Summer Box Office Bombs

Summer Box Office Suffers Historic Decline in U.S.

by Pamela McClintock

From left: 'The Mummy,' 'Transformers: The Last Knight,' 'The Dark Tower'From left to right: Courtesy of Universal Pictures, Paramount Pictures and Sony Pictures

By the time Labor Day weekend wraps, summer box-office revenue in North America will end up being down nearly 16 percent over last year, the steepest decline in modern times and eclipsing the 14.6 percent dip in 2014. It will also be the first time since 2006 that summer didn't clear $4 billion.

That's according to comScore, which is predicting that revenue will come in at roughly $3.78 billion (a 15.7 percent decline). Attendance also plummeted, and is almost assured of hitting a 25-year low in terms of the number of tickets sold, according to Box Office Mojo.

The sequelitis virus that first invaded Hollywood last year only grew worse this summer. A number of franchise installments underperformed domestically, including Transformers: The Last Knight ($132 million), The Mummy ($80.1 million) and Pirates of the Caribbean: Dead Men Tell No Tales ($172 million). While Pirates 5 certainly fared the best, it paled in comparison to the previous installments.

The good news for a worried Hollywood? The international box office — which is up more than 3 percent year-to-date — helped save a number of summer event films that underperformed in the U.S. Pirates 5 has grossed $618 million overseas for a global total of $790 million, while Transformers 5 stands at $604 million globally after earning $474 million offshore. And The Mummy scared up $328 million abroad for a worldwide cume of $407.8 million.

Summer titles that all-out bombed domestically include King Arthur: Legend of the Sword, Valerian and the City of a Thousand Planets and The Dark Tower, which kicked off an especially brutal August.

Another sore point was R-rated comedies. Baywatch, The House and Rough Night all bombed despite impressive star wattage. The only film to break the R-rated curse was Malcolm D. Lee'sGirls Trip, from Universal and producer Will Packer, which has earned $108.1 million to date.

"The lesson for Hollywood this summer is that every movie counts when it comes to box office and there are no 'throwaway' titles," says Paul Dergarabedian of comScore. "At least three tentpoles missed the mark in North America as well as a handful of R-rated comedies that left audiences frowning, and the missing revenue from those failures could arguably have left a $500 million-plus void in the marketplace — enough to turn a potentially strong $4 billion-plus summer season heavyweight into a 98-pound weakling."

The tentpole winners of summer were Guardians of the Galaxy Vol. 2, which earned $389.4 million domestically and $862.8 million globally; Wonder Woman ($406.2 million/$806.2 million); Despicable Me 3 ($254.5 million/$971.7 million); and Spider-Man: Homecoming ($318.8 million/$737 million). Smaller gems include Baby Driver and Annabelle: Creation.

Year-to-date, domestic revenue is down 5.7 percent, while international revenue is up nearly 4 percent.

How AI might make "digital humans" Hollywood's New Stars

AUGUST 25, 2017 6:45am PT by Carolyn Giardina

How Artificial Intelligence Will Make Digital Humans Hollywood's New Stars

Illustration by: Wren McDonald

Script supervisors, editors, CG artists and actors all had better look out: "It's all over by 2045 — we are no longer running the show."

Following Paul Walker's death in 2013, the Furious 7 filmmakers faced the delicate task of finishing the film using a digitally created version of the actor. To do so, they resorted to performance capture with the help of the actor's brothers, Caleb and Cody, as well as painstaking computer animation from a team at VFX house Weta. That was state-of-the-art in 2014. But imagine if, instead, a computer could have stepped in, watched all of Walker's performances in the previous Furious films, learning the minute details of how he walked, talked and even raised an eyebrow. And then imagine that artificial intelligence took over and itself helped to create a digital performance for Walker's character.

This isn't so far off. Now that the use of computer graphics is commonplace in movies and TV, artificial intelligence may be the most important technology to emerge in Hollywood. Potential AI-driven applications — in which the machine takes over and can learn and think for itself — could function as script supervisors, take a first pass at film editing, even create performances either for digital characters that resemble actual humans or more fantastic CG creatures. While that may sound like something out of Blade Runner or Westworld, the truth is, such technology could have a huge impact in the areas Hollywood cares about a lot: schedules and budgets, by shortening production times and bringing down costs.

Creating believable digital humans — still considered the most difficult VFX feat — could be the ultimate test of the emerging tech due to the "uncanny valley," the phenomenon in which human replicas that are not quite human-seeming essentially creep people out (certainly, not the best way to drive people into theater seats). "Digital humans are increasingly important in films. But if your data is too sparse, it doesn't look right," says Chris Nichols, a director at Chaos Group Labs and key member of the Digital Human League, a research and development group. "We are using AI to fill in the gaps. The whole concept of AI is dependent on data training itself. The more data you have, the better the system works." Such techniques have not yet been used in a mainstream movie. But, theoretically, AI could do the job of creating a digital "Paul Walker" faster and more economically than current methods.

Right now, AI is best at filling in the blanks after a character already has been sketched out, either from an actual performance or by CGI artists. Another application could come into play in a movie like Guardians of the Galaxy Vol. 2, in which footage of current-day Kurt Russell and reference shots of his younger self were combined to "de-age" the character. AI "does sound magical," says Nichols, but "it's not exact data. It's interpreted data — interpreting the missing parts."

Stephen Regelous, a SciTech Academy Award recipient for the development of Massive, an AI-driven software that was first used to create the huge armies in Peter Jackson's The Lord of the Rings series, sees potential for AI in the animation world as well. His Massive system was used for that purpose on a recent animated film, though he declined to reveal his client. "You can shave off tens of millions of dollars from the budget of an animated feature," he says. In a matter of seconds, AI could animate a character, a labor-intensive process for a CG animator. "With Netflix and other streaming services [adding to the volume of production]," adds Regelous, "AI can help produce animation more quickly, and they need ways to improve their efficiency."

AI also could be used to create individual characters in live-action movies. "In Planet of the Apes, it could be an alternative to performance capture, [which was used so that Andy Serkis could play the hero Caesar]," says Regelous. "At some point, you'll be able to create an actor that doesn't know he's not real."

That could pose some thorny issues in the not-too-distant future. "The question of the ethics — whether you should do this or not — is still there," warns Nichols. Motion pictures such as 2001: A Space Odyssey and AI: Artificial Intelligence are cautionary tales about AI-trained computers and robots rebelling, and futurist-entrepreneur Elon Musk already has voiced fears of "a fleet of artificial intelligence-enhanced robots capable of destroying mankind." That possibility was suggested recently when Facebook, which already uses AI for editing news feeds and targeted ads, reportedly shut down an experiment in which a pair of AI-driven robots ended up creating their own language that defied human comprehension.

"It's all over by 2045 — we are no longer running the show," predicts Regelous. "They will become so smart, and this won't be about motion pictures. They will be curing cancer and fixing global warming." But Regelous doesn't envision a bleak future. "Anything significantly smarter than us is going to value us. It will think, feel love and value life," he says, adding, "I hope I'm right. Otherwise, we are screwed."

Courtesy of Epic Games

If an AI-created digital human character — like this example from the Digital Human League — is to be believed, one of the key tests is the eyes.

Courtesy of Epic Games

This story first appeared in the Aug. 23 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

AUGUST 28, 2017 8:00am PT by Carolyn Giardina , Jon Alain Guzik

Why Hollywood Could Make Billions From Self-Driving Cars

Illustration by: Wren McDonald

In-vehicle entertainment for passengers may translate to big business for studios: "Can the windshield be the movie screen of tomorrow?"

For the past 18 months, a river of money has been flowing between Detroit and Silicon Valley. In March 2016, GM spent $1 billion to acquire self-driving car startup Cruise Automation. More than 10 automakers, including Tesla, Audi and Mercedes-Benz, have set up autonomous vehicle development labs in Silicon Valley. Even Apple has its own model in the works, seen driving itself on the Cupertino streets of the new $5 billion Apple Park campus. With an estimated 21 million new connected cars (or vehicles with internet access) on the road in 2017 in the lead-up to fully autonomous vehicles hitting the streets over the next decade, it's no wonder that a 2016 Ernst & Young report projects that in-car streaming entertainment could bring $20 billion in incremental revenue to the industry.

"Our mobile lifestyle is expanding into cars — that is the next journey for entertainment. Hollywood is an important part of that discussion," says Ted Schilowitz, futurist at Paramount Pictures. He points out that while passengers will continue to use personal mobile devices, a self-driving car could deliver a more sophisticated offering of movies, TV and games as well as emerging platforms such as virtual, augmented and mixed reality. In a driverless car, "there's a lot of real estate," says Schilowitz. "If you look at the windshield and windows, they are 'screens' at the right distance to be entertainment portals. Can the windshield be the movie screen of tomorrow?"

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How Artificial Intelligence Will Make Digital Humans Hollywood's New Stars

Right now, the technology is in a development stage. Says Alex Hilliger, advanced engineer at Mercedes-Benz Research & Development North America: "We're re-envisioning the automotive experience. The vehicle could have a lounge atmosphere, and the passengers face forward or backward. If you don't need a steering wheel or driver's seat, the car can be a new space."

The broadcast industry is positioning itself for this scenario: Its next-gen broadcast standard (known as ATSC 3.0) brings together internet and live over-the-air signals with mobility for delivering video-on-demand content, Ultra HD (4K resolution) and High Dynamic Range TV. "In cars, that might mean riders view network or new types of programming," says ATSC spokesman Dave Arland. "Broadcasters are interested in conversations with automakers. ATSC 3.0 is a very big [content] pipe into the car."

Courtesy of Mercedes-Benz

The Mercedes-Benz F105 Luxury in Motion research car concept has a "lounge atmosphere" with new space for media.

Though it will be a few years before the technology is widely used, "deployment will start almost immediately," as the first version is expected in the fall, says Arland. Revenue models will be in place even sooner: "We could deliver interactive, geolocated advertising based on nearby shops, restaurants and businesses," says Dennis Wharton, executive vp at the National Association of Broadcasters.

With such capabilities, experts are wondering if in-car entertainment services — like in-flight entertainment — are on deck for driverless vehicles. Says Schilowitz: "Multiple studios are looking at this and meeting with strategic partners. I'd guess that they are all looking at it."

Viewing a movie that has been edited and packaged for in-car consumption is only the tip of the iceberg: Think content customization prompted by facial, voice and gesture recognition. "Artificial intelligence will be permeating every aspect, from monitoring what's going on outside the vehicle — making sure the road is clear and safe — to a robust in-car AI system that recognizes who is in the car via facial recognition," says Danny Shapiro, senior director of automotive at tech developer NVIDIA. "The content personalization possibilities are endless and will be based on a voice-activated and gesture-based system. The telcos, content providers, game developers and e-commerce companies will be transacting business within the car. We'll also see new types of interfaces — we can even turn the whole interior of the car into a holodeck."

This story first appeared in the Aug. 23 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

Studio-by-studio profitability rankings at the 2016 Box Office

Studio-by-Studio Profitability Ranking: Disney Surges, Sony Sputters

  

6:30 AM 2/20/2017

 

by Georg Szalai

'Rogue One' and 'Captain America' help Disney CEO Bob Iger score a third straight No. 1 ranking with $2.5 billion in profit in 2016, but others face a brutal year in THR's annual breakdown of money at the six majors.

'Rogue One: A Star Wars Story' and 'Ghostbusters'

Courtesy of Lucasfilm; Courtesy of Sony Pictures

Hollywood ended 2016 with big gains in TV and a record-shattering $11.4 billion box-office haul thanks to superheroes, The Force and a string of animated hits.

But not everyone in town is crowing; last year was lopsided when it comes to profitability. The six major studios collectively pocketed $5.2 billion, down 20 percent from 2015. Analysts blame the challenging traditional home entertainment market and a focus on expensive tentpoles, which can mean a huge payday or major headaches in case of a dud. Plus, of course, the size and strength of each studio’s slate and the timing of releases and marketing spend always affect results.

While some studios had record years and succeeded with established box-office franchises, others failed to ignite excitement with known properties.

Case in point: Two studios posted losses last year for the first time since THR began tracking profitability in 2009. Sony and Viacom's Paramount were the money losers, eclipsed by a record take by industry juggernaut Disney.

And 2017 might be another year of the haves and have-nots: "I see competition in the film landscape increasing," says Drexel Hamilton analyst Tony Wible. "This has made it more difficult for some studios to keep momentum in current franchises and to cultivate others."

The Hollywood Reporter's annual look at studio profits for the latest calendar year follows the release of financials for the fourth quarter of 2016. Figures aren't always directly comparable. After all, several companies have fiscal years that differ from the calendar year, and Time Warner, Fox and Sony include big TV production businesses, which provide a big percentage of their profits, while other companies don't.

The annual figures nonetheless provide insight into how 2016 looked for major studios beyond the traditional Hollywood focus on box office. Here is a closer look at each company.

• Walt Disney

  
  

  

  Disney

  
  

  The giant led by chairman and CEO Bob Iger finished its third straight year at the top of THR's rankings thanks to Captain America: Civil War ($1.15 billion in worldwide box office), Rogue One: A Star Wars Story ($1.05 billion) and Finding Dory ($1.03 billion). That trio, among others, pushed Disney's film profits up 4 percent to a staggering $2.53 billion. Also packed into the financial results was Star Wars: The Force Awakens, which started its theatrical run at the very end of 2015 and last year hit the home entertainment market. 
• Time Warner

  
  

  

  Courtesy of Warner Bros.

  
  

  The Warner Bros. parent reached its highest profit ever with $1.7 billion thanks to DC superheroes and Harry Potter. The studio's TV production arm remains a key profit driver, and it released three big-box office tentpoles in 2016, Batman v. Superman: Dawn of Justice ($873 million), Fantastic Beasts and Where to Find Them ($811 million) and Suicide Squad ($746 million), along with such smaller breakouts as Sully and The Conjuring 2. New Line's Lights Out was also a strong performer, earning close to $150 million at the global box office with a budget of $5 million. Overall, Warner celebrated its most profitable film slate in nearly a decade. Consumer products are also a growing source of strength. Warner Bros. consumer products revenue increased close to 40 percent last year, helped by the franchise-led slate, and the company expects this to continue. 
• 21st Century Fox

  
  

  

  
  

  Deadpool killed it for Fox. The anti-hero hit helped the studio with a $783 million global box-office haul. Add to that the $544 million that X-Men: Apocalypse brought in (though a disappointment), and a TV production business that is a profit engine, and the studio posted a $1.3 billion profit, up 21 percent from a weak 2015, making for the strongest gain among all majors last year. Strong home entertainment performance from The Martian and a licensing deal with Hulu for the Showtime hit Homeland also helped the unit. Looking at 2017, the overperformance of Hidden Figures will mostly benefit the new calendar year since the wide release of the film (now over $150 million in the U.S.) falls into the year, even though the movie was first released in a limited run in 2016 for awards purposes.
• NBCUniversal

  
  

  

  Courtesy of Universal Pictures

  
  

  Universal faced a tough comparison with its 2015 profit of $1.23 billion, a studio record driven by three billion-dollar grossers: Jurassic World, Furious 7 and Minions. Earnings nearly were cut in half in 2016 to $697 million amid a dearth of established mega-franchises, leading to lower theatrical and home entertainment revenue. Its big movies in 2016 were The Secret Life of Pets ($875.5 million) and Sing ($502.3 million). (Television is not included in NBCU's filmed entertainment unit.)
• Sony

  
  

  

  Courtesy of Sony Pictures

  
  

  On the bright side, Sony delivered a $440 million profit for the studio last year — not counting a $962 million impairment charge because of write-downs on the weakened home entertainment market and the 1989 acquisition of Columbia Pictures. The charge led to a loss for 2016 as management continues to look to reinvigorate the studio unit. Its TV production and global networks operations have been strong performers, while film has been more mixed and faced challenges. The highest grossers for the year were The Angry Birds Movie ($350 million) and the rebooted Ghostbusters ($229 million), a disappointment. By comparison, Sony's 2015 James Bond hit Spectre made $855 million worldwide, though Sony's ultimate haul was limited by partners MGM and the Broccoli family. 
• Viacom

  
  

  

  Lula Carvalho/Paramount

  
  

  After recording a $25 million profit for 2015, the company's Paramount Pictures unit last year remained at the bottom of the rankings by posting its first calendar-year loss ($364 million) since THR began its annual calculations. The drop is even steeper if one includes a $115 million impairment charge for Monster Trucks. The studio had a string of disappointments, including Teenage Mutant Ninja Turtles: Out of the Shadows, Zoolander 2 and Whiskey Tango Foxtrot. New Viacom CEO Bob Bakish has made the movie studio a key priority in the ambitious turnaround plan he announced Feb. 9. Bakish told THR: "I'm optimistic about the direction of Paramount, but there is a lot of work to do."