Saturday, November 29, 2014

Penguin Plunge


Before I get started, I'm just going to say one thing... Penguins of Madagascar will probably be profitable. DreamWorks need not worry, I say.

The Friday numbers are in, and Penguins - despite a strong marketing push from Fox and the success of the Madagascar series, particularly the penguins themselves and their own show - took in a rather disappointing $10 million.

As Box Office Mojo's Ray Subers notes, that's only a slight cut above what Rise of the Guardians opened with over the Thanksgiving weekend in 2012. This puts on track for a roughly $26-30 million opening, which is not all that great for a big budget animated family film and it's certainly not impressive coming off of the Madagascar films, the last two installments of that series opened with over $60 million domestically...

But, but, but... Before we determine this movie's fate, let's consider the following...

#1. Penguins of Madagascar is already doing good business overseas. It's scoring in China, and it just opened in several European countries a couple days ago. Some countries don't get it until next month, the UK gets the film on December 5th. It also doesn't have to square off against Big Hero 6 over there. A lot of South America gets it in January; Hong Kong, Taiwan and Thailand get it in February. It's another bracketed release, so it's going to take some time to make its money. The Madagascar series is wildly popular overseas, too. The last one took in over $500 million overseas alone!

#2. Multipliers... That's right. Multipliers. They speak volumes. Rise of the Guardians may not have made more than $110 million domestically, but it getting to $103 million off of a very weak $23 million opening is no small feat. That's actually 4.4x its opening weekend, which is an excellent multiplier for any animated film in this day and age of quick theatrical runs.

Funny, DreamWorks' low openers always pull good multipliers. Turbo opened with $21 million, but it made $83 million in the end, a great 3.9x its opening! Mr. Peabody & Sherman made 3.4x its opening weekend, also very good. I have no doubt the same will happen to Penguins. I can see it now. It'll easily make 4x its opening, because aside from Big Hero 6, it has no competition. 4x its opening weekend will get it past $100 million. It may not top $120 million or so in the end, but again... It'll be fine. The worldwide numbers are going to save it, big time...

So, what went wrong? With box office, sometimes you never know...

Did audiences just not want to see a spin-off featuring the penguins? Did it not look good from the trailers? I don't know, I personally enjoyed both trailers for the film... But I'm not the majority, so I wouldn't know. Is it possible that audiences want the full zoo gang? Remember, Ice Age's fourth installment wasn't a dramatically large dip from the last one... Maybe audiences would've flocked to a fourth Madagascar instead of a penguins spin-off?

Or maybe it has something to do with the Penguins of Madagascar TV show. Maybe to a lot of families and moviegoers, it looked like a 90-minute episode. "Why pay to see that when you can watch it for free?" Some speculated that this was a reason why How To Train Your Dragon 2 didn't fly above $60 million on opening weekend.

Let's look at DreamWorks' first theatrical spin-off film, Puss in Boots. I feel its opening weekend is a similar case. The last three Shrek movies all opened with over $70 million domestically; Shrek 2 and Shrek the Third making over $100 million on opening weekend.

However, I think there was definitely a case of franchise fatigue there. Shrek the Third disappointed many and had a very weak multiplier, making 2.6x its gargantuan $121 million opening weekend gross back in 2007... That adjusts to $143 million today. Shrek Forever After arrived three years later, but it still had some juice in it. $70 million is no easy number for an animated movie to get in this day and age. Shrek Forever After had a much better run than its predecessor, but again, a lot of the general public moved on from the green ogre.

Puss in Boots then arrived one year later, and opened with a pretty small $34 million. I guess many audiences decided to just stay at home or catch another flick that was playing. Then something happened... On its second weekend, it made $33 million, dropping only 3%! It proceeded to hold on like crazy, despite the barrage of animated films and family films opening weeks after it: Happy Feet Two, Arthur Christmas, The Muppets, Hugo... Puss in Boots finished up with $149 million domestically, outgrossing 2010's Megamind which had opened significantly higher, and best of all: That was 4.3x its opening! People must've really liked it!

Penguins of Madagascar currently holds an A- on CinemaScore, and Madagascar is a strong brand so I can definitely see it pulling a Puss in Boots while also co-existing with Big Hero 6.

Speaking of which...

Big Hero 6 looks to make around $19 million this weekend, last weekend it took in $20 million. Excellent hold, and no different from how Wreck-It Ralph performed on Thanksgiving weekend, dropping only 10%. It looks like this new Walt Disney Animation Studios film is going to be stronger than Ralph this holiday season. Now I think the lowest it goes in terms of the multiplier is 3.8x, which means it'll make $212 million at the end of its run. It could go higher though, with holds like this, word-of-mouth will keep spreading and more people will check it out, and so on...

But... Back to penguins... Movie press, before you begin to write those obituaries, consider everything. DreamWorks most likely has a hit on their hands...

UPDATE (11/30/2014): Weekend estimates are in...

Penguins of Madagascar pulled in $25 million (might actually be $26 million when the actuals come in on Monday), so it's just a decent opening. Definitely low, but again, no panicking! No need to deem the movie dead.

Big Hero 6 took in an estimated $18 million, an excellent 6% drop. Wreck-It Ralph, again, dropped 10% on this weekend back in 2012. If it continues to perform like Ralph, it'll pass $200 million. I hope it goes significantly higher, though...

UPDATE (12/1/2014):

Oh look, obituaries being written... From Deadline...

Shares are down more than 5% in mid-day trading as analysts debate whether the studio will have to take another write down following recent ones for Rise of the Guardians, Turbo, and Mr. Peabody and Sherman.

And get a load of this hyperbole that Deadline also scooped up:

More important, the disappointing results bolstered bears’ fears that DWA will continue to dive after a 12 month period in which it lost more than 31% of its market value. Next spring’s Home looks "uninspiring," B. Riley Co’s Eric Wold said this morning. That, plus the likely move of B.O.O.: Bureau Of Otherworldly Operations from its planned summer release, paint a bleak picture "to investors or potential acquirers of the studio," per Wold.

Wow... More doom and gloom for DreamWorks! A bleak picture because B.O.O. is moving, probably to a release date that'll help it, and because Home looks- wait, wait, wait! Home looks uninspiring? To who? To this guy, yes. Anyone else? You never know, a lot of audiences could be looking forward to DreamWorks' new alien picture. And some might not be... Just because one person sees it as "uninspiring" doesn't mean everybody will think that way. You never know with audiences. Hey, who would've thought caveman adventure Croods would've caught on? Or a movie about an overweight panda learning kung fu? Or heck!

Just wow...

And then there's this pessimism...

Sterne Agee stock picker Vasily Karasyov predicts that Penguins will generate $105 million at domestic box offices, far below the pre-release consensus of $175 million. That could result in a write down if the film can’t drive at least $350 million overseas. And he’s pessimistic that international sales will be 3.3 times domestic. "The highest ratio for a DreamWorks Animation title in the last five years was Kung Fu Panda 2 at 3.0; this ratio for Puss in Boots which is a good comparable title is 2.7," he says.

Puss in Boots took in $405 million overseas alone. Shrek Forever After was the biggest Shrek film overseas, how much did it make? $513 million. Madagascar 3 made $530 million, so if Penguins has a similar overseas drop, it'll still make over $400 million in other territories.

Okay, so $350 million is 3.3x the projected $105 million domestic gross... How is that unusual? Kung Fu Panda 2's ratio is 3.0x for a reason, the domestic gross was high enough. The domestic gross here won't be, and that'll hold the film back from performing well overseas? I don't know about that. If other markets eat it up in ways that the US isn't, it'll do well - US underperformance or no US underperformance.

It seems like people are just looking for ways to be debbie-downers. I don't know, the flack DreamWorks gets every time a film of theirs fails at the box office is astounding. The constant obituary-writing, the constant doom-n-gloom/"this studio's gonna die" spiel... I think people just want to pile on DreamWorks. Why? Because they had a long successful streak of animated movies? Probably, it's "cool" to pick on a successful person/group who has tripped up.

Penguins will do just fine. $105 million plus $300 million (2.8x the projected domestic total, which I think is the floor for the film, overseas) puts it as $405 million, more than double the film's $132 million budget.

If it doesn't, I'll eat crow... But can we please refrain from predicting that the film will be a disaster and/or a problem for DreamWorks?

Deadline, however, does note that some out there (thank goodness) are "a little more optimistic"...

Cowen and Co’s Doug Creutz expects it to be "comfortably profitable," although he warns that he may have to take down his profit estimate for the company of 57 cents per share next year. "We remain concerned that DWA’s product is losing cachet among audiences due to heavy competition," he says. The company’s efforts to diversify into TV and consumer products may not pay off "given the decreasing interest in their product and IP at the box office."

I'll have to disagree on competition being DreamWorks' problem, I think it's a case of their movies not looking good to audiences...

Also...

Janney Capital Markets’ Tony Wible sees some glimmers of hope for Penguins, although it underperformed "even the most conservative tracking estimate" and likely will fall short of expectations. The film has "a favorable window with limited competition over the next month." And audiences liked it judging by the A- rating at CinemaScore. International sales also "are disproportionately important for the Madagascar franchise” and Penguins faces a staggered release schedule through early January. "It will take longer to see if some markets can help compensate for the weaker U.S. open, but our $467 million total [international box office estimate] seems aggressive."

Now that's more like it!

You know what I say? It'll be just fine...

5 comments:

  1. Dreamworks needs to find a new distributor ASAP. They aren't doing nearly as well under Fox as they did under Paramount.

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  2. I take back what I said. I looked at Box Office Mojo, and I think it's entirely possible for this thing to do Puss in Boots numbers.

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  3. I do agree on that one, Gray. DreamWorks needs a new distributor now. Fox is ruining DreamWorks's CGI outputs like Mr.Peabody & Sherman. As for you, Kyle's Animated World blogger, I do agree that DreamWorks needs a better marketing tool. DreamWorks needs to step away from McDonald's. Why is McDonald's still doing DreamWorks? McDonald's has to stop making Happy Meal DreamWorks toys. But no, all America Happy Meal toys wants is gender specific Happy Meal toys and DreamWorks. That's all America's Happy Meal does and never stops. Seriously, McDonald's's DreamWorks Happy Meal toys has to go. DreamWorks's McDonald's Happy Meal toys has to go. By the way, nice articles on DreamWorks's ramblings.

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  4. Next weekend, I expect that both Penguins and Big Hero are going to drop hard. Family movies typically fall hard over the post Thanksgiving frame, unless they're Christmas or holiday themed. Since neither of them are, both films should fall between 55 and 60 percent this weekend.

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    1. Well to be honest. Family movies like Walt Disney Animation Studios CGI movies will not appeal Thanksgiving. Family movies only appeal summer. Walt Disney Animation Studios should've released CGI movies in summer instead of November. But no, Bob Iger and Walt Disney Animation Studios screwed over the release dates for Walt Disney Animation Studios CGI movies. Disney needs to bring back November Pixar releases and luckily, The Good Dinosaur will be Disney's first November Pixar release since 2004's The Incredibles next year. If Disney needs to bring back traditional animation rather than making nothing but CGI movies, then Disney will have no problem keeping traditional animation alive.

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