Two Animated Hits Keep Second Quarter Strong
The second quarter of 2023 started on Friday, April 7th, and ended on Thursday, July 6th, covering film weeks 14-26 of the year. When Q2 began, the industry had just completed a solid Q1 which had produced 135% of the box office compared to Q1 of 2022.
This was a much-appreciated boost for both exhibitors and studios, many of whom were still struggling to recover from the disruptions due to COVID-19. Looking at the first half of the summer, many felt that the current year would struggle to match the year-over-year comps in 2022 when the trio of TOP GUN: MAVERICK, DOCTOR STRANGE IN THE MULTIVERSE OF MADNESS, and JURASSIC WORLD DOMINION had produced over $1.3B in the second quarter alone.
While most believed that the box office would still wind at the mid-point of the year ahead of where it had stood in 2022 at that same point, there was concern that much of the 35% advantage built up during the first quarter would evaporate. Let’s see how Q2 measured up.
Top 10 Second Quarter Movies – Comparing Q2 2023 with Q2 2022
In a dead heat, 2023 nosed out 2022 with $10M more at the box office or one-half of one percent. Given the challenging comps, theatre owners were relieved to see any increase in the second quarter from the year before. The year-to-date comparison between 2023 and 2022 dropped from 135% after the first quarter to 116% after the second quarter.
There were some surprises and some outright disappointments. A cautionary trend exposed itself during the quarter with as many as six high-profile films struggling to reach profitability because of soaring production costs. While theatre owners benefitted from their solid box office, studios were burned when these very expensive films did not meet the lofty expectations for ticket sales.
Pleasant Surprises
Universal opened THE SUPER MARIO BROS. MOVIE on Wednesday, April 5th, two days before the official beginning of the second quarter. After producing an impressive $58,268,865 in its first two days, which were credited to the Q1 total box office number, it powered on to a spectacular opening weekend from Friday to Sunday of $146,361,865.
This would be the highest opening weekend for any film in the first half of the year. THE SUPER MARIO BROS. MOVIE is an animated sequel to the 1993 live-action feature SUPER MARIO BROS. that produced only $21M over its entire run in theatres. Both Nintendo and Universal believed that there was still an opportunity to make gold out of one of the most popular video game heroes of all time.
While pre-release estimates were generally in the vicinity of $200M domestic, the actual response from audiences was much stronger, coming in at $515M domestic during the second quarter. Almost singlehandedly, MARIO nearly equaled the $582M magic that Tom Cruise’s TOP GUN: MAVERICK had produced in Q2 2022
Second Quarter Clash of Number Ones
SUPER MARIO’s eyepopping worldwide total of $1.341B to date on a skinny production budget of $100M assures that there will be many future chapters and steep profits ahead for the budding franchise. The second pleasant surprise for the quarter turned out to be another animated picture.
SPIDER-MAN: ACROSS THE SPIDER-VERSE from Sony opened on June 2nd and surged to a first-weekend gross of $121M. The second animated hit of the quarter came eight weeks after SUPER MARIO, proving that the appetite for animated features was strong enough to support two blockbusters in the same quarter.
Currently, Spider-Man is the hottest of all the superhero franchises, with its most recent live-action movie SPIDER-MAN: NO WAY HOME (2021) producing franchise best box office totals of $814M domestic and $1.9B worldwide. The previous animated film in the series, SPIDER-MAN: INTO THE SPIDER-VERSE also did very in its holiday release in 2018, earning $190M domestically and $384M worldwide. With all this success to build on, how is it that anyone would be surprised by strong results for this year’s ACROSS the SPIDER-VERSE?
Comparing Animated Spider-Mans
Once again, the experts were caught off-guard as SPIDER-MAN: ACROSS THE SPIDER-VERSE has already brought in $357M domestically and $642M worldwide. Pre-opening estimates were about half of those numbers. No one had projected such an increase in its performance numbers. This also paves the way for the next animated Spidey as SPIDER-MAN: BEYOND THE SPIDER-VERSE is targeted to open on March 29th, 2024.
A Cautionary Tale
While theatre owners benefited from studios delivering a steady stream of wide releases throughout the quarter, some studios got burned by spending so much to create these films that they required an exceptional box office to cover those costs. Some of the most expensive films of the quarter did not meet those high expectations, leading studios to reconsider whether to approve massive production budgets for future projects.
The second quarter included several pictures that were able to sell quite a few tickets but remained underwater because of their soaring production budgets. We believe that six of the top ten earners in the second quarter will struggle to get into the black.
Movies with a Very High Production Budget
Studio execs are faced with a conundrum. On the one hand, they are making huge investments to produce movies with big stars and dazzling special effects so they can draw in large audiences who have come to expect an impressive theatrical experience. On the other hand, after investing these large sums, many of these projects will only be successful if they produce unicorn-level ticket sales, which can be a hit-or-miss proposition.
Theatre owners were pleased to see the second quarter this year come in at nearly the same level as last year’s strong second quarter of 2022. However, studios were less universally pleased due to the ballooning production costs. If studios decide to cut back on production costs going forward, it may result in audiences being less willing to pay to see new releases in theatres, which may in turn lead to fewer new releases.
One industry expert suggested that Warner Bros. would have lost less on THE FLASH had the picture never been released to theatres. We hope that this mindset does not take hold. All parties involved have to make a profit for the business model to hold.
