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Summer movie sequels equal profits for Hollywood studios

Summer movie sequels equal profits for Hollywood studios

CAPTAIN AMERICA:This image released by Marvel shows George St-Pierre, left, and Chris Evans in a scene from "Captain America: The Winter Soldier." Photo: Associated Press/Zade Rosenthal

By Lisa Richwine

LOS ANGELES (Reuters) – Captain America, Spider-Man, the X-Men and Transformers are storming back into movie theaters, returning in sequels to save the world from mass destruction, while at the same time churning out profits for movie studios.

Hollywood will pack 13 sequels into theaters over the next 20 weeks. The parade begins on Friday, when Captain America dons his red-white-and-blue superhero suit for the U.S. debut of Marvel’s “Captain America: The Winter Soldier,” and continues through summer, Hollywood’s most lucrative season.

Studios generally don’t have to spend as much to raise awareness of sequels months in advance, as they do with other big-budget films, executives say. And when sequels reach the big screen, ticket sales in foreign markets, which can account for up to 80 percent of a film’s box office, often exceed their predecessors.

“When you can say, here’s ‘Avatar 2,’ and you’ve got six billion people ready to see it, it doesn’t take a lot of marketing to get them into the theater,” said Jim Gianopulos, chairman and chief executive of Fox Filmed Entertainment. “It’s a self-propelling marketing message in a very big world.”

The first installment of 20th Century Fox’s animated “Ice Age” series took in $207 million overseas in 2002. The fourth “Ice Age” from the studio owned by Twenty-First Century Fox earned $716 million at international box offices in 2012.

Sequels are hardly a new Hollywood phenomenon. But in recent years, as DVD sales crumbled, movie studios began to cut back on the numbers of films they produced to trim the risks.

Starting in 2008, they began to churn out more sequels and big-budget event films, turning away from riskier original films like independent dramas and romantic comedies.

This year’s sequels include superhero films “The Amazing Spider-Man 2” from Sony Corp, Fox’s “X-Men: Days of Future Past,” and “Transformers: Age of Extinction” from Viacom Inc’s Paramount; animated movies “Rio 2” from Fox and Dreamworks Animation’s “How to Train Your Dragon 2;” and Sony comedies “22 Jump Street” and “Think Like a Man Too.”

What mostly drives the studio top brass is that audiences keep buying tickets for sequels. In 2013, nine of the top 12 films in the U.S. and Canada were sequels or prequels, including Marvel’s “Iron Man 3” and Lions Gate’s “The Hunger Games: Catching Fire.” Those films generated $2.6 billion in domestic ticket sales, nearly one-quarter of the year’s $10.9 billion total, and another $4.5 billion worldwide.

That shift away from riskier films has helped studios increase or stabilize their profits, said Janney Montgomery Scott analyst Tony Wible.

Operating margins at Time Warner Inc’s Warner Bros., the studio behind the “Harry Potter” franchise and “The Dark Knight” Batman series, hovered around 7 percent in 2007 and 2008, Wible said, before rising to about 10 percent for each of the next five years.

At Walt Disney Co, the focus is on a smaller number of films with the potential to produce sequels, drive toy sales and inspire theme-park rides.

In a typical year, Disney is aiming to release one film each from Pixar, Disney Animation, and “Star Wars” producer Lucasfilm; two from Marvel, and four to six from its Disney live action division, said Alan Horn, chairman of The Walt Disney Studios. “We choose our sequels carefully,” Horn said. “If we have a picture that has earned a right to have a sequel, it’s because the audiences loved it.”

Next year’s crop of sequels may set even bigger records. Studios are already planning to release new installments of some of the biggest films of all time, including “Star Wars,” “Jurassic Park” and “Marvel’s The Avengers.”

The rash of sequels has prompted even filmmakers to make fun of their world. In the opening number for “Muppets Most Wanted,” Disney’s sequel to its 2011 “The Muppets” movie, the furry puppets break into a song called “We’re Doing a Sequel.”

“That’s what we do in Hollywood,” the puppets sing, “and everybody knows that the sequel’s never quite as good.”

(Reporting by Lisa Richwine; Editing by Ronald Grover and Kenneth Maxwell)

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