Year-End Box Office Wrap 2010: Winners and Losers Chart, Warners Leads Domestic Market Share

It was feast or famine at the 2010 domestic box office. The studios spent too much on too many uber-flops, but thanks to holdover Avatar and premium 3-D ticket prices, they enjoyed their second-best year at the domestic box office with $10.46 billion, off less than 2% from 2009’s all-time haul of $10.6 billion. The theatrical buoyancy of 3-D inflated the average stub from $7.46 in 2009 to $7.85 in the third quarter (per the National Association of Theater Owners). But the real trend is worrisome: higher ticket prices plus static turnstiles equals fewer butts in seats. Admissions fell 6% from 1.42 billion in 2009 to 1.33 billion last year. 

In the face of the industry's anxiety-provoking shift to digital, the majors are trying to stay upbeat. Twentieth Century Fox's failure to abandon a seven-year-old production strategy yielded a weak 2010 domestic slate (from Marmaduke to Gulliver's Travels) with a domestic total of $918 million. But the studio was able to claim fourth place thanks to 2009 carryovers Avatar ($408.4 million in 2010) and Alvin and the Chipmunks 2 ($63.7 million in 2010), which boosted their annual take to $1.39 billion (down 4% from 2009). Plus, Fox made up for their U.S. disasters abroad, nearly tying Warner Bros.'s industry record of $2.93 billion. The Burbank studio also claimed the domestic crown for the third year in a row with $1.88 billion (down 12% from 2009).

Anthony D'Alessandro's Winners and Losers box office charts are below: they show return-on-investment by weighing a film's negative cost against domestic "rental" (the share of ticket sales returned by theaters to distributors).

Despite the downturn in admissions, recession-worn Americans were still spending at the cinema. They flocked to 3-D, if inconsistently: families resisted paying full freight for animated CG films such as Toy Story 3 ($415 million) and Despicable Me ($251.2 million), evident in the format’s 50-60% draw during opening weekends. But the majority of four-quadrant crowds--80%-plus--soaked up Alice in Wonderland in 3-D. But more audiences sampled Avatar and Alice in Wonderland in the visual format at the start of the year than at the end. Exhibitors have rushed to meet distributors’ demand for 3-D, pushing their screen counts for the format up 99% from 4,400 in May to 8,770 by the start of December.

“There are more screens, so a theater can now handle anywhere from two to three 3-D films at one time,” says Paramount distribution exec vp Don Harris, whose studio took second with $1.742 billion and catapulted five 3-D titles past the century mark at the domestic B.O.: Shrek Forever After ($238.4 million), How to Train Your Dragon ($217.6 million), Megamind ($144.2 million), The Last Airbender ($131.6 million) and Jackass 3D ($117.1 million).

It remains to be seen how the 3-D story will play out in 2011, which promises 30 3-D titles. Are film fans dying to see Smurfs 3-D and Final Destination 5?

Even when 3-D musicals (Step Up 3D, domestic B.O. $42.4 million, $125 million foreign) and routine sequels (Resident Evil: Afterlife, $60.1 million domestic, $223 million) didn’t generate waves at home, they outperformed abroad by more than threefold.

Theatrical, which had lost ground to DVDs, the internet and TiVo during the early part of the century, is again the leading film revenue stream against declining DVD sales and fledgling VOD ancillaries. Instead of building DVD libraries, consumers are embarking on unforgettable visual trips: IMAX’s global B.O. doubled to a new record of $546 million over 2009’s $270 million, in large part due to such films as Disney's Alice in Wonderland ($334.2 million) and Tron: Legacy ($133.6 million). “It’s like that feeling you get before leaving on a cool trip," IMAX filmed entertainment chairman-president Greg Foster exclaimed to Screen Daily about 3-D fare. "You have butterflies. Audiences enter the theater with this feeling: This is where I want to be.”

The majors met both hurdles and opportunities during 2010:
 
Diverse slates vs. failed franchise start-ups:
Warner Bros. charted the top spot in 2010 because it ran its slate like a marathon with 27 releases, more than any major, across a range of genres: guy comedies (Due Date, $99.2 million), chick pics (Valentine’s Day, $110.5 million) and risky franchise start Inception ($292.6 million). 

Observed Warner Bros. domestic distrib chief Dan Fellman, "Our company has been able to handle a full release schedule that's north of 20, and we'll continue to do so. Looking at 2011, we have 24-25 movies. It's interesting because the industry trend has been to reduce wide releases, but we've been successful with this [formula]."

Paramount leaned on sequels (Iron Man 2) and DreamWorks animated films (How to Train Your Dragon, with more to come in 2011). 

Earning $1.47 billion (+22% vs. ’09), Disney under movie rookie Rich Ross invested in family tentpoles like Alice, but churned out too many costly also-rans (including Jerry Bruckheimer's Prince of Persia and The Sorcerer's Apprentice) resulting in unwieldy marketing/production bills. 

Fox placed bad bets on a string of brand-name titles (The A Team, $77.2 million) and star vehicles (Tom Cruise’s Knight and Day cost $117 million vs. domestic B.O. $76.4 million).

Sony at $1.28 billion (-11% vs. 2009) produced a schedule that constantly posted No. 1 bows, but dropped the ball at year's end with two expensive flops, James L. Brooks' $110 million How Do You Know and $100-million Jolie/Depp vehicle The Tourist.

Under new studio leadership, Universal generated $885 million and planted a flag in the animation field with Illumination's home run Despicable Me. “We had an OK transitional year," says U distrib chief Nikki Rocco. "We had what we had and did the best we could." The studio weathered several pricey bombs--war movie Green Zone, VFX-crammed Scott Pilgrim vs. the World and the problematic The Wolfman--but minimized their exposure through their co-financing deal with Relativity Media which can fund up to 75% of the studio’s slate. Coming up: Christopher Meledandri's live-action/animated Hop, starring Russell Brand as the Easter Bunny, Vince Vaughn in Ron Howard's The Dilemma and DreamWorks' western Cowboys vs. Aliens, starring Daniel Craig and Harrison Ford.

Indie Summit’s $519.6 million 2010 tally (+8% vs. 2009) was bolstered by The Twilight Saga: Eclipse ($300.5 million), the series’ highest grosser stateside, as well as a series of solid performers such as Roman Polanski's The Ghost Writer and adult ensemble RED.

Lionsgate built its $514.1 million (+28% vs. 2009) on a lean and mean mix of low-budget genre pics including macho adult actioner The Expendables. Cash-generator Tyler Perry's attempt to go upscale, For Colored Girls, was a misfire.
 
Ill-fated marriages between stars and concepts:
In the wake of such disasters as Jolie/Depp in The Tourist ($54.6 million) and Witherspoon/Wilson in How Do You Know ($25 million), the star system seems to be faltering. The issue is more about pairing stars with the right scripts. Jolie and Depp fans prefer their stars in action fare.  Witherspoon followers want their favorite blonde to be flirty, not glum and whiney. One star who is in actual peril stateside is Russell Crowe, who couldn't even pull audiences to a $200-million Ridley Scott action epic (Robin Hood, $105.3 million domestic), much less low-budget thriller The Next Three Days, $21.1 million). With the right epic, Crowe can still work abroad.
 
Marketing overspending:
The majors continued to fail to curb their ad spending. Paramount spent $280 million on producing and marketing The Last Airbender, which grossed $319 million worldwide. Weren't media congloms’ vertical integration intended to save the media conglom's money, especially when they exploited a property through various ancillary streams? But big-spender Disney, even with its theme parks and the Disney Channel, laid out $100 million-plus to promote Tron: Legacy and Prince of Persia.

Although studios reduced costs by shrinking output (releasing fewer films, 110 in 2010 vs. 121 in 2009) and trimming specialty units, their marketing spends continue to rise with their tentpole budgets. The majors should capitalize more on guerrilla opportunities and sync with their media partners. Sony fueled The Karate Kid’s opening by teaming up with Justin Bieber on the film’s song “Never Say Never." And Lionsgate deployed the brilliant Chatroulette promo for The Last Exorcism.
 
Banking on fanboys:  
Just because a film generates enormous hype at Comic-Con doesn’t mean it’s destined to be a crossover success. Word-of-mouth pushed Lionsgate to acquire Kick-Ass ($48.1 million), Universal to overspend on Scott Pilgrim vs. The World ($31.5 million), and Disney to heighten expectations for Tron: Legacy.  Among comic-book adaptations, Paramount’s mighty sequel Iron Man 2 ($312.1 million) is the notable exception, but it was an already-established property.

Poor holiday scheduling:
The majors fumbled Memorial Day ($192.7 million off 13% from 2009) by choosing to unspool chick pic Sex and the City 2 and video game adaptation Prince of Persia against the frame’s robust four-quadrant sequels. While the holiday season was bound to be lower than last year’s historical Avatar high (Christmas weekend's $139.9 million was off 48% from 2009), even so a cluster of family-centric films (Little Fockers, The Chronicles of Narnia: Voyage of the Dawn Treader and Gulliver’s Travels) were going up against James Cameron's signature tentpole.
 
Adult dramas rally: 
With fewer studio classic films in the market this fall, the majors filled the void with commercial adult fare. By constraining spending on titles that could play both at the Landmark and the multiplex, they turned smart movies into cash cows (True Grit, estimated final domestic $125 million-plus, The Social Network, $93.2 million, Red, $89.5 million and The Fighter, estimated final domestic $70-$85 million). As the adult audience grows and youngsters become less reliable moviegoers, that could just be the ticket.

[Additonal reporting by Sophia Savage.]