Hollywood is a funny business to begin with, but the movie business is even crazier. Why? Front-loaded economics means that the opening weekend can account for a huge portion of a film's box office profit.
Here's a look at the five movies that, so far, have cashed in the most:
|Movie||Opening Weekend||Domestic Gross||Opening as a % Of Domestic Gross|
|Marvel's The Avengers||$207,438,708||$623,357,910||33.3%|
|Avengers: Age of Ultron||$191,271,109||$413,318,567||46.3%|
|Iron Man 3||$174,144,585||$409,013,994||42.6%|
|Harry Potter and the Deathly Hallows, Part 2||$169,189,427||$381,011,219||44.4%|
|The Dark Knight Rises
The math behind opening-weekend mania
Reports vary when it comes to how distributors (i.e., studios) and exhibitors (i.e., theaters) split the gate, but most agree that the Hollywood operators get the majority in the early weeks. For opening weekend, it can be as much as 90% of box office sales.
That's why you saw Disney (NYSE:DIS) releasing so many teasers and TV ads ahead of Avengers: Age of Ultron. As both producer and distributor, the House of Mouse was on track to earn as much as $180 million -- in the U.S. alone -- from a $200 million open. Mixing in tens of millions more from early openings in foreign territories appeared to put Age of Ultron within striking distance of profitability on opening weekend, no small feat for a film that cost a reported $250 million to produce.
Only part of the equation
As important as a big opening weekend can be, three of the five top-grossing films of all time cashed in on the staying power that comes with positive word of mouth. Audiences were still packing theaters to see Avatar, Titanic, and Furious 7 weeks after release:
|Movie||Worldwide Gross||Domestic Gross||Domestic Gross as a % of Total|
|Marvel's The Avengers||$1,518,594,910||$623,357,910||41%|
|Harry Potter and the Deathly Hallows, Part 2||$1,341,511,219||$381,011,219||28.4%|
What every investor should learn from this
What can we learn from all this? First, while Disney has the golden touch right now, every studio gets its turn. 21st Century Fox (NASDAQ:FOXA) is planning to add to the Avatar franchise. Universal has made huge sums from the Fast and the Furious franchise.
Paramount still gets fees for cable screenings of Titanic. And of course, Time Warner (NYSE:TWX.DL) has done so well with the Harry Potter films that Warner Bros. CEO Kevin Tsujihara has commissioned a spinoff series based on the mythical Hogwarts textbook, Fantastic Beasts and Where to Find Them.
Getting back to the biggest opening weekends, I think it's also fair to say that:
- Studios will continue to make comic book movies. For now, the opening-weekend winners list is dominated by comic-book-inspired fare -- four of the top five, to be specific. Knowing how important strong starts can be, it's no wonder that studios continue to bet big on comics-inspired properties.
- Robert Downey Jr. is Hollywood's hottest property. Of those five, actor Robert Downey Jr. has either starred in or headlined three. No performer is more bankable right now, which is why it's easy to envision next year's Captain America: Civil War -- another of his headliners -- earning at least $1 billion in worldwide box office grosses.
- Moviegoers come out for franchises. Unproven properties have a tougher opening weekend sell than existing franchises. That's why Hollywood executives spend so much time chasing franchises. Known properties can draft off the films that came before, which makes them less dependent on buzz in the moment, and more likely to earn a return for the studio and its shareholders.
Big opening weekends at the box office make for records, for legends, and for good copy. But when it comes to the business of investing in the best entertainment stocks, short-term box office wins are only as good as the long-term franchises they lead to.
Tim Beyers has lived in a mouse house before. Thankfully, that's no longer true. He's also a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission and owned shares of Apple, Time Warner, and Walt Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool.
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