed. Stanton's position as a successful Pixar director meant that he had more leeway in casting and bugeting than a first-time live action director would usually be afforded. Consequently, Stanton hired a little-known actor in the lead role, and went all-out in terms of production values and special effects. However, the budget, and Stanton's evident passion for the project, were not enough to elevate the film. By the time the film was released in March 2012, it had slipped to a “rotten” rating on Rotten Tomatoes, indicating that only 58% of critics recommended the film and those that didn't found it confusing, bloated, and derivative. 

However, I’m sure we’ve all sat through enough terrible blockbusters to know that quality is not necessarily a predictor of box office success. That’s where marketing comes into the mix. Sellers argues that Disney failed to give JOHN CARTER the “tentpole” treatment. Disney is no stranger to blockbusters, but most of the marketing for its blockbuster brands (e.g. Pixar, Marvel, Bruckheimer films) was overseen by dedicated teams. JOHN CARTER was lumped in with a general slate of Disney releases, and close attention to the film — from managing early social media “buzz” to creating evocative trailers, posters, and TV spots — fell through the cracks as Disney’s marketing department went through a number of top-level hirings and firings. 

Sellers concludes that Disney's marketing failures required the film to be a “home run.” With great reviews and great word of mouth, a film can overcome weak marketing. Conversely, strong marketing can make a weak film a hit, at least for the opening weekend, until negative audience opinion becomes wide-spread. Unfortunately, JOHN CARTER failed to measure up on both accounts.

Weak marketing + a less-than-perfect film = a $250 million would-be-blockbuster flop.