Hollywood Is About To Become A 3-Way Battle Between Disney, Universal And Warner Bros.
Universal/Comcast Corp. announced on Tuesday that it was the third studio to cross the $5 billion mark in global box office for 2017, coming mere weeks after Walt Disney and Warner Bros./Time Warner Inc. did likewise. I’ll go into this later this month (after I see Pitch Perfect 3), but Universal’s 2017 has been another case of them scoring with comparatively unconventional hits and treating would-be counterprogramming as A-level events. I bring this up both to tip my hat in their general direction and to note that, now that Walt Disney has officially announced its intent to purchase Fox, Hollywood is now essentially a three-way fight between Universal/Comcast Corp., Warner Bros./Time Warner Inc. and Walt Disney/Fox.
Yes, there is a lot more at stake than just theatrical moviegoing. For one thing, it’s likely that Walt Disney will remake Hulu into their own private streaming service and thus put Hulu on equal footing with (relatively speaking) Netflix and Amazon. But just concentrating on theatrical moviegoing for a moment, this deal will solidify the utter dominance of the three biggest studios in town, partially be taking the fourth biggest out of the equation.
First and foremost, Walt Disney is currently running up 18.4% of the total domestic box office as Warner Bros./Time Warner Inc. leads with 20.1%, Universal (counting Focus Features) is third with 15.8% and Fox and Fox Searchlight now make up 13% of the 2017 North American theatrical market. While Disney is now behind Warner Bros./Time Warner Inc. in domestic market share, it’s close enough that The Last Jedi should put it over the top. Give or take Jumanji potentially giving Sony a push, these four top studios will control around 67.3% of the market share in terms of domestic box office in 2017.
Last year, Walt Disney had a jaw-dropping 26.3% of the domestic box office, Warner Bros. had 16.7%, Universal (in a year with little in the way of conventional tentpoles) had 14.1% while Fox had 13.4%. So last year, those top four studios controlled nearly 71% of the domestic box office. While that hasn’t always been the case, the respective slates of these four studios, compared with the likes of Sony, Paramount and Lionsgate, make the case that the Mouse House, the Dream Factory, Universal and Fox will be topping market share for the immediate future.
Now market share isn’t the only measurement of success, and at the end of the day if a studio’s slate is profitable than market share is merely about bragging rights. Lionsgate doesn’t need market share to drown in Wonder or La La Land money. Universal had zero conventional tentpole offerings in 2014 and still had record profit margins.
But assuming Disney doesn’t drastically reduce the theatrical output from Fox and Fox Searchlight, the industry as a whole will almost instantly turn into a three-way slugfest with Disney/Fox snagging 30-40% of the market in a given year while Universal and Warner Bros. go for their respective 15-20% apiece. Meanwhile, Paramount, Sony and Lionsgate will do their best with the remaining 20-30% while STX, A24 and the rest fight for the remaining 10-15%. No, this is not exact math, and sure Sony, Paramount or Lionsgate could have a jaw-dropping year down the line, but you get the idea.
The good news is that all three mega-studios are good at what they do, and they are good at doing different things.
Universal has done with smaller-scale would-be counterprogramming (Lucy, Trainwreck, Straight Outta Compton, Get Out, Atomic Blonde) that has been successfully sold as A-level event movies while offering a few big-deal franchises (Fast and the Furious, Jurassic World and the Illumination brand) at a price. Warner Bros. throws a deluge of movies of all shapes and sizes at the wall while their marketing departments have a knack for turning stuff like Magic Mike, American Sniper and It into mainstream smash hits. And yes, they deserve credit for getting Wonder Woman to $821 million global, just as frankly Universal deserves some credit for putting the brakes on their Dark Universe and putting the movie before the release date.
Walt Disney has a solid reputation for mega-budget tentpole fantasy fare that A) delivers in terms of nuts-and-bolts/meat-and-potatoes entertainment while also offering underserved demographics the chance to play the hero. Sure, most of their biggies come from animation, acquired IP or live-action movies stemming from their animation legacy, but most folks walk into a Disney movie expecting it to be “pretty good.” Yes, buying Lucasfilm and Marvel was partially about standing on the shoulders of others, but the production values, casting and relative big-scale entertainment value speak for themselves.
That’s why Jumanji: Welcome to the Jungle being quite fun was so important, as it’s Sony’s first “pretty good” biggie that isn’t an MCU movie or a James Bond adventure in a long time. Paramount will have to figure out how to survive in a world where movie stardom and prestige doesn’t mean much to general theatrical moviegoers, but I’m rooting for them to pull it off. And, yeah, that’s why Lionsgate’s pretty solid last couple of years, where they thrived without entirely relying on reboots (Jigsaw) or franchise plays (Power Rangers), mattered so much in a post-Hunger Games/Twilight word.
What Disney swallowing Fox’s year-end prestige pics and their “big movies for grown-ups” offerings, to say nothing of franchises like Alien, Predator or Kingsman, will mean, I can only guess. But if Disney squashes Fox, then that vacuum can be filled by Paramount or Sony. But in terms of market share domination, today’s announcement will all but surely turn theatrical filmmaking into a three-ring circus, with those rings belonging to Time Warner, Comcast Corp. and Walt Disney. Maybe the rest of the industry will hold firm if Disney decides to wield their new power in unpleasant ways, or maybe Disney will change the conversation about early VOD (or day-and-date VOD). This should be interesting.