Will Lionsgate Soar on Hunger Games Success?
With $155 million in three days, The Hunger Games now holds the third-most successful opening weekend in movie history.
But are investors hungry for more, or are they already full?
Less than one week ago, I wrote a detailed analysis of the potential success and pitfalls The Hunger Games could face at the box office. “Analysts are predicting that the film will gross between $70 and $100 million during its opening weekend (March 23 through March 25),” I wrote on March 22, just hours before the film's midnight debut. “This is certainly feasible. And with so many Hunger Games fans in America, I personally think that the film could eclipse the $100 million mark by $10 or $20 million.”
My fear, however, was that the film wouldn't be able to achieve this level of success. And when I arrived at the theater on Thursday evening, I wondered if my fears were correct. With only six midnight showings (compared to 20 for the last Twilight and Harry Potter flicks), The Hunger Games wasn't drawing that large of a crowd. From what I could tell, my particular showing wasn't even sold out.
This made me wonder: is it a fluke? Is it the area? Are there other parts of the country where The Hunger Games was more likely to succeed?
Whatever the case, it seems as if the less-than-record-breaking midnight showings (which, to be clear, were still record-breaking among non-sequels, but not when compared to the likes of Twilight) didn't matter. In the end, The Hunger Games still managed to break a few records.
While investors were expected to exit Lionsgate (NYSE: LGF) now that The Hunger Games has been released, the film's success might be enough to make them stick around a bit longer – and invest further in the stock.
The real test, however, might not come for another week. Historically, spring and summer blockbusters open big and drop off significantly in the second week. With The Hunger Games' box office estimates at $155 million, there's almost no way the film won't drop by 50% in the next six days. But even then Lionsgate would bank another $77.5 million. That's enormous for the second-week haul of a sequel. And for a non-sequel, that's almost impossible to believe.
But The Hunger Games has achieved what some would say is the impossible. Fifteen months ago, when Lionsgate began its hype machine for this long-awaited book adaptation, I was under the belief that Hollywood was desperate for a Twilight replacement. With so many studios trying to copy the success of the vampire saga, who wouldn't think that? It's not as if film studios are opposed to the idea of copying another production company's work. They do it all the time.
Where The Hunger Games differed, however, was in the simple fact that its source material was nothing like Twilight. That didn't stop Lionsgate from playing the Twilight card because it knew that if it mentioned the hit vampire film enough times, it might work to its advantage.
But the studio's love of Twilight did not end with its marketing campaign for The Hunger Games. In January, Lionsgate acquired Summit Entertainment, the production company behind the Twilight films, for a little over $400 million. Unfortunately, now that the Twilight saga is nearing its end, it seems unlikely that Lionsgate will enjoy the profit margins it could have experienced if it had acquired Summit in 2008 when merger talks first began.
That's not to say that Lionsgate is about to post a loss – far from it. While the $400+ million debt may be hard for some investors to swallow, the LA Times reports that The Hunger Games could provide Lionsgate with $300 to $400 million in profit.
Thus far, The Hunger Games has made $59 million overseas, bringing the film's worldwide total to $214 million (in revenue). With franchise estimates in the $1.5 to $2 billion range (for all four films combined), analysts are expecting The Hunger Games to be an enormous source of profit for Lionsgate. And with a reported budget of just $78 million, the first Hunger Games film likely cost more to promote worldwide than it did to produce. The second film will likely be a more costly affair, if only to cover the salary increases for cast and crew. But in terms of special effects, the first sequel does not need to be more expensive. But knowing Hollywood, it probably will cost more anyway.
The third and fourth films (part 1 and 2 of the final book) are likely to be much more expensive, as they deal with a greater degree of action, violence, and visceral combat. That is, assuming the filmmakers don't change the story and adapt it for a soft PG-13 rating, as opposed to an envelope-pushing PG-13 rating that will make parents scream, “Why isn't this rated ‘R'!?”
It's too early to say if moviegoers are satisfied enough to return to the theater for a second viewing of The Hunger Games, and then again for the upcoming sequels. But if these fans are anything like those who devote themselves to the Twilight saga, expect The Hunger Games series to be very profitable.
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