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Analysis: Lower-cost surprises drive Hollywood toward record year

LOS ANGELES (Reuters) - As Ron Burgundy returns to the big screen this weekend in the "Anchorman" sequel, it's kind of a big deal, as the fictional newsman would say, for Hollywood's entire year.
/ Source: Reuters

LOS ANGELES (Reuters) - As Ron Burgundy returns to the big screen this weekend in the "Anchorman" sequel, it's kind of a big deal, as the fictional newsman would say, for Hollywood's entire year.

After a handful of expensive summer flops, lower-cost movies such as the $50 million "Anchorman 2: The Legend Continues" are lighting up the screen for studio executives who are cautiously predicting a second straight record year.

Ticket sales at theaters in the United States and Canada started slowly at the beginning of 2013. Even with the summer hits "Iron Man 3" and "Despicable Me 2," revenue for the year was running 0.3 percent lower than last year through July 26, according to data from Rentrak, following bombs like "The Lone Ranger."

But starting in August, box office receipts pulled ahead of last year's pace, helped by late-year surprises such as the civil rights story "Lee Daniels' The Butler" and the hostage thriller "Captain Phillips" that were made for $55 million or less and had ticket sales of more than $100 million each.

They were joined by comedies "We're the Millers" and "Jackass Presents: Bad Grandpa."

"The poster child is 'Gravity,'" said Gerardo Lopez, chief executive of theater chain AMC Entertainment, who said the film was expected to take in only $50 million to $70 million at domestic theaters. "It's a good film and people found it."

"Gravity," the 3D space thriller about a pair of stranded astronauts starring Sandra Bullock and George Clooney, defied projections to sell $253 million at movie theaters in the United States and Canada.

The film, which cost about $100 million to make, ranks sixth on this year's list of highest-grossing movies at domestic theaters, ahead of big-budget action hits like "Fast & Furious 6" and "Star Trek Into Darkness." Those films both cost at least $160 million apiece to make.

Helped by higher ticket prices, U.S. and Canadian movie grosses are 0.4 percent ahead of a year ago at $10.16 billion through Sunday. The average price paid by moviegoers climbed 11 cents this year to $8.05 through the end of September, according to the National Association of Theatre Owners.


The success of "Gravity" and other overachievers helped offset weak performances by some pricey star-studded action films. They include "After Earth," "R.I.P.D." and "White House Down," which analysts say were hurt in part by a crowded summer movie slate.

"If you look at the list of the top-performing movies, there is a very broad diversity of films there," said Chris Aronson, president of domestic distribution for 20th Century Fox, which scored a summer hit with "The Heat," a comedy with a budget of $43 million that grossed $160 million at domestic theaters.

This year's surprise hits took off for different reasons.

"Gravity," from Time Warner Inc's Warner Bros, awed critics and audiences with its depictions of space and weightlessness, which pushed moviegoers to higher-priced IMAX and 3D tickets.

Star power helped promote "The Butler," which was boosted by Oprah Winfrey's popularity, while "Captain Phillips" stirred Oscar buzz for lead actor Tom Hanks.

"They sustained a fairly high volume of conversation over time," said Wayne St. Amand, executive vice president of marketing for Crimson Hexagon, which analyzed Twitter comments on both films. The tweets "kept both films on the minds of moviegoers for longer periods of time than you might expect," he said.

The year also saw massive big-budget hits, led by Walt Disney's Co's Marvel superhero sequel "Iron Man 3" ($409 million), Universal Pictures' animated "Despicable Me 2" ($367 million) and dystopian thriller sequel "The Hunger Games: Catching Fire" ($358 million). Domestic sales for the summer movie season hit a record $4.8 billion.

Hollywood's big-budget thrillers grabbed massive returns overseas. "Iron Man 3," for instance, earned $806 million in international markets, or two-thirds of its total.

Lions Gate Entertainment the studio behind "Catching Fire," also found a hit with the $75 million heist caper "Now You See Me" that opened in late May and collected domestic ticket sales of $118 million.

"We felt we could live in that world and hold up very nicely, and that turned out to be the case," said Richie Fay, president of domestic distribution for Lions Gate. While the movie was initially aimed at an over-25 audience, it also pulled in younger filmgoers, Fay said.

A mixture of upcoming big-budget and smaller priced films will give Hollywood a shot at beating last year's $10.8 billion record, say analysts. Leonardo DiCaprio is getting Oscar buzz for Paramount's "The Wolf of Wall Street," which cost more than $100 million to make, while Fox has heavily promoted the Ben Stiller comedy "The Secret Life of Walter Mitty."

"Anchorman 2," which opened Wednesday, will likely join the list of this year's hits made with modest budgets, according to, which projects the movie from Paramount Pictures will take in $185 million domestically during its theatrical run.

The movie's star, Will Ferrell, has appeared in character as Burgundy seemingly everywhere, from Dodge Durango commercials and a newscast in Nebraska to an interview with Denver Broncos quarterback Peyton Manning for ESPN The Magazine.

"Will Ferrell is about as big a sell-out as you can get," said Jeff Bock, senior box office analyst at Exhibitor Relations Co. "And that's a good thing for everybody involved in this."

(Reporting by Lisa Richwine; Editing by Ronald Grover and Grant McCool)