What a surprise. It’s Monday morning and JHM is running yet another “Cars” -related story.
Okay. I know. A lot of you have already had your fill of this subject. Particularly those of you who have had a hard time accepting the premise that I’ve been trying to float for the past few months. Mainly that a movie that’s earned (to date) $239.5 million during its initial domestic run, making it the second highest grossing motion picture of 2006 (so far), could still (in certain circles, anyway) be considered a disappointment.
No matter how many investment analysts & reporters I quote from and/or pertinent stories that I link directly back to, there are still JHM readers who flat-out refuse to accept this premise. They just can’t believe that anyone in Tinseltown and/or the investment community would ever actually think this way about this particular movie.
Well, as it turns out, I’m no longer the only writer who’s noticed the negative impact that Wall Street’s initial financial projections has been having on Hollywood’s attitude toward this year’s crop of top grossing films. This past Friday, Laura M. Holson of the New York Times actually wrote an in-depth article about this very same subject, “Caught on Film: A Growing Unease in Hollywood.” Where — thanks to the investment community’s inflated expectations for Tinseltown’s supposedly-just-can’t-miss blockbusters — even …
” … Films like the Peter Jackson “King Kong” (are now) considered disappointments, despite bringing in $549 million at the worldwide box office.”
As I read Ms. Holson’s story … I gotta tell you, folks, I felt this weird mixture of vindication and deja vu. I mean, here was a reporter from one of America’s leading newspapers basically saying what I’d been saying for the past three months. Hell, this particular NY Times article even went so far as to bolster the claims that Roger Colton had made in last Thursday’s column, “The Cold Streak That Just Wouldn’t End,”) when Laura went on to talk about how …
” … even profitable Warner movies are cause for anxiety because Hollywood is quick to label anything a loser that does not meet prerelease expectations.
For example, “Superman Returns” by Warner cost $209 million to make and (president of the studio Alan F.) Horn predicted it would garner $400 million at the worldwide box office (a respectable sum), which he said ensured a profit after DVD and television sales. But many in Hollywood expected it to bring in at least $500 million given Superman’s popularity and the publicity around the movie’s release. Mr. Horn said, “People are asking, ‘Are you disappointed?’ I don’t know how to relate to that. I don’t know what to say.”
Okay. So hopefully this NY Times article will finally be enough to convince a certain segment of JHM’s readership that what I’ve been trying to tell you guys this summer (I.E. That these days in Hollywood, it’s not enough that your film just makes a whole lot of money. Nowadays — in order to be considered a real success — your motion picture not only has to be a blockbuster. It also has to meet the initial financial projections that the investment community has laid out for that particular production) is — in fact — true. That this is the way that people-in-power in Hollywood & Wall Street are actually thinking & talking these days.
So now can we please put this particular discussion to rest?
No?!
Well, I guess I should have expected as such from all you die-hard “Cars” fans out there. You guys are just never going to accept the fact that this John Lasseter film failed to meet Wall Street’s original expectations. That they were hoping for a “Finding Nemo” -sized hit from Disney this summer and didn’t get one. Which is why the investment community (as well as a significant number of Mouse House executives) are somewhat disappointed with how this Pixar production has performed at the box office.
“But … But … But …,” you “Cars” defenders sputter. “Even if this John Lasseter film did miss the investment community’s initial financial projections for its domestic run as well as under-perform overseas, that’s not going to matter come November 7th. For once ‘Cars’ finally comes out on DVD, this Pixar Animation Studios film is sure to make beaucoup bucks.”
Well, that is true. The DVD version of “Cars” is almost certain to make a fortune.
Copyright 2006 Disney/Pixar
Of course, when I say ” … make a fortune,” what I really mean is ” … make as much money as this disc possibly can during the first six weeks that it sits on store shelves.”
“Why just six weeks?,” you ask. Well, this is where the Big Box stores — particularly Wal-Mart — enter the retail equation. Now you have to understand that nearly 40% of all new DVDs that are sold these days are now sold at Wal-Mart. With 50% (and sometimes — in the case of a very popular, highly anticipated film finally coming out on DVD — 70%) of those sales happening in the first seven days that these discs are on store shelves.
Now the downside of this situation is … Well, given how tightly the Big Boxes control their inventories these days, a new DVD is only given a limited amount of time to take up shelf space. Typically after just six weeks time, the majority of these discs are then packed up and sent back to their original distributor. Which (in spite of all the recent talk about how the “long tail” theory is supposedly transforming the retail world) severely limits a studio’s opportunity to continue to cash in on a particular title.
You may recall how this returning-unsold-DVDs-to-their-original-distributor practice was actually what got both Dreamworks & Pixar in trouble back in the summer of 2005. When each of these animation studios were forced to restate earnings-per-share projections for that quarter. Thanks — in large part — to the huge financial impact of Wal-Mart, Best Buy and Target suddenly returning millions of unsold units of “Shrek 2” & “The Incredibles” had on Dreamworks & Pixar’s original financial forecasts for these two films.
Now if the prevailing retail conditions weren’t already making it pretty difficult for these “Cars” discs to achieve record sales, let’s consider what other popular recent Walt Disney Pictures release will also be coming out on DVD during the 2006 holiday season? That’s right, “Pirates of the Caribbean: Dead Man’s Chest.” Which is due to hit store shelves on December 5th of this year.
And given that the investment community (just as they did with “Cars” theatrical release) will be carefully monitoring sales levels for the DVD version of this John Lasseter film (And if these discs don’t sell all that well … Well, look for all that talk about how the Walt Disney Company supposedly paid too much for Pixar Animation Studios to get considerably louder) … Well, Disney Consumer Products is now looking for ways to artificially extend the shelf life of “Cars” DVDs.
Among the concepts that DCP is now pushing on the Big Box stores is the “Cars” feature store. Which would literally be a smallish store-within-the-store that would feature “Cars” merchandise. And among the items that would be prominently displayed in this feature store would be (surprise, surprise) the “Cars” DVD.
Look for these “Cars” feature stores to pop up in your local Wal-Mart, Target and Toys ‘R’ Us during the first week of November (Just in time for the DVD’s release). Then look for these specialty store-within-the-store to stay in operation all the way through to the after-Christmas sales. Thereby artificially extending the sales of these discs by at least 2-to-3 weeks.
Sooo … Will all this additional effort (More importantly, high sales figures for the DVD version of this Pixar production) finally be enough to convince Wall Street that “Cars” was actually a success? Or is this John Lasseter film still doomed to be labelled “Pixar’s first disappointment”?
Your thoughts?