It is a story as unlikely as a boy who can fly: Hollywood's
biggest studio is in the midst of a prolonged slump at the box
office at the same time it is racking up a high score in
videogames.
The fairy tale reboot "Pan" bombed with a $15.5 million opening
this weekend, likely landing it where most of Warner Bros.'
big-budget movies this year have: in the red. With a production
budget of at least $150 million, "Pan" joins other high-profile
Warner flops, including "Jupiter Ascending" and "The Man From
U.N.C.L.E.," along with smaller duds such as "Entourage" and the
action film "Run All Night."
Two exceptions were January's surprise blockbuster "American
Sniper" and the solidly performing disaster flick "San
Andreas."
Despite releasing more movies than the other five major
Hollywood studios, Warner is ranked No. 3 in global box office with
$3.2 billion so far in 2015, and may fall to No. 4 before the year
is out. The Time Warner Inc.-owned studio has long spent more
making and marketing its movies than competitors, in search of the
highest results, and hasn't finished a year lower than No. 2 in
box-office rankings since 2006.
While the 92-year-old Warner is losing at the box office,
however, its 11-year-old videogame division is beating established
publishers like Electronic Arts Inc. and Activision Blizzard Inc.
at their own game. The studio's Warner Bros. Interactive
Entertainment is ranked No. 1 in videogame sales, with a domestic
market share of just over 20% through August, according to data
from research firm NPD Group.
Other Hollywood studios have taken a stab at the videogame
business, but none have stuck with it like Warner. After ranking
No. 6 or 7 the past few years, the studio has shot to the top,
thanks to major hits including "Batman: Arkham Knight" and fighting
game "Mortal Kombat X," which have each sold more than 5 million
units globally. "Lego Jurassic World," based on the movie from
competitor Universal Pictures, has sold about 4 million copies.
Warner Interactive has in several key ways aped the strategy of
the studio's motion-picture business by making large investments in
hopes of creating market-dominating franchises.
It spent hundreds of millions of dollars to buy the development
studios behind "Arkham Knight," the third game in a successful
Batman franchise; "Mortal Kombat"; and the Lego game series, which
turns popular movies like "Harry Potter," "The Avengers" and "Star
Wars" into kid-friendly interactive worlds.
"We really do feel this year is a culmination of a lot of the
investments we have been doing for about a decade," said David
Haddad, who runs Warner's videogame business.
Though it may not keep its No. 1 ranking all year, Warner
Interactive is on track for a record $1.5 billion in revenue in
2015, said Mr. Haddad—likely more than 10% of the studio's annual
total.
Two weeks ago it made its biggest bet ever with the launch of
"Lego Dimensions," a "toys-to-life" game similar to Activision's
"Skylanders" that lets players build special, separately sold Lego
sets that can appear in the game. Such toys-to-life games typically
cost more than $100 million to develop, manufacture and launch.
Warner's entry into the videogame business was led by former
home-entertainment chief Kevin Tsujihara, who is now CEO of the
studio. Since ascending to that role in 2013, Mr. Tsujihara has
been more involved in the movie business than his predecessor,
Barry Meyer, who largely delegated that job to the motion-picture
group president. Mr. Tsujihara hasn't filled that job.
Instead, he has worked closely with the heads of movie
production, marketing and distribution to steer a slate that is
rebuilding following the recent conclusions of the hugely
successful "Dark Knight," "Harry Potter" and "Hobbit" series.
This year's attempts to start new franchises—some of which were
under way before Mr. Tsujihara was named CEO—have fallen flat.
"Pan," which has grossed an additional $25.1 million
internationally, is just the latest example.
With Warner Bros.' large television business—which produces the
new NBC hit "Blindspot," among many other series—still performing
well, the studio is on track for record revenue this year despite
its movie woes.
"Our business is intentionally diverse, so in a year where we've
faced challenges at the box office, our games and TV businesses
have been off the charts," said a spokeswoman.
Mr. Tsujihara, who declined to be interviewed, is said to
essentially have this year's movie slate in his rearview mirror and
is focused on March's ambitious and expensive "Batman v Superman:
Dawn of Justice," which kicks off 10 DC superhero movies over the
next five years. Next November brings the Harry Potter spinoff
"Fantastic Beasts and Where to Find Them," while 2017 will see two
follow-ups to last year's "The Lego Movie"—a surprise hit that
arose from the studio's videogame partnership with the brand.
Warner Bros. wasn't the only studio with bad box-office news for
the weekend. Sony Pictures Entertainment's "The Walk," a $35
million true-life story about the daredevil who crossed the Twin
Towers on a tightrope, expanded nationwide this weekend and grossed
a dismal $3.65 million.
"The Martian," the Ridley Scott-directed science-fiction
thriller from 21st Century Fox's Twentieth Century Fox, was No. 1
for the second weekend in a row, grossing $37 million. It has
collected a robust $228 million world-wide.
Write to Ben Fritz at ben.fritz@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 11, 2015 20:55 ET (00:55 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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