A Youthful Year in Pictures

Boys and girls made up a larger share of the moviegoing audience this year, which had a major effect on the profitability of some films.

While the major studios have always known that young males (ages 17 to 24) were a driving force at the box office, even-younger viewers (ages 10 to 16), both male and female, made their presence felt in 1998.

This largely suburban constituency had a major impact on the financial success of films such as “Rush Hour,” “The Waterboy,” “Dr. Dolittle,” “There’s Something About Mary” (despite its R rating) and even the more costly “Armageddon.”

The female segment of that young audience contributed heavily to the success of “Titanic,” “Scream 2,” “Good Will Hunting,” “Ever After,” “The Wedding Singer” and “The Man in the Iron Mask.”

“The demographic bubble of teens and preteens will, over the next five to 10 years, become an increasingly significant audience,” says Disney studio Chairman Joe Roth.

The uncertainties of the world economy, particularly in Asia, hurt all but the A-list pictures.

As a result, some of the major studios began watching overhead more closely and cut the number of releases on their annual slate.

At some studios, the average budget is expected to decline in 1999. Disney, for instance, will average $32 million per film in 1999, well below the $55-million industry average, according to Roth.

Fox expects to have no movies costing more than $70 million, says studio chief Bill Mechanic.

Marketing costs, however, remain untethered.

While the major studios often talk about market share, their actual fiscal health is more complex. Among the factors are shared risks and shared profits on major hits like “Titanic,” “Deep Impact” and “Saving Private Ryan.”

Three studios clearly led in profitability: Paramount, Disney and Fox. Sony made a respectable showing despite only one major profitable hit, “As Good as It Gets,” though it was down from its record 1997. Warner Bros. posted strong revenue in its film division but unclear profitability.

MGM/UA and Universal had a tough time. But the so-called independents New Line and DreamWorks both did well in 1998.

Paramount Pictures and 20th Century Fox released only about a dozen films in 1998 and saw healthy returns on their investments, particularly their “Titanic” co-venture, which generated more than $1.8 billion in revenue.

Several of Paramount’s other films, including “Deep Impact” ($350 million worldwide), “The Truman Show” ($240 million worldwide so far) and “Rugrats” ($90 million to $95 million projected in the U.S.), were break-out successes and the studio had no major disasters in 1998. The studio posted domestic box-office revenues of more than $1 billion. Except for “Truman” and “Rugrats,” Paramount shared the bounty (and the costs) on many of its bigger films. “It takes out the peaks and valleys,” said studio senior executive Rob Friedman, “but we find it an efficient way to run a business.”

Fox also had few costly flops but reached a high-water mark for international revenues of almost $2 billion, with “Titanic” supplying more than $1.2 billion of that.

Other than “Titanic,” which cost more than $200 million, the studio had no other films that cost more than $70 million. And many of those saw a good return on investment, particularly the $25-million “There’s Something About Mary” (which has grossed about $325 million worldwide).

For the second year running, Disney posted more than $1 billion in U.S. box-office revenue, as well as $1 billion overseas. Five domestic releases should top $100 million by year’s end. The major financial successes were “Armageddon” (more than $450 million worldwide), “Mulan” ($240 million worldwide), “A Bug’s Life” (more than $300 million expected worldwide) and “The Waterboy” ($160 million in its U.S. run alone).

There were also some heavy write-downs for Disney on “Holy Man,” “Kundun” and “Beloved.” Some of the studio’s bigger international hits such as “Six Days, Seven Nights” ($160 million worldwide) and “The Horse Whisperer” ($180 million worldwide) didn’t contribute much to the bottom line because they were laden with expensive budgets and hefty profit participation by stars.

For ‘99, Roth is shaving the production schedule, consolidating costs and, apart from the regular animation output, planning only about 15 releases in ’99.

Sony’s release calendar will remain as crowded in 1999 as it was this year. But there are no mega-budget films such as “Godzilla” on the schedule. Even Sony’s highest-grossing films this year, the 1997 holdover “As Good as It Gets” ($385 million worldwide), “Godzilla” ($380 million worldwide) and “The Mask of Zorro” ($200 million worldwide), were compromised by either high production budgets or costly profit-participation deals.

The studio did better with inexpensive youth- or family-oriented films such as “Urban Legend” and “I Still Know What You Did Last Summer.” The company’s flops were largely inexpensive projects.

The profit-to-flop ratio at Warner Bros. was disturbingly lopsided, as one of the most consistent studios in Hollywood continued to struggle. For every good performer--say, “City of Angels” ($200 million worldwide), “A Perfect Murder” ($130 million worldwide) or “Lethal Weapon IV” ($285 million)--there was a costly misstep--”The Postman,” “Sphere” and “The Avengers.”

Universal and MGM/UA were both beset by administrative or financial turbulence. MGM muddled through with two hits, “Tomorrow Never Dies” ($340 million worldwide) and “The Man in the Iron Mask” ($170 million worldwide), but otherwise barely made its presence felt in the marketplace.

Universal was plagued with one disappointment after another, starting with “Primary Colors” and “Mercury Rising” and ending with the twin disasters “Meet Joe Black” and “Babe: Pig in the City.”

The year-end arrival of “Patch Adams” was the first bright light at the end of the studio’s hitless year and a half.

New Line Cinema, which is owned by Warner Bros. parent Time Warner, turned out several notable hits, starting with the modestly profitable political comedy “Wag the Dog” ($60 million worldwide). The company hit pay dirt with “The Wedding Singer” ($120 million worldwide), “Rush Hour” ($150 million worldwide to date) and “Blade” ($120 million worldwide so far). All cost well below the industry average. By pre-selling many of its films overseas, New Line was also able to cover itself even on the costly disappointment “Lost in Space.”

Miramax started off the year with “Good Will Hunting” ($225 million worldwide) and “Scream II” ($167 million worldwide) and is heading into 1999 with expected hits “The Faculty,” “Life Is Beautiful” and “Shakespeare in Love.”

In between, however, the almost 30 film-release schedule produced few revenue winners except such minor hits as “Sliding Doors” and “Halloween H20.”

DreamWorks, which produced or co-financed some of the year’s best performers--”Deep Impact” and “Saving Private Ryan”--introduced its first two computer animated films, “Antz” ($150 million worldwide to date) and the relatively disappointing “Small Soldiers” ($85 million worldwide), as well as its first fully animated film, “The Prince of Egypt,” a longshot for profitability.