Why the ‘Transformers’ Franchise Is So Important to Paramount

The ‘Transformers’ franchise reignited in a big way this weekend with over $100 million domestically and $300 million globally. That’s a big deal for Paramount as the studio is banking big on its franchises in the coming years.

Jul 2, 2014 at 10:15AM

Say what you want about Michael Bay and his "Transformers" series, but the brand delivers. This weekend, Paramount (a subsidiary of Viacom (NASDAQ:VIA)) unleashed the fourth installment of its robot-powered action staple and dominated the competition. Not only did a hit of this magnitude come at the right time for the studio, but given the studio's newfound reliance on franchise tentpole releases, executives and investors have to be breathing a sigh of relief.

Transformers

Credit: Paramount

Critic proof

"Begging for Extinction" ..."Ready for the Junk Heap"... "Less Than Meets the Eye"

Those are all actual headlines from last weekend's round of reviews tied to Transformers: Age of Extinction. Normally that type of negative press would sink a movie, and possibly even a franchise. But for the "Transformers" series it's par for the course. So far, all it has done is boost Paramount's financial bottom line.

Taking a quick look back at how the "Transformers" series has done, you can see that bad reviews have had little to no impact on its box office performance. In fact, each film has topped the previous one in total worldwide sales with 2011's Dark of the Moon breaking the $1 billion mark.

Transformersbor

With budgets around $200 million, these are not cheap films to make. That's usually the case when studios go all out for a summer tentpole, however. For Paramount to be able to pump that much money into a movie and have it essentially be a guaranteed smash hit is rare. With Mark Wahlberg now in the lead role, the franchise has rebooted itself quite nicely.

This weekend alone, Age of Extinction took in around $100 million domestically; that makes it the largest opening for a movie in 2014. It is also a 35% film-to-film increase, which means a fifth installment can't be too far off. Globally, the film will add another $200 million to its totals and in the process open as no. 1 in each of the nearly 40 countries where the film unspooled over the weekend.

Franchise friendly

Transformers

Credit: Paramount

Paramount's arsenal of franchises is fairly robust, but lately almost all of them have had some sort of a setback. This makes "Transformers" even more important to have in the fold. You have to go back to 2011 and Mission Impossible: Ghost Protocol to find the last time a high-profile action/thriller franchise lived up to box-office expectations.

Instead Paramount's "G.I. Joe" sequel made less money domestically than the original, its "Paranormal Activity" brand has been on the decline, and the studio's attempt to reboot the "Jack Ryan" series flopped. The lone bright spot was the "Anchorman" sequel. which despite opening to less money than its predecessor was able to turn a nice profit. The comedy still cost twice as much to make, however, and who knows how much to market and promote.

Having a series like "Transformers" that can perform time after time and remain critic proof is something that few studios can claim. Paramount isn't backing down on franchises, either, as its remaining 2014 slate is littered with films that are either a brand continuation or designed to become one over time. The studio's slate includes Hercules, Teenage Mutant Ninja Turtles, Hot Tub Time Machine, and another Paranormal Activity before the end of the year. 2015 is set to be more of the same with a lineup that includes a "SpongeBob SquarePants" sequel, Scouts vs. Zombies, Terminator: Genesis, the next "Friday the 13th" installment, and a new "Mission Impossible" film.

Believe it or not, this was also the studio's first summer film of 2014. Paramount's last wide release was Noah back in March, which overcame its own media storm to float toward a $350+ plus million haul worldwide. After seeing its first three films of the year underperform, the combination of Noah and Age of Extinction is a major shot in the arm. Investors should still be a little wary, of course, as up next is Hercules, which hasn't exactly won over analysts or insiders; many wonder if even Dwayne "The Rock" Johnson can help reignite a tale that is literally as old as time.

Maybe if they added in a bunch of robots?

Your cable company is scared, but you can get rich

With cable TV on the ropes, Viacom and other companies may need to start relying more on its film subsidiaries to bring in value.  There's $2.2 trillion out there to be had and currently cable grabs a big piece of it. That may not last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 

Brett Gold has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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