The ‘Divergent’ Movie Is Getting Terrible Reviews. Here’s Why it Doesn’t Matter

If critics are to be believed, Lions Gate took an errant leap in backing the Divergent movie series. Source: Summit Entertainment.

To read the reviews for the just-released Divergent movie is to believe that Lions Gate (NYSE: LGF  ) wasted the bulk of the $85 million it spent to produce the film. Only 53 of the 132 reviews tracked at Rotten Tomatoes rate the film as fresh, and even those come with qualifiers.

"If you can forget what it's saying, Divergent is fairly entertaining," reviewer David Edelstein wrote for Vulture. Just the sort of backhanded compliment I'd expect if the intent is to explain why an otherwise mediocre movie might succeed despite itself.

I've yet to see Divergent so I can't comment on its quality. What I can tell you is that bad reviews won't keep this movie from making serious moola for Lions Gate. Here's why:

Metric
Divergent
Twilight

Domestic weekend opening

at least $53 million (est.)

$69.6 million

Rotten Tomatoes (critics / audiences)

40% / 81%

49% / 73%

CinemaScore

A

A-

Sources: The Hollywood Reporter, The Numbers, Rotten Tomatoes, CinemaScore.

The read? For all their influence, critics aren't good at predicting box office success or failure. Early audience reaction is far more prescient. Here, all signs point to a warm reception for director Neil Burger's kick-start to the Divergent movie franchise.

After all, not many movies earn an "A" CinemaScore -- only three others in recent months, including box office winners The Lego Movie, Ride Along, and Mr. Peabody & Sherman. With a better overall CinemaScore, it's a fair bet that Divergent will earn close to the $397.9 million worldwide that Twilight generated in 2008.

And what if it doesn't? Remember the context. Lions Gate subsidiary Summit Entertainment scheduled most of the Twilight and Hunger Games films for November, which tends to be a much better month for movies than March.

Take last year's results. Oz the Great Powerful led the U.S. box office, earning $234.9 million for distributor Walt Disney (NYSE: DIS  ) and 24% of the total domestic haul for March 2013. Seven months later, The Hunger Games: Catching Fire earned $424.4 million at U.S. theaters, good for about 29% of November's domestic gross. Interestingly, the last time March's top film beat November's best was 2012 when The Hunger Games grossed $408 million at U.S. theaters on the way to earning $684.5 million worldwide.

So ignore the critics, Fool. The ones buying the tickets don't just want  to see the movie -- they want to see an entire Divergent movie franchise.

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Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On March 24, 2014, at 11:26 AM, RealityCheck2014 wrote:

    Do any of the LGF cheerleaders bother with basic financial analysis?

    Opening weekends:

    The Hunger Games $152 million

    Catching Fire $158 million

    Enders Game $ 27 million

    Divergent $ 56 million

    Divergent has to reach $260 million in box office/dvd/other revenues just to break even on its $130+ million production/P&A budget after theater and dvd producer/ancillary takes. It may make some money if gets a 50/50 proportional international performance to "The Hunger Games" and if it does not hit a second weekend box office wall. However, after months of relentless LGF hype that "Divergent" would be bigger than "The Hunger Games", it has posted opening weekend revenues at 37% of "The Hunger Games". "Divergent" will be nowhere close to a "The Hunger Games" level franchise that will be needed to fill the LGF earnings gap after "The Hunger Games" ends in 2015. In fact, it is closer to an "Enders Game" performance than "The Hunger Games" level.

    In addition, "Divergent" is more of a Summit sales agent/distribution income profile than a fully integrated LGF production scenario like "The Hunger Games". Therefore, LGF may have to share substantial portions of any "Divergent" upside with its production partners who provided production capital.

    I truth, LGF caught lightening in a bottle with "The Hunger Games" and has failed to produce a follow up that would justify its current 16x P/E multiple that is based on a perpetuity of "The Hunger Games" level earnings. There is nothing in the future LGF or Summit slates that inspires confidence that "The Hunger Games" earnings performance can be replicated.

    At this point, LGF is nothing more than a speculative play that is grounded in ignorance rather than sound fundamentals that can be easily replicated at current earnings levels.

  • Report this Comment On March 24, 2014, at 12:04 PM, TMFMileHigh wrote:

    @RealityCheck2014,

    Presuming you're right and production plus marketing and distribution were in the range of $130 mil., then a $260 million worldwide gross would roughly amount to box office break-even.

    Ender's Game didn't get close to the figure, but it also earned a B+ CinemaScore, well below Divergent's solid A.

    And then there's this from Box Office Mojo:

    "Some other positive metrics: the audience was more evenly split between men (41 percent) and women, and between older and younger (50 percent were over the age of 25). Only 40 percent of its opening weekend gross was earned on Friday, which makes it less front-loaded than any of the Twilight or Hunger Games movies. It also received an "A" CinemaScore, suggesting word-of-mouth will be solid."

    Finally, figure that the opening weekend tends to be a small portion of the U.S. take for films that enjoy strong word-of-mouth. (For example, 31.2% for Ride Along and 28.4% for The Lego Movie.)

    Imagine Divergent does slightly worse than recent A-rated films and ends with 35% of domestic gross coming in the opening weekend. That's still $160 million in a market that's deriving ever-more revenue overseas -- and we've yet to see results from 39 additional territories in which Divergent is scheduled to be released: http://www.imdb.com/title/tt1840309/releaseinfo

    My point? While $260 million sounds like a high hurdle, given history and what we know so far, I think it's quite likely Divergent will clear it with a little room to spare.

    FWIW and Foolish best,

    Tim

    --

    TMFMileHigh in CAPS and on the boards

    @milehighfool on Twitter

    http://about.me/timbeyers

    http://timbeyers.me

  • Report this Comment On March 24, 2014, at 4:40 PM, maineiacle wrote:

    The whole thing seems contrived. Pundits have been touting this movie for months All the while assuming a franchise was a given.

    That appears to be every major studios goal now. "Find the next franchise". Tech and special effects do not a good movie make.

  • Report this Comment On March 24, 2014, at 6:36 PM, akfisherman22 wrote:

    I don't believe anyone at LGF claimed that Divergent would be equal or greater than Hunger Games. The media may have tried to make that claim but not the studio.

    Also, they are not trying to fill the gap that will be left by the HG franchise. The last Mockinjay will be released Nov 2015 and the last Divergent movie will be March 2016. Honestly, there is no filler for a $600+ million movie.

    LGF is more than just a movie making company. At current levels LGF is a BUY. I believe $40 by year end is easily achieved.

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