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How Do Studios Decide What Movies Get Sequels?

This is a question which has bothered me for quite a while now, because it seems like there should be an obvious answer, but I can’t really make a lot of decisions fit based on that. The deciding factor, one would assume, in any industry as to whether a product gets a continuation, a re-release, or a spin-off, would be that of box office. You imagine that the studio executives include an option for sequels in the contracts of any actors they want to stick around, and then wait for the box office totals to come in before they finally decide if they want to make the investment. However, this doesn’t always seem to be the case.

Should I get on my bike?

There’s a trend, of late, with movies moving forward on sequels before the original instalment is even released. You might make the case that The Lord of the Rings is an instance of that, as all three were shot concurrently (obviously before the first one was released), but there a whole host of other examples. In the case of the two upcoming Tintin films, one assumes the “name power” of Spielberg and Jackson were enough to guarantee the studio would bankroll two films at once. However, there are other instances where the same factors don’t come into play.

It happened with Sherlock Holmes. It has also happened with the upcoming Conan the Barbarian. It has happened with the upcoming Green Lantern, which seems a bit risky given the difficulty DC has had with superheroes who aren’t Batman. There are countless other examples as well. While history has vindicated some examples, there are plenty of reasons in favour of particular films getting green-lit sequels, but there are also plenty of reasons to worry. However much the studios might hope a given movie will succeed, it always seems sort of risky to make big investments like that.

They werent racing to make a sequel...

However, even if one casts aside all those sequels green-lit before the release of the original film, it’s still fascinating to look at the movies which did get sequels as measured against those that did. Let’s begin by comparing two potential “franchise launchers.” Take Bryan Singer’s Superman Returns, an attempt to relaunch the superhero for a modern generation. The big blue boy scout earned $200,000,000 in the US and $191,000,o00 overseas, as against a $270,000,00 budget (so $120,000,000 profit). This wasn’t enough to earn a sequel and – years later – we’re finally getting a reboot. So this gives us an idea of how profitable a movie can be and not earn a sequel.

In contrast, Tron: Legacy has recently earned a formal announcement that it will be receiving a sequel. Made on a budget of $170,000,000 (which makes me wonder how Superman cost so much), the film took only $172,000,000 at the US box office, making most of its money ($226,000,000) overseas (so $228,000,000 profit). The fact the people seem relatively surprised at this announcement would suggest that this is somewhere around the lower end of profitability for a movie to spawn a sequel.

Maybe the disc sales were great?

So if we assume that somewhere are 125% profit worldwide (actually around 132%) is the threshold, I find myself wondering why some films don’t earn sequels. Consider, for example, Kick-Ass. Produced on a budget of $30,000,000, it made $48,000,000 at both the US and foreign box offices (for a total of $96,000,000, or 220%, profit). And yet apparently there is unlikely to be a sequel, despite the fact that a similar model works for low-budget horror franchises (where you keep the budget so low you can’t help but make a profit).

Even if we discount the financial basis of any sequel-related decisions that come from the major studios, I find myself wondering how they decide which old franchises to revive. After all, in the past few years we’ve seen belated sequels to Indiana Jones and the Last Crusade, Wall Street and Tron – with the same sort of thing planned for Blade Runner. Obviously, again, the talent involves comes into it. I’m fairly sure that if Spielberg strolled into a meeting and declared he wanted to make a sequel to 1941 (arguably the only financial bomb in his career), the executives would probably nod along. So that, at least, explains thinks like Indiana Jones and Star Wars.

A rare Indie movie to spawn a sequel...

Still, I’m a little perplexed that executives seem to believe that they can take films (like Tron and Blade Runner) which arguably underperformed decades ago and release them to huge success. I mean, obviously it worked with Tron: Legacy, and that’s great, but not all attempts to resurrect classic properties have worked so well. It seems like a huge gambit. You could just as easily end up with Land of the Lost. I guess you’re figuring on the cult fanbases of these films to generate a steady stream of revenue – counting on those who discovered the films on VHS to go to the cinema this time, but I’d still love to be a fly on the wall at those meetings.

I don’t know. This is one of those things where I can see the lose principles at play. I can understand a lot of decisions, even if they don’t conform to a standard logic. At the same time, some choices do seem quite a bit irrational (in particular, the decision to move forward with a Green Lantern film before the first is even released), but what do I know?

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15 Responses

  1. It’s very difficult, I think, to determine the total profitability of a movie. Studios get specific percentages for specific markets and time periods (first 2 weeks), for example. It’s hard to gauge how much actual profit they’re making without having all this info.

    You also have to consider TV, DVD, merchandise and licensing. Tron: Legacy has plenty of opportunity in this area that other potential franchises might not.

    Superman Returns is probably an exception rather than the rule. This may sound harsh, but it was the Batman and Robin effect. Both movies made a decent amount of money but dug the franchise into a hole creatively. Was anyone really aching to see a sequel to either movie? Thus, the profitibility of a sequel might be in jeopardy.

    Finally, it all comes down to human judgement. Executives aren’t robots; they have their own pet projects and babies that they green lit due to poor judgement. Or sometimes they won’t for movies that deserve it. I don’t know.

    • Yep, I suppose you’re entirely correct. It is a personal judgement. Studios push what they want. And I think you’re right, there’s more than just the movies themselves involved. I imagine that Tron is being pushed as one of the first heavy-duty family-friendly 3D franchises that the studios can actually control (as opposed to Avatar, which Cameron has), which is probably why it’s such a big deal for them. Similarly, Green Lantern is a huge deal for Warners, if only because Harry Potter is coming to an end, and they need to see if they can churn out their DC properties.

  2. I was really hoping that Disney would hold off for another 15-20 before updating Tron (wishful thinking, I know). The leap in technology was really the only factor that legitimized “Legacy” being made at all.

    • I think you’re right to an extent, but I’m one of those people who embraced the narrative simplicity of Legacy. It was a Disney Princess movie, only with a prince instead of a princess – all the same ideas and themes incorporated.

      I’m more worried about the lack of Jeff Bridges in the sequel.

  3. Not sure that Superman Returns or even Tron Legacy are good examples as they are both likely to have been significant money loser for studios. However, in this case, Superman Returns was likely a bigger loser than Tron Legacy given the higher cost.

    In the case of Kick Ass, you can see that it didn’t even make 50 million at the North American box office, so it didn’t even reach minor blockbuster status. There is absolutely no reason for the studio to make a sequel to that given that the studio barely broke even at best.

    • The studio spend just over $30m on Kick-Ass though, and made $90m. That’s about three times the profit, not factoring in home media (where I figure a cult hit like that will really take off). Any movie that returns three times what was put in is surely a good investment, regardless of scale. Obviously a $100m movie which makes three times the investment is even better, but I wouldn’t sneeze at a 300% return.

      It’s close enough to the model of the horror films which flirt with the same sort of budget and the same sort of profit (there are exceptions, like the Saw franchise which has an insanely high rate of return).

      • Well in the case of Kick Ass. $30 million is just the production budget, add in an average $25 million for marketing, that’s already $60 million in cost. Then, from that $96 million in worldwide box office (wow that’s it???), the studio probably gets only about 50%, so less than $50 million, it’s a break even in the very best case scenario.

        Of course, they will make a profit with DVD sales, cable licensing etc… but that’s not part of the conversation 😉

  4. Superman Returns cost as much as it did because it had millions of dollars dumped on it from several failed move attempts. (reportedly anything from $40m – $63m!) For example the Tim Burton / Nicolas Cage version had begun pre production and test shoots, but when WB pulled the plug they also had to pay out to both Cage and Burton. Superman returns would have had a sequel, but Bryan Singer took time out to make Valkyrie and in the meantime WB decided to just start again instead.

    The box office take of a film is a million miles away from its profit. Just like your wages will have a gross amount that you wish you actually got t keep and a net amount. Or if you pay $1 for Oreos in the super market, that $1 neither goes all to Oreos (or whoever makes them) or to the supermarket. (effectively). Whilst the final net return to a studio can be as little as 40ish% the standard “guestimate” for the industry trades is to take 50% of the global gross and say that is the max that goes toward profits. That tends t balance out the different scales of exhibitor: distributor rates in different countries and at different stages of release, as well as accounting for “some of the tax issues. So the $391m take of Superman Returns is ,AT BEST, a return of $195.5m. That’s less than the shooting budget of the film, let alone the P&A budget too. Tron:Legacy has the same problem; its $400m gross is AT BEST a $200m return; set that against a total budget of $240m (Including P&A) and you have another loss.

    Now getting a sequel has more to it than that, especially with both of these films. Fisrt of all the box office is no longer the only focus. Merely the firt door. Then we have TV sales, DVD, Blu-Ray and more. Perhaps as important, more so with Superman, is licensing. Toys, clothes and other products bring in a lot of money for both Disney and WB. WB is trying to catch up to Marvel, which makes an absolute fortune from licensing its super heroes. (Over 5B a year). Meanwhile DC which is part of WB, makes far, far less). The movies add a lot of money t this, and it is not including a single penny from the films themselves. When Marvel Studios had the 1 – 2 of Iron Man and The Incredible Hulk,in 2008, their licensing revenues jumped up over $8000m! So you can see how even an unsuccessful Superman at the box office, has the potential to make the company money elsewhere and hence get a sequel.

    Warner Bro. are also trying to build a shared universe for their DC heroes, as Marvel Studios have done / are doing for their characters (for which The Avengers marks the end of phase one). Superman is a key part of that as he remains, although far less popular, even more recognisable than Batman and their number one character from a brand recognition standpoint.

    So it’s important to look at the potential of a sequel to make more money at the box office than the previous movie. The money that film may have made for the studio in other areas; licensing, toys, cross promotion. Also to remember that whatever the film grossed, halve it and then take the FULL cost of the movie from that amount. Then you’ll know if it actually made money at the cinema box office or not.

    Kick Ass 2 is coming b the way. The film cost the independent film company $28m and hey got far more than that back. The film was a success for them and sowed every sign that a sequel would do a least as well. The distributor, on the other hand, overpaid for th film and they lost out.
    🙂

    • You make a fair point. I always thought it would be fairer to write off the money from failed reboots rather than snowballing the budget.

      But glad to hear about Kick-Ass 2, even though I was under the impression both Vaughn and Goldman had moved on to other projects.

      • Thanks for answering me; I know it was a long time ago that you original wrote on here.

        Vaughan is hopefully producing Kick-Ass 2, you’re right he can’t direct it, which is a shame. Goldman is an excellent screenwriter and I know she has plenty of work to do. She’s a big loss, as her interpretation of Millar’s work was very, very good. It made for better film, even though I slightly prefer Millar’s darker story, I think Goldman / Vaughan’s ‘happier’ story made a better movie.

      • No worries. I try to get through most comments. I work a regular week, so I don’t get to do this in “realtime” – most of my posts are written at the weekend and scheduled for the week ahead. So it might take a very long time to get back. (Sadly, I tend to react quicker if people accuse me of stuff or get aggressive, if only because I’ve seen that sort of thing spiral and I don’t like to delete comments.)

        I think Goldman was epic. I actually prefer the film to the book precisely because it isn’t so soul-destroyingly bleak. I thinkw e agree the book wouldn’t have worked on screen if it had been literally transposed.

      • Oh yes, the “internet rage” posts. I get that and fully understand why you reply to those first!

        Goldman’s version is defiantly the one that works on film, there’s not a question about that at all. Good taste that man! 🙂

      • Thanks! And thanks for understanding!

    • That’s meant to be $800m by the way 🙂

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