‘Hunger Games’ to deliver more than $300 million in profit to Lions Gate
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The blockbuster opening weekend of ‘The Hunger Games’ — which debuted with an estimated $155 million — will ultimately lead to more than $300 million in profit for independent studio Lionsgate, analysts predicted Sunday.
And with three sequels to come, the franchise as a whole is expected to deliver $1.5 billion or more to the Santa Monica company’s bottom line.
That’s a significant success for Lionsgate, which has posted net losses in its last four fiscal years and struggled to up its game in film production. While it has scored with a variety of genre and prestige pictures like ‘Saw’ and ‘Precious’ and has a growing television division, the studio last year took losing bets on several high-profile flops, including ‘Conan the Barbarian’ and the Taylor Lautner action-thriller ‘Abduction.’
Media analyst Monica Dicenso of JP Morgan predicted that the first ‘Hunger Games’ film will produce $310 million in profit and the series as a whole will generate $1.5 billion. James Marsh of Piper Jaffray said the numbers could be even higher, with more than $400 million from the first movie and $2-billion-plus for the entire series.
This weekend’s release, which cost a little more than $80 million to make (after a tax break) and $45 million more to market, needed to reach about $100 million in domestic box office receipts to break even, according to a person familiar with the picture’s economics who was not authorized to speak publicly. The picture reached that milestone on Saturday.
The ultimate success of the franchise will depend largely on how the movie performs on DVD when it’s no longer in theaters as well as the sales of licensed products.
Lionsgate vice chairman Michael Burns noted Sunday that he had just received an email informing him that ‘Hunger Games’ T-shirts were already selling out in many Hot Topic chain stores.
‘The panacea in the movie business is to find franchises,’ he said when asked to reflect on the meaning of ‘The Hunger Games’ to the studio, which he and chief executive Jon Feltheimer have run since 2000.
‘The idea that we can create some predictability around the most unpredictable part of our business is fantastic,’ he added.
There are several factors in Lions Gate’s favor that should help the company generate even higher profits from the sequels than the first film. The movie’s international opening, for instance, was solid but not spectacular, particularly outside of the English-speaking world, where author Suzanne Collins’ ‘Hunger Games’ novels are not as well known.
Just as the popular’Twilight’ sequels did much better overseas than the original, the same might hold true for Lionsgate’s new franchise.
In addition, with the success of the first film, Lionsgate will be in a position to demand more favorable terms from foreign distributors for the sequels. The independent studio does not handle the release of its movies outside of the U.S. and Great Britain.
One challenge the company faces, however, is the pending departure of motion picture group president Joe Drake. While Feltheimer gave the movie the greenlight, it was Drake and his team who oversaw the development, production and marketing.
Drake and several of his key executives are being replaced by the team from ‘Twilight’ studio Summit Entertainment, which Lionsgate acquired in January.
Lions Gate stock has more than doubled in value since September in part because of anticipation for ‘The Hunger Games’ (as well as the exit of dissident shareholder Carl Icahn). The shares closed at $14.53 on Friday. But with the movie outperforming even the most optimistic expectations this weekend, they could rise again Monday.
— Ben Fritz