The Changing Logic of Making Hollywood’s Next Blockbuster Franchise

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In 2018, Into the Spider-Verse garnered acclaim and won an Oscar for Best Animated Feature. Eric Charbonneau/Getty Images for Sony Pictures

Like it or not, Hollywood relies on franchises as its lifeblood and studio executives would sell their souls (and likely have) for a hit film series they can milk for years. Marvel, Jurassic World, Lord of the Rings—these types of tentpole titles bolster and subsidize entire movie slates while virtually guaranteeing high floors at the box office. These franchises generate repetitive cash flow, often sparing executives from the hot seat during challenging times for theaters.

But blockbuster franchise development has changed dramatically in the last 15 years alongside the financial model for success. To understand the challenges facing studios—and the hows and whys behind the good and bad big budget flicks delivered to audiences—we need to track those changes, and how they’ve impacted the creative and business side of things, and ask a central question that the industry is still navigating: is raw box office or audience goodwill more important to the creation of a successful franchise? 

The criteria of a successful franchise have changed 

In 2013, DC’s Man of Steel earned nearly $670 million worldwide against a $225 million budget, qualifying it for blockbuster status. In 2018, Sony’s Spider-Man: Into the Spider-Verse earned $384 million against a $90 million budget, cementing profitability but not reaching the roughly $500 million blockbuster threshold. So why did the latter receive a sequel while the former never got a direct follow-up? 

Defining success is difficult today because there isn’t one uniform rubric of achievement (although films that fail to turn a profit almost never receive sequels). Instead, the required criteria differ from project to project as studios value varying elements depending on company goals. 

“Studios look at a wide range of factors depending on the target audiences,” Shawn Robbins, founder of Box Office Theory, told Observer. “An adult-oriented series like John Wick or Dune has very different metrics to reach than something like Inside Out 2 or Despicable Me 4. For the latter and similar examples, the box office is just the start of an equation that expands to include an entire world of merchandising opportunities.”

At the time of Tim Burton’s Batman in 1989, the studio calculus for franchise building may have included external merchandise sales but still largely revolved around a film earning enough simply to justify a sequel. When that didn’t happen, studios could just as easily pivot to a Julia Roberts romcom, a Keanu Reeves action flick, or an adult-skewing drama to help fill the void. 

The 2012 Marvel team-up hit, The Avengers, created a model that all of Hollywood attempted (mostly unsuccessfully) to chase: the shared cinematic universe. Studios began trying to build franchises and, more importantly, entire brands out of single films. Suddenly, Bloodshot, The Mummy and Man of Steel were no longer just responsible for a standalone franchise, but entire cinematic continuities that occupied release real estate 10 years into the future on paper. 

“The new normal resulted in a movie not just trying to make money for itself, but being measured by the harm or good it does short- and long-term for the planned avalanche of multimedia content that is meant to follow,” Scott Mendelson, a Puck contributor and the founder of box office newsletter The Outside Scoop, told Observer.

With this change, movie franchises have also become more global. Non-U.S. ticket sales are a growing share of global film revenue. In 2009, domestic ticket sales comprised an average of 41.3 percent of the revenue for the top 15 Hollywood films globally. By 2019, that number had shrunk to 34.5 percent. Today, the average demand for the 10 most in-demand movies worldwide is 31 percent greater than the top 10 in the U.S. alone, according to Parrot Analytics, where I work as Senior Entertainment Industry Strategist. A worldwide appeal has become imperative to large-scale success. “If you want to be successful, you have to be global,” Warner Bros. Discovery (WBD) CEO David Zaslav said during the company’s most recent earnings presentation.

This trend has required studios to program for a broader array of audiences across the globe, which has led to strategic creative changes (though China is no longer as significant of a contributor as it was in the 2010s). Depending on which companies own the international distribution rights, that money could ultimately be split into a number of different pieces as well, which complicates the total profit picture. 

The structural meaning of a franchise changed with The Avengers, resulting in a benchmark of success that was far harder to reach as studios saddled single films with the expectations of an entire business model engine. At the same time, the target audience widened, which put pressure on the creative side and occasionally created challenges in profiting outside of the U.S.

“Each franchise lives and breathes on its own merits, so the key is for studios to remain persistent in observing certain trends and cultural evolution in terms of what moviegoers are going to see, when and why they’re going to see it,” Robbins said.  

So what matters more: box office or audience goodwill? 

While Man of Steel, which launched the DC Extended Universe, divided audiences and critics, Into the Spider-Verse garnered acclaim across the board and won an Oscar for Best Animated Feature. Despite lower box office numbers than Man of Steel, its universally positive reception paved the way for a hugely successful breakout sequel, Across the Spider-Verse, which grossed $691 million worldwide. 

“The currency of goodwill is more important than dollars and cents,” Paul Dergarabedian, a senior media analyst at Comscore, told Observer. “You can effectively kill the golden goose and stop a franchise in its tracks if you mess up the content part of it irrespective of the budget level.”

Of course, a film needs to actually earn money to become a proper franchise launcher, but raw box office can often play a bigger role than pure profitability, Dergarabedian noted. If a film generates big box office totals but isn’t highly profitable, it still reflects significant demand for that title and those characters. Budgets can be controlled but viewer affinity is an unpredictable variable to be capitalized upon when it arises. 

A franchise can exponentially raise revenues and become a long-term annuity for any company that is fortunate enough to grab hold of one. When deciding if a single title warrants the franchise treatment, you have to “look at everything alongside the numbers,” Mendelson explained. “How much money did it make? How quickly or slowly? If it made money slowly and was still earning in weekends three, five, seven and nine, that tells you something. Moviegoers were telling their friends to go see it in theaters. There was consistent word-of-mouth.” 

The first film is the foundation of any franchise. A shaky start, like John Carter, Mortal Engines, or Tomorrowland—or even misfires on soft relaunches such as recent Terminator sequels—dooms the chances of building a vast cinematic universe or successful standalone franchise. Conversely, strong debuts like the first Harry Potter and Batman Begins set the gold standard creatively. A franchise thrives on a combination of positive reception and box office success, with audience acclaim holding more weight, as long as the film isn’t a financial flop. 

Batman v Superman was the precipice of the new normal as it was unsuccessful in a very new way,” Mendelson said. “There aren’t many movies that can make nearly $900 million and correctly be seen as a disaster.” 

Yes, major film studios need franchises to make the economics of theatrical movie-making work. But Comscore’s Dergarabedian warns of the increased reputational risk in the social media era that could One that can make or break a studio’s bottom line and the CEO’s job security. “Every studio dreams of having a franchise, but be careful what you wish for because once you get it and you blow it, it’s one of the most high-profile blunders you can make in Hollywood,” Dergarabedian said. 

The Changing Logic of Making Hollywood’s Next Blockbuster Franchise

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