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"Saw" Still Cutting It?

By Steven Mallas – Updated Nov 15, 2016 at 5:29PM

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Blood and bodies still equal bucks.

For the third Halloween in a row, Lions Gate Entertainment's (NYSE:LGF) Saw franchise has cast its dark, torturous spell over celluloid lovers in the mood for a twisted scare. There's no stopping Jigsaw and his horrifying circus of pain -- and no stopping Lions Gate in its quest for future cash flow.

The first Saw dismembered many moviegoing minds, taking in more than $18 million in its first weekend at the domestic box office, and finishing with a total domestic gross of about $55 million (all statistics courtesy of Saw 2 debuted with $31.7 million and ultimately scored $87 million in the domestic market. Saw 3 is estimated to have taken in a little more than $34 million in its first outing.

I thought the third film in the series was set to demolish the last entry's opening weekend, but I was wrong. It performed well on a relative basis, snatching the the No. 1 spot, and it was far ahead of such hyped Hollywood hotshots as Disney's (NYSE:DIS) The Prestige, TimeWarner's (NYSE:TWX) The Departed, and Viacom's (NYSE:VIA) Clint Eastwood epic, Flags of Our Fathers. And it grossed in one weekend a little less than what Sony's (NYSE:SNE) supernatural shockfest The Grudge 2 has made after two weeks in the marketplace. It's therefore holding its own, even if it didn't outdistance the second Saw by as much as I had expected.

The studio definitely knows how to monetize fear. However, I hope that a keen eye will be kept on the Saw franchise in terms of costs -- this latest outing is, according to some reports, the most expensive, with a budget possibly north of $10 million, more than double the amount spent on the previous sequel. Each successive sequel becomes riskier than the last, since the chance of audience interest in the series wearing thin increases every year. Whatever the budget actually is, I must state that if I were running this whole macabre business operation, I would challenge the filmmakers to return to their roots and synthesize a compelling cinematic puzzle on a significantly lower economic scale. There's no question that bare-bones moviemaking oftentimes leads to innovative ideas and executions -- there's also no question that it is more shareholder-friendly. I do concede, however, that it would be difficult to control costs, as the talent involved will undoubtedly demand higher compensation packages.

It's important for Lions Gate to cultivate lucrative franchises, because they will reinforce its brand equity and bring audiences to the theaters for its products. A strong theatrical showing bolsters all other ancillary distributional channels, and that's going to be even more vital when the new DVD format takes hold of the marketplace (right now, it looks like it'll be either Blu-ray or HD-DVD). With a new DVD paradigm and a whole set of broadband initiatives out there, Lions Gate will be able to exploit its collection of franchises in all kinds of moneymaking ways. This is why the studio makes for such an interesting investing idea -- its library of exciting intellectual properties -- like Saw 3 -- keeps growing in the midst of a coming media change. That'll be worth something over time.

Yes, there will be more Takes:

Dare you enter the den of the Lion ?

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Fool contributor Steven Mallas owns shares of Disney. Last Friday, he was ranked 536 out of 11,654 investors in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.


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