Box Office Round Up – February 20-22, 2015

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Get behind the numbers of the last weekend’s box office. This week, Chris Neumer delves into what 50 Shades of Grey‘s enormous drop at the box office means, why Titanic was such a God send for theater owners and why a $100 million box office is sometimes worse than $75 million take.

by Chris Neumer

Lost in the hoopla of Oscar weekend and John Travolta face rubbing, there were actually movies released to theaters on Friday! McFarland, USA, The DUFF and Hot Tub Time Machine 2 all had major releases this weekend and all three brought in rather disappointing returns; Hot Tub Time Machine 2 was the worst performing of the bunch, not even reaching $6 million its opening weekend.

However, the story of the weekend wasn’t the roughly $27 million combined totals of the three, but rather 50 Shades of Grey’s second week in theaters.

Last week, 50 Shades of Grey opened to a whopping $85 million. It “spanked” the competition! It “whipped” all comers! It should have been called 50 Shades of Green! It caused people to ponder whether to BDSM or not to BDSM. It was also quite a boon for headline writers who wanted to throw in some clever double entendres.

50 Shades of Grey’s second weekend looked primed to continue on its hot streak. Its total box office would (obviously) drop, but, factoring in a lot of worst case scenarios—post-Valentine’s Day drop, hardcore fans already saw it, poor word-of-mouth, etc—it was still predicted to bring in around $30 million. Well, about that…

When the dust settled on Monday, it became clear that 50 Shades of Grey didn’t come remotely close to making $30 million. Instead, it pulled in a smidge more than $22 million. This marked an unbelievable 74% drop in box office from its first to second weekends in theaters. The last movie to suffer this great a percentage drop in wide release was 2013’s One Direction: This is Us, which also dropped 74%.

I’ve written about this previously, but there are different release patterns and expectations for different types of movies. Horror movies (and to a lesser extent, urban and fanboy films) cannot and should not be measured against their non-horror (or non-urban and fanboy) counterparts. Horror movies open with a bang and then practically fall off the face of the earth. Movies like this used to be referred to as “Star Trek Movies” in honor of the many William Shatner and Patrick Stewart led Star Trek movies that experienced huge drops in attendance from week 1 to week 2. In recent years, this term has largely faded away… mostly because Star Trek movies are now huge, mainstream, tentpole movies that don’t only appeal to fanboys.

If you look at the movies released to more than 2,500 theaters with the biggest drops from week 1 to 2, you notice more than your fair share of horror films. The list looks like this:

1)   Friday the 13th (2009) – 80.4% drop

2)   Star Trek: Nemesis – 76.2% drop

3)   The Devil Inside – 76.2% drop

4)   Texas Chainsaw 3D – 75.7% drop

5)   The Purge – 75.6% drop

6)   One Direction: This is Us – 74.4% drop

7)   50 Shades of Grey – 73.9% drop

It’s not good company. Remove the fanboy and horror titles from that list and you’re looking at the biggest—the BIGGEST!—one week percentage drop for a widely released, mainstream film in Hollywood history.

Now, the question becomes: what does that mean?

At first blush, it’s hard to see a silver lining in the biggest percentage drop in history. I mean, how can you witness a movie drop almost 75% of its box office total from opening weekend to the next and not have that be a bad thing? As I looked at 50 Shades of Grey’s numbers more closely though, I began to realize that the scenario was nowhere near as bleak as it might initially appear.

The reason for this is that not all box office dollars are equal. To a studio, a dollar spent seeing a film opening weekend is far more valuable than a dollar spent seeing a film during its fourth week of release because the studio receives a far greater percentage of the opening weekend ticket sales than it does fourth week ticket sales. This is because studios do not pocket the total sum of a film’s box office. If American Sniper pulls in $350 million total, Warner Brothers will probably see about $180 million of that. The remainder goes to the theater chains showing the film.

I’m boiling away a lot of fat here, but studios have worked out an agreement with the theaters that gives them a much larger cut (think 80/20 or 70/30) of a film’s opening weekend totals than of its fourth week numbers (50/50) or eighth week numbers (20/80). This is why Titanic will forever be the least profitable studio success story you’ll ever see. It made the grand majority of its money after the percentages tilted strongly in favor of the theater owners.

As such, studios want their movies to make all their money during their first two weeks in theaters. Financially, it would be better for them for a movie to do $100 million its first two weeks in theaters and then fall off the face of the earth than for that same movie to do $60 million its first two weeks in theaters and ultimately end up with $150 million total. Because the first two weeks are where the money is. That, along with low production costs, are why horror films are so en vogue.

So in regards to 50 Shades of Grey, Universal and Focus Features have to figure out which scenario is most likely for the film.

Scenario #1: Did they market the film too well?

With a marketing campaign that began in the summer of 2014, did they whet their audiences appetite to such a degree that they pulled everyone in the first weekend, including some people who might have otherwise seen the film second of third weekend causing the big drop?

Or, Scenario #2: Did they leave a lot of dollars on the table?

Had they done something different—made a better movie, worked a slightly different marketing angle after Valentine’s Day, something—could they have attracted more people during week #2?

Scenario #1 is the glass is half-full, scenario #2 is the glass is half-empty. And, in all honesty, it’s hard to know whether its one or the other. It will be very interesting to see what 50 Shades of Grey does between week 2 and 3 and how much this will impact Universal and Focus Features’ plans for the release of the 50 Shades of Grey sequel in another two years.

It might sound odd, but if 50 Shades of Grey takes another wild hit at the box office this next weekend, it’s entirely possible that The SpongeBob Movie will finish with a higher gross. And I don’t think anyone saw that coming.