Hollywood sails to a box-office record

By Ryan Faughnder / Los Angeles Times

Deepening anxiety in Hollywood that the ascendance of Netflix would keep people from going to the movies this year appears to have been overblown.

Major hits, including Marvel Studios’ “Black Panther,” Universal Pictures’ “Jurassic World: Fallen Kingdom” and 20th Century Fox’s “Deadpool 2,” drove ticket sales in the U.S. and Canada to a record-breaking $11.8 billion this year, according to preliminary projections from data firm Comscore. That would represent growth of 6 percent from a year ago and beat the previous record of $11.4 billion in ticket sales set in 2016.

The surge is welcome news for studios and multiplexes, coming after a steep downturn in attendance in 2017 that stoked fears that buzzworthy programming on streaming and cable TV had sapped the movie industry of its cultural clout. Multiplexes have been buffeted by long-term declines in theater admissions coupled with the incursion of big-spending technology companies such as Netflix, Apple and Amazon, making it harder for movies to grab the audience’s attention in an increasingly fragmented market.

But this year presented a different narrative as a better mix of movies and a string of surprise hits kept cinemas humming. Studios found fresh ways to expand or revive their biggest franchises, and largely avoided pricey, ill-advised flops of years past. Rising ticket prices also helped. Attendance jumped a projected 4 percent to nearly 1.3 billion tickets sold, but did not set a record.

“There’s an argument that’s been built up that consumers don’t want to see movies in theaters,” said Barton Crockett, a media and entertainment analyst at B. Riley FBR. “But that’s not where the consumer is. The consumer wants to see movies, and when you give them movies they want to see, they come out in droves.”

A crowd-pleaser strategy again paid off for Burbank-based Walt Disney Co., which released the three highest-grossing films of the year — “Black Panther,” “Avengers: Infinity War,” and Pixar’s “Incredibles 2.” “Black Panther,” the first global superhero blockbuster to feature a mostly black cast and an African American director, smashed all expectations by grossing $700 million in the U.S. and Canada, making it the top movie of 2018.

Walt Disney Studios Chairman Alan Horn, in an interview in his Burbank office, said the results are a sign that people will still go to the theaters to see quality movies, despite competition from newer home entertainment outlets. Disney, which focuses almost entirely on “tent pole” films designed for the big screen, said it passed $3 billion in domestic grosses for the year on Sunday, exceeding its own industry record set in 2016.

“I do think that these different entities — streaming services and movie theaters — can coexist,” Horn said. “I think the prospective member of the audience asks himself or herself, ‘Do I have to see it now, and do I have to see it on a big screen?’ If the answer to both is ‘yes,’ we’ve got them.”

Cinephiles and critics for years have rolled their eyes at Hollywood’s dependence on sequels, reboots and remakes. However, audiences this year rewarded studios for finding new ways to bring back well-known characters.

Universal Pictures’ “The Grinch,” produced by “Minions” computer animation studio Illumination Entertainment, grossed more than $250 million in domestic ticket sales. “A Star Is Born” soared for Warner Bros., despite being the fourth version of the title, largely because of the critical praise lavished on Lady Gaga’s performance as a rising singer. Paramount’s “Mission: Impossible — Fallout,” the sixth movie in the super spy series, upped the ante for Tom Cruise’s stunt work.

A few non-franchises managed to find big audiences by filling voids in the market. Warner Bros.’s romantic comedy “Crazy Rich Asians” benefited from having a rare all-Asian and Asian American cast. Earlier this year, Paramount Pictures scored a much-needed win with “A Quiet Place,” a well-reviewed horror movie with an unusual concept and minimal dialogue. And Rami Malek’s portrayal of the late Queen front man Freddie Mercury bolstered 20th Century Fox’s “Bohemian Rhapsody.”

“Every month, we saw some new bright spot,” said Adam Aron, chief executive of AMC Theatres, the world’s largest cinema operator. “You can point to a big box-office surprise like ‘Black Panther,’ but every month there were titles people wanted to see.”

The year is poised to finish in solid fashion, with Warner Bros.’ “Aquaman” winning the pre-Christmas box office by grossing $67 million Friday through Sunday. Disney’s “Mary Poppins Returns” launched in second place, with a lower-than-expected $22 million during the three-day weekend. Paramount Pictures’ “Bumblebee” came in third with $21 million.

There were still a few major flops this year. “Mortal Engines,” Universal’s $100-million steampunk odyssey, became a December box-office boondoggle, grossing $10 million domestically, partly because of poor reviews and the audiences’ lack of familiarity with the story and the stars. A new “Robin Hood” release from Lionsgate also bombed, confirming that few people were interested in a new version of the English folk hero. Sony’s attempt to bring back “The Girl with the Dragon Tattoo” series also disappointed.

Even Disney couldn’t avoid a handful of pricey misfires. “Solo: A Star Wars Story” grossed less than $400 million globally, a poor result for a “Star Wars” movie. Ava DuVernay’s ambitious “A Wrinkle In Time,” based on the heady children’s book from the 1960s, and the fantasy epic “The Nutcracker and the Four Realms” both fizzled at cinemas.

“Of course, we want to make original product,” Horn said. “Because we’re in the tent-pole business, sometimes trying means you swing for the fences. They’re expensive movies, so when they don’t work, it’s a big miss.”

Theaters still face major challenges, such as the long-term declines in domestic attendance, which is still down significantly from its most recent peak of 1.6 billion in 2002.

Some theater chains are trying to boost attendance by introducing subscription pricing, after discount movie service MoviePass shook up the industry by offering virtually unlimited movies for $9.95 a month. AMC responded with its own Stubs A-List offer, letting subscribers pay about $20 a month to see up to three films a week in its theaters. The deal proved popular and is expected to grow to nearly 600,000 subscribers by the end of the year. MoviePass, which many analysts saw as unsustainable, has dramatically scaled back its business.

Additionally, growth at the international box office, long a silver lining for the business, slowed in 2018, according to analysts. International sales are expected to grow 2 percent to $30 billion in 2018, compared to 7 percent growth last year, according to Comscore. China’s box office is projected to grow about 10 percent to $8.8 billion this year, according to consultancy Artisan Gateway. But much of the increase was driven by local movies, not Hollywood imports. Moreover, while China remains the world’s second-biggest box-office market, it may become a less reliable source of revenue for Hollywood as trade tensions escalate between Beijing and Washington.

Next year promises to bring even bigger shifts — and upheaval — in the entertainment industry, when Walt Disney Co., AT&T and others launch their own streaming services to take on Netflix. Additionally, Disney’s pending acquisition of Fox is expected to result in significant job losses. Analysts predict other studios, including Lionsgate and Sony Pictures, will eventually be sold as media companies and tech giants look to bulk up by purchasing smaller rivals.

Still, analysts and industry executives predict 2019 could be another strong year for the box office. Highly anticipated films include Disney’s superhero film “Captain Marvel,” a fourth “Avengers,” another “Star Wars” and three live-action remakes of animated Disney classics — “Dumbo,” “Aladdin” and “The Lion King.” Also coming are Warner Bros.’ “It: Chapter 2” and “Joker,” a Sony “Men in Black” reboot and Universal’s “Glass,” a crossover of M. Night Shyamalan’s “Unbreakable” and “Split.”

“The consumers have shown us a real ability to surprise us with what they want to see,” B. Riley FBR’s Crockett said. “I think studios are coming into the year with a pretty good hand.”