2023 Summer Box Office Has Been Much Better for Theaters Than for Studios

As the 2023 summer box office reaches its halfway mark, the season so far has been defined by a couple of bona fide hit films outweighed by several tentpoles from multiple studios that have flopped against their immense budgets.

But even those flops have contributed to a second quarter that has seen a 15% improvement over last year’s box office, which means the current theatrical marketplace has been much better for cinemas than for studios.

“The success of movie theaters is based on the profitability of all movies, not just a single one,” said Comscore analyst Paul Dergarabedian. “Getting seats filled and popcorn sold is the key goal for theaters, and whether they’re succeeding is judged from a 30,000-foot view, while studios are looking for a return on investment especially on these big blockbusters. There are synergies within those goals, but success and failure isn’t always completely aligned.”

From the first weekend of May through July 4, the domestic box office has kept up the pace of last year with $1.88 billion grossed so far. The July and August slate coming up should significantly improve over last year, which saw a months-long drought begin in late July.

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So far this year, it has once again been Marvel that has yielded the highest turnout from moviegoers. Disney/Marvel Studios’ “Guardians of the Galaxy Vol. 3” is the season’s top grosser with $355 million domestic and $835 million worldwide, and Sony Animation’s “Spider-Man: Across the Spider-Verse” has crossed $600 million worldwide against a reported production budget of around $100 million.

But alongside these films, there have been several movies that have hit theaters with budgets of $200 million or more — sometimes way more — and haven’t climbed out of the red. Universal’s “Fast X” has grossed nearly $700 million worldwide, but the potential studio profit from those grosses has been eaten up by a “Fast & Furious” record $340 million production budget before an immense marketing budget that included a premiere in Rome.

Paramount’s “Transformers: Rise of the Beasts,” after a hopeful opening weekend in early June, took a hard fall as the month wore on and has grossed $381 million so far against a reported $200 million budget, still short of the $468 million global total of the 2018 spin-off “Bumblebee.”

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The trend continued this past weekend, with Disney/Lucasfilm’s “Indiana Jones and the Dial of Destiny” opening well short of what a film with a near $300-million production budget needs to earn. And the mid-budget “Ruby Gillman: Teenage Kraken” suffered the worst opening in DreamWorks Animation history. Similar fates befell Pixar’s “Elemental” and DC’s “The Flash,” with the former now using its strong word of mouth and overseas legs to cut its theatrical losses while the latter has collapsed so quickly that it has risked poisoning the well for the other DC films coming out this year.

But for an example of how box office results can mean different things for theaters versus studios, look at Disney’s remake of “The Little Mermaid,” a film that recently crossed $500 million worldwide but carries a $250 million budget before marketing and has underperformed overseas compared to past Disney remakes.

For theater chains, the running $283 million domestic total of “Little Mermaid” is one they will gladly take, as it currently stands fourth among all films this year. Among the films it has outgrossed are Lionsgate’s “John Wick: Chapter 4” and MGM’s “Creed III,” films that did turn a profit for their studios against their smaller budgets. Even if those films had more favorable ticket revenue split terms for theaters than Disney — such terms are kept confidential between studios and exhibitors — that strong turnout from “Little Mermaid” also brings valuable downstream revenue through increased concessions sales, which are the lifeblood of the theatrical business.

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In fact, Disney, which has taken plenty of rough headlines from this site and other trade news outlets for recent underperformances, is still the top studio at the box office this year with nearly $1.4 billion grossed domestically and $3.4 billion worldwide, according to data from the studio and Comscore, thanks in large part to “Guardians of the Galaxy Vol. 3” and early-year holdover grosses from “Avatar: The Way of Water.” Universal is just behind on the domestic charts with $1.14 billion, roughly half of that coming from “The Super Mario Bros. Movie,” with Sony in a very distant third with $592 million.

This has created the ironic situation in which Disney is getting squeezed by both the rising costs of producing and marketing these massive tentpoles and diminished returns for several of its titles, yet it’s still the primary force that has allowed the momentum theaters enjoyed from Universal’s “Super Mario Bros.” in April to continue into May and June as the studio has contributed over $850 million in domestic grosses so far this summer, accounting for 44% of all domestic revenue over the past two months.

“When you’ve got more skin in the game, you’re going to be judged more,” said Dergarabedian. “Disney, which has been on top for so long, has really stuck its neck out there releasing so many tentpoles in such a short time, and while not all of them are profitable they are showing confidence in the theatrical experience and that people are returning to cinemas.”

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The growing divide between a film’s success and failure for studios and for theaters who don’t need to worry about production and marketing expenses goes beyond Disney. With the exception of “Ruby Gillman,” all of the movies listed above have or will have domestic totals of above $100 million.

So while last summer saw theaters rely on the overwhelming success of “Top Gun: Maverick” with the assistance of “Doctor Strange in the Multiverse of Madness” and “Jurassic World: Dominion,” this summer has seen theaters get support more evenly from a wider number of titles. By the end of next weekend, there will be eight films with domestic totals of more than $100 million, the same number seen through all of summer 2022, resulting in more consistent theatrical business from week to week.

Could things be better? Of course. If films like “Fast X” and “The Flash” had performed as well critically and commercially as past installments of their respective franchises and family titles like “Elemental” and “Ruby Gillman” did half as well as “Across the Spider-Verse,” we’d probably be looking at a running summer total much closer to pre-COVID levels. As it stands, the running domestic total for the summer stands around 12% behind that of 2019, according to Box Office Mojo.

This trend of big budget risks is likely to continue into the second half of the summer. Disney will take a step back — but not entirely, as it will release “Haunted Mansion” in late July — while other studios put out high-profile titles in the hopes of getting some much-needed hits.

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Foremost among these films is Paramount’s “Mission: Impossible — Dead Reckoning,” marking Tom Cruise’s return to theaters after the triumph of “Top Gun: Maverick” last year. But like “Indiana Jones and the Dial of Destiny,” “Dead Reckoning” sports a reported budget of nearly $300 million thanks to pandemic production delays and inflation.

The good news is that the first wave of reviews for “MI7” have been as strong as the franchise has ever seen, so “Dead Reckoning” may see its five-day opening weekend improved from its currently projected $75 million-85 million opening. But it will take all of Cruise’s box office drawing power to help this film turn a profit in a way that other summer films at this budget level haven’t.

Warner Bros.’ “Barbie” and Universal’s “Oppenheimer” have much smaller reported budgets at $100 million, but the stakes are high for these movies too. Warner Bros. hasn’t had a film gross over $150 million domestic since “Elvis” last summer and $400 million worldwide since “The Batman” in spring 2022. After “The Flash” bombed spectacularly, it’s now up to Barbie and Ken to give Warner a much needed theatrical hit.

Universal, meanwhile, is hoping with “Oppenheimer” that Christopher Nolan’s sterling reputation with cinephiles and mature audiences will turn this deadly serious biopic about nuclear weapons into a hit at a time when movies about serious subject matter have struggled theatrically. Theaters would also like this very different breed of summer movie to work, as Nolan and Universal have negotiated three weeks of exclusive Imax play.

Still, these films along with August titles like “Blue Beetle,” “The Last Voyage of the Demeter” and “Strays” should provide a higher floor of box office performance than last year, so even as studios continue to grapple with how to produce top-tier blockbusters that don’t become too expensive to be profitable, theaters should still see progress as the march out of the COVID darkness continues.

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