Hollywood has an IP problem: Box office sales are banking on franchise hits that keep falling flat

Core Insights - The theatrical industry is heavily reliant on established franchises to drive box office sales, with a goal to surpass $10 billion domestically for the first time since the pandemic [4][5][8] - Despite the presence of popular franchises, some major releases are underperforming, raising concerns about the industry's ability to reach its financial targets [5][10] - The trend of franchise films dominating the box office has been consistent, with the top 10 films representing an average of 44% of the total domestic box office post-pandemic [9] Industry Trends - The number of films produced for theatrical release has declined significantly since the pandemic, with a 20% drop in wide releases from 2019 to 2024 [19] - Studios are increasingly focusing on familiar intellectual properties (IP) as safe bets, leading to a reliance on franchise films for box office success [8][19] - The shift in consumer behavior towards streaming has impacted the theatrical market, with audiences becoming more selective about what they watch [21] Franchise Performance - Recent franchise films like "Wicked: For Good" and "Avatar: Fire and Ash" have underperformed compared to their predecessors, indicating a potential decline in audience interest [11][14] - The Marvel Cinematic Universe has faced challenges in maintaining quality and audience engagement following its peak with "Avengers: Endgame" [15] - Successful franchises, such as the Dune series, have managed to attract both core fans and new audiences, demonstrating the importance of balancing niche appeal with broader market reach [17][18] Box Office Dynamics - The top 10 films in 2019 accounted for nearly 40% of the annual domestic box office, while post-pandemic, this figure has risen to 44% [9] - The decline in mid-budget films has created a gap in theatrical content, as many have transitioned to streaming platforms [20] - Studios are adapting by "eventizing" film releases, promoting them as must-see experiences, particularly for franchise films [22][23] Consumer Engagement - Major studios are leveraging their franchises for merchandise and theme park experiences, creating additional revenue streams beyond box office sales [24][26] - Fans of franchises are eager for products that celebrate their favorite characters, leading to a diverse range of merchandise offerings [25] - The enduring popularity of franchises like Star Wars demonstrates their cultural significance, even in the absence of new theatrical releases [28]