Financing Formulas: The Sequel

When a movie like “Rush Hour” or “Mission: Impossible” blasts off at the box office, it doesn’t take a rocket scientist to predict that it’s only a matter of time before a sequel is on its way. On the other hand, it would be hard to imagine a more unlikely candidate for sequelization than “Friday,” a 1995 New Line comedy starring hip-hop star Ice Cube and a then-little-known comic named Chris Tucker.

But New Line’s plans to create a low-budget sequel offer a striking example of the changing economics of the movie business, especially in the realm of youth-oriented urban films. Released with little fanfare, “Friday” received scant press attention and made a modest $27 million in its theatrical release, barely what a blockbuster grosses in an opening weekend. But the film only cost $4 million, so much of that $27 million was profit.

What made “Friday” different was that it became a hit in home video, not at the theaters. New Line Home Video chief Steve Einhorn says that when he would interview college-aged kids for entry-level jobs or internships, he’d ask what videos they’d been watching. The most frequent reply: “Friday.”

“Friday” has been on the video bestseller list for an astounding 98 straight weeks--only “Braveheart” has ridden the video charts longer. Released in October 1995, it has sold more than 600,000 units. The movie’s soundtrack album is still selling 2,000 copies a week, having topped 2.2 million in sales overall.

“ ‘Friday’ is the ‘Titanic’ of urban videos,” says Einhorn. “With most urban movies, we’re happy to sell 200,000 units. I don’t think there’s ever been another movie in the genre to compare to this.”

After Einhorn ran those numbers by New Line Productions chief Mike De Luca this spring, De Luca promptly signed up Ice Cube to write and produce “Next Friday,” which is due to start filming in February for an October 1999 release.

The movie’s home-video success has spotlighted one of the hidden dilemmas of modern-day Hollywood marketing: Youth-oriented black films perform significantly better in home video than in theatrical release. After a series of widely publicized violent incidents at movie theaters showing urban films in the mid-1990s, white moviegoers stopped going to movies that attracted a predominantly black audience. In 1991, before the violent incidents began, “Boyz N the Hood” made nearly $65 million. But recently, even the most popular youth-oriented black films have topped out at around $35 million.

Movie marketers say the difference is largely due to the inability of black films to attract a substantial white audience. Ice Cube says he meets young white “Friday” fans all the time, but none of them had seen the film until it was released on video. “The violence in the theaters just made people back off,” says Cube. “People feel safer waiting to see the movie on video.” (Earlier this month, the Magic Johnson Theatres in Baldwin Hills refused to show the urban action drama “Belly” because of its potential for violence).

Despite “Friday’s” continued popularity, a sequel would still have trouble breaking this box-office ceiling, especially if Tucker doesn’t return in a co-starring role. So New Line is determined to make the sequel on a non-sequel budget, using a game plan that offers an intriguing lesson in sequel economics.

Under normal circumstances, if a studio wants to transform a hit into a franchise film, as Warner Bros. did with “Lethal Weapon” or 20th Century Fox did with “Die Hard,” it needs to reassemble the original creative team, who use their bargaining leverage to win steep pay raises and rich gross participation deals from the studio.

To make “Lethal Weapon 4,” for example, Warners had to pay Mel Gibson $20 million, plus 20% of the studio’s gross earnings, while also giving substantial gross participation to director Richard Donner and producer Joel Silver. The film was estimated to have cost upward of $130 million--and it made about that domestically at the box office.

When salaries go up, budgets skyrocket. “Babe,” a surprise hit for Universal in 1995, cost less than $30 million. Its sequel, due this Thanksgiving, is budgeted at nearly $85 million. The original “Speed” cost $30 million and was a sleeper hit. The sequel, “Speed 2,” cost $110 million and was a costly failure.

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Some sequel packages are so prohibitively expensive that they haven’t made it off the launch pad. Although Sony Pictures has been eager to reprise “Men in Black,” the studio has been unable to find an equation that would satisfy the film’s principals, who could end up with $50 million in salaries and 50% of the film’s first-dollar grosses. As studio chief John Calley said earlier this year: “When you give the talent what they want, there’s nothing left for the studio.”

New Line hasn’t been immune to sequel inflation. “Austin Powers,” which made $53 million, only cost $18 million; the sequel will cost more than $30 million. The studio is already at work on a sequel to “Rush Hour,” which has earned more than $120 million at the box office. The original film cost $24 million; a sequel would be in the $40-million-plus range, much of that going to a hefty salary hike for Tucker, who is now in the $10-million pay range.

But New Line’s plans for “Next Friday” are very different. By making the film with an up-and-coming comic in Tucker’s original role, the studio believes it can bring the picture in for less than $10 million. “With a movie like ‘Friday,’ we’re in a very different sequel business than someone making ‘Lethal Weapon,’ where you’re reliant on a big movie star,” says De Luca.

Actually, New Line is in both ends of the sequel business. While the studio plans to keep “Next Friday’s” costs down by teaming Cube with a young, inexpensive comic, it will pay Tucker his top-dollar salary to co-star in a “Rush Hour” sequel, since the latter film is a franchise that appeals to a broad spectrum of moviegoers.

Since black films rarely cross over, New Line keeps its marketing costs down by focusing its advertising on young urban moviegoers. To launch a sequel like “Lethal Weapon 4,” Warners spends roughly $25 million on mass-audience TV buys. For a film like “Next Friday,” New Line will only spend about $5 million, building awareness through a hip-hop soundtrack and ads targeted at urban radio stations and TV shows with a predominantly black audience.

New Line isn’t the only company keeping sequel costs down. Disney Studios has been making direct-to-video sequels for its animated films, the most recent being the just-released “Lion King II: Simba’s Pride.” The savings are considerable. The “Lion King” sequel cost less than $20 million, dramatically less than what the studio would have spent on a theatrical release.

“It keeps costs down and allows us to take our product directly to the consumer,” says Disney Studios Chairman Joe Roth. “The movies go through the same distribution cycle, playing on ‘The Wonderful World of Disney’ and then going on Disney channels all over the world; the difference is that they start in home video instead of playing first in theaters.”

For an actor-filmmaker like Cube, seeing “Friday” become a mega-hit on home video is just as satisfying as having it succeed at the box office.

“I’d always vowed I’d never make a sequel, but the reaction we got from video word-of-mouth made me change my mind,” he says. “Me and my buddies always used to rent movies that were so funny we’d want to watch them again and again, whether it was ‘Car Wash’ or ‘Cooley High’ or ‘Hollywood Shuffle.’ And if you’re going to watch them over and over, why not make a sequel--it can be just as fresh as the original.”