Lions Gate Entertainment's (NYSE:LGF-A) Insurgent, the eagerly anticipated sequel to Divergent, recently started shooting in Atlanta. Insurgent is based on the second book of the dystopian Divergent trilogy by Veronica Roth, which is frequently compared in print and film to Lions Gate's other major dystopian franchise, The Hunger Games.
Insurgent will retain its primary cast from the first film, which includes Shailene Woodley (Tris), Theo James (Four), and Kate Winslet (Jeanine). Supporting cast members Jai Courtney, Ray Stevenson, Zoë Kravitz, Maggie Q, and Mekhi Phifer will also return.
However, the director and writers of the first film have notably been replaced. Robert Schwentke, who most recently directed the box office bomb R.I.P.D., will take over the director's chair from Neil Burger. Akiva Goldsman -- best known for writing Batman & Robin, A Beautiful Mind, and The Da Vinci Code -- will co-write the script with newcomer Brian Duffield. The first film was written by Evan Daugherty (Snow White and the Huntsman) and Vanessa Taylor (Game of Thrones).
Could creative changes help the film earn better reviews?
Yet that's not to say that Insurgent will necessarily suffer as a result of those changes. After all, R.I.P.D. and Batman & Robin were bad for plenty of other reasons, and both Schwentke and Goldsman have been involved in much better films.
Divergent, which was released in March, earned a mixed 41% rating among critics at review aggregator site Rotten Tomatoes. By comparison, the first Hunger Games film earned a score of 84%. Its sequel, Catching Fire, was also written and directed by a completely new team, but earned an even higher score of 89%.
Lions Gate's Summit Entertainment also swapped out the director with every film in its Twilight franchise (except for the final film, which was split in two), but retained the same writer, Melissa Rosenberg, throughout the series. However, switching directors resulted in an uneven critical response to the five films, which earned scores as low as 24% (Breaking Dawn Part 1) and as high as 49% (Twilight, Eclipse) at Rotten Tomatoes.
But as anyone who follows the movie industry knows, positive or negative reviews don't necessarily reflect the amount of money they earn. Therefore, let's follow the money and take a look at how much bigger the Divergent franchise could get, and the challenges it could face along the way.
Why Divergent can never be the next Hunger Games
It's easy to see why everyone wants to compare Divergent to The Hunger Games -- both are popular young adult dystopian novels with strong, rebellious female leads. However, it's fairly clear that Divergent is not in the same league as The Hunger Games in either print or film.
Taking a look at Amazon's Top 100 Best-Sellers List, we see that although Divergent hit #5 at the start of 2014, the two sequels -- Insurgent and Allegiant -- only respectively reached #18 and #22.
When we look back at 2012, when the first Hunger Games film arrived, we see much stronger results -- the first book reached #4, while Catching Fire and Mockingjay respectively reached #7 and #8.
A comparison of the two box sets also reveals Divergent's weakness -- the Divergent trilogy box set only reached #43 in 2014, while the Hunger Games box set reached #11 in 2012. Therefore, it's clear that interest significantly fell between Divergent and Insurgent, whereas The Hunger Games retained its readership throughout the entire franchise.
Lions Gate's system of low risk and high returns
The key question now is whether that decline in interest will also be seen at the box office. Divergent was a bonafide hit, grossing $267 million at the box office on a production budget of $85 million. Lions Gate reportedly spent approximately $40 million marketing the film.
What's intriguing about Lions Gate's approach, however, is that it offsets production costs by selling international distribution rights to its films in advance -- for example, the rights for Divergent were sold for $70 million, covering most of the production costs. The Hunger Games films were also financed in a similar manner. This is a fairly thrifty and low-risk system, since Lions Gate actually pays very little of the films' production costs out of its own pocket.
The Foolish takeaway
Despite frequent comparisons in the media, there's no way that Lions Gate expects Insurgent to replicate the blockbuster success of The Hunger Games: Catching Fire, which grossed a whopping $865 million worldwide on a production budget of $130 million.
However, Lions Gate is hoping that interest in the Divergent franchise won't flounder after the first film as it did after the first book. After all, Lions Gate needs audiences to come back for Allegiant, which has already been split into two films for 2016 and 2017.
Insurgent is scheduled to hit theaters on March 20, 2015. Although it might not be the next Hunger Games, it could still represent a strong source of revenue for Lions Gate after The Hunger Games franchise concludes with Mockingjay: Part 2 in November 2015.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Lions Gate Entertainment. 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.