Dino Soars Again : Why Invest in a Sequel? Tour Spielberg’s ‘World’

Steven Spielberg is ambivalent about doing sequels, but it’s probably safe to assume that the world’s most successful director and producer has few regrets about having made a follow-up to his 1993 blockbuster, “Jurassic Park.”

It’s also safe to assume that the other major profit participants in “The Lost World: Jurassic Park”--the film’s financier and distributor, Universal Pictures, and author Michael Crichton, whose books are the basis for the sequel and its predecessor--are equally elated.

Spielberg & Co., who cleaned up on “Jurassic,” stand to make another fortune on “Lost World.” Spielberg and Universal, essentially 50-50 partners on the movies, walked away with about $300 million each on “Jurassic.” Spielberg’s cut of the profits on “Lost World” are even greater, as is Crichton’s, though the writer’s are considerably less. Neither took any upfront fees.

“Jurassic Park,” the world’s top-grossing movie of all time, netted a pure profit of close to $700 million. Although blockbusters of this kind are rare, Hollywood studios are willing to risk upward of $100 million on their big movies in the hope of capturing such dinosaur-sized paydays.

“It allows us to build value across all of our businesses from consumer products to home entertainment to theme parks,” Universal Pictures Chairman Casey Silver said.

Released a week ago, the “Jurassic” sequel has taken in $100 million in record speed, and industry analysts believe it has a good shot at besting the $916 million the original collected at the theatrical worldwide box office.

Spielberg--who now owns his own studio, DreamWorks SKG, with Jeffrey Katzenberg and David Geffen--is more cautious: “In my opinion, ‘The Lost World’ will not equal or surpass ‘Jurassic Park’ either domestically or internationally,” he said Thursday through a representative.

The industry’s rule of thumb is that sequels generally gross 60% of the originals. “Lost World” will certainly beat those odds.

It’s believed that “Jurassic” generated as much as $3 billion from all revenue sources, including worldwide box office, videocassette and television sales, merchandising and such intangibles as theme park attractions.

In worldwide merchandising, the original movie amassed $1 billion in retail sales, according to Jim Klein, president of Universal’s consumer products group, and “Lost World,” he said, “is looking significantly bigger than ‘Jurassic’ from a merchandising standpoint.” Klein said a number of retailers, in more than 10,000 locations nationwide, “are out of stock” on various merchandise items, including toys, apparel and consumables such as cereals and candy.

Klein said that collectively, Universal’s promotional sponsors, which include Burger King, General Mills, Kodak and Mercedes-Benz, “are spending $250 million in media dollars on the property.”

Brad Globe, head of consumer products for DreamWorks who has worked with Spielberg for 14 years, said of “Lost World” merchandise: “We’ve never seen anything like this . . . it’s selling at levels that well surpass the first film--the stuff is blowing off the shelves.”

Studios typically earn royalties of 10% to 12% on the wholesale merchandise revenues, which for “Jurassic” was about $500 million to $700 million.

Industry analysts like Hal Vogel, of Cowen & Co., predict that the ultimate impact of “Lost World” in terms of a total revenue generator, could be “about equal or more” than “Jurassic” given the film’s strong start.

Universal executives, while hoping that the current momentum will drive the film to even greater records than its predecessor, are reluctant to make projections.

“If I could predict that, I’d be doing something else with my life,” said Nikki Rocco, Universal’s president of distribution. But, taking an educated guess, Rocco said: “We think the picture will certainly get into the high twos [$200 million, domestically], but we don’t know what the legs are.”

“Legs,” in Hollywood parlance, refers to how long a movie can sustain itself in the marketplace in the face of competition.

“Lost World,” which had little competition when it debuted last weekend, has nothing to worry about until the weekend of June 6, when an onslaught of big summer movies, beginning with Disney’s “Con Air,” flood the marketplace.

Rocco said “Lost World” is doing “summer business and it’s not even summertime.” Kids won’t be out of school until mid-June--and kids on summer break translates to bigger box office.

Industry observers believe the sequel will gross more than $300 million domestically (“Jurassic” grossed $357 million) and could very well outperform “Jurassic’s” international take of $559 million, mainly because of the expansion of foreign markets over the last four years. There are more multiplexes overseas, newly opened or expanded territories in Asia and Eastern Europe and television has exploded on a global basis.

“Hopefully, it all translates into more money,” said Nadia Bronson, Universal’s executive vice president of international marketing. The film kicked off its overseas release Thursday in Australia and will roll out through October with its final destination, France.

Bronson said Universal keeps upping the number of prints it will go out with based on the strong domestic performance. In Japan, which was the highest-grossing territory for “Jurassic” with $120 million, the distributor will go out with 345 prints of “Lost World” compared with 237 on “Jurassic.”

Within a couple of weeks, “Lost World,” which cost $78 million to produce and an additional $60 million or more to market worldwide, is expected to recoup all of its expenditures (including overhead and interest) for Universal.

Because of the favorable terms that studios have with theater owners on the initial releases of their big movies, Universal is expected to earn about 75% of the gross in the first week. Essentially, the distributor and exhibitor split the box-office take in half by the time a movie has played out its run.

One source estimated that by the time “Lost World” breaks even, Spielberg will have earned about $35 million.

As the world’s most successful filmmaker, Spielberg has the best deal in Hollywood. He takes no salary--no upfront fee--and hasn’t for more than a decade, opting rather to take a huge chunk of the profits on his movies.

He gets paid both as a director and a producer, the latter through his pre-DreamWorks company, Amblin Entertainment. It is believed that, as a director, he will receive 17.5% of the first-dollar gross on “Lost World,” a slight bump up from the 15% he got on “Jurassic.” That means he gets 17.5 cents on every dollar off the top that comes to Universal. Additionally, after the film breaks even, Spielberg and Amblin share 50-50 in the balance of profits.

Crichton, who sources estimate made $10 million to $15 million on “Jurassic,” cut himself an even better deal on the sequel. This time, he took no money upfront (on the original he was paid about $2 million for his book and screen adaptation), in exchange for 4% of first-dollar gross. (On “Jurassic,” he made fixed amounts of money at different levels of the gross.)

“He’ll make even more this time,” said the source. “And Steven will probably make even more than Universal, which is unheard of.”

As for the possibility of Spielberg doing another “Jurassic” sequel, he said through a spokesman: “Please, let me sample the feast already on my plate.”

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Jurassic Profits

Steven Spielberg’s “The Lost World,” the sequel to his 1993 blockbuster, “Jurassic Park,” earned $100 million at the box office more quickly than any other film. It is sure to become one of the most profitable films ever made, along with its predecessor. Although Universal Studios will net substantial income on its investment in the film, Spielberg could potentially walk away with even more cash than the studio.

No Slouch at the Box Office

“The Lost World” is the first movie in history to reach $100 million at the box office after six days in theaters, beating last year’s “Independence Day” by a day.

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Movie Days Opening date The Lost World: Jurassic Park 6 May 23, 1997 Independence Day 7 July 3, 1996 Jurassic Park 9 June 11, 1993 Batman 10 June 23, 1989 Batman Forever 10 June 16, 1995 Mission: Impossible 11 May 22, 1996 Batman Returns 11 June 19, 1992 Twister 12 May 10, 1996 Terminator 2: Judgment Day 16 July 3, 1991

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Source: Exhibitor Relations Co.

Steven Spielberg’s Deal

The most successful movie maker in the world, Spielberg has the most lucrative deal in Hollywood. It’s estimated that he earned about $300 million on “Jurassic Park” and has even more favorable terms on “The Lost World.”

Spielberg, who accepts no upfront salary, will share in the profits both as a director and a producer. As a director, he will earn 17.5% of all revenue that comes to Universal (known in the industry as “first-dollar gross”), up from 15% on “Jurassic,” sources say. As a producer, through his company Amblin Entertainment, Spielberg shares 50-50 in the balance of profits with Universal after the studio recoups its production, marketing and other costs.

Michael Crichton’s Deal

The author of the books that spawned the “Jurassic” movies will earn 4% of first-dollar gross. Crichton also took no upfront money on “The Lost World,” but his share of the profits could bring him $20 million or more, well above the estimated $10 million to $15 million he earned on “Jurassic,” sources say.

“Jurassic Park” Track Record

Estimated worldwide revenues

* Theatrical box office

Total: $916 million

Domestic: $357 million

Foreign: $559 million

* Merchandise sales (retail): $1 billion

* Video

Total: $500 million

Domestic: $300 million

Foreign: $200 million

* Television: $150 million, including $50-million network sale to NBC

* Estimated profit to Universal and Spielberg: $700 million

* Theme parks: Not calculable*

* After Universal built its Jurassic Park ride at Universal Studios Hollywood last summer, attendance increased 35%. Universal is scheduled to open a park in Florida with a Jurassic ride In the summer of 1999.

Sources: Industry executives