The new James Bond movie, Spectre, is officially the franchise record holder for product placement. 17 different brands show up on screen throughout the film, each one of them representing millions upon millions of dollars spent to simply be associated with Daniel Craig’s robot-like, non-smiling face. Maybe you’ll go buy The Macallan malt whisky simply because a bottle can be seen on Bond’s living room table. If not, at least you’ll know what that bottle looks like now, and Macallan probably spent somewhere north of $10 million to makes sure of that.
Was that a wise investment on Macallan’s part? Ah, who cares. The important thing is that Sony desperately needed that money from them and the 16 other companies forking over insanely big bucks to get their logos associated with Bond. As last year’s Sony hack revealed, Spectre’s budget ballooned to around $300 million during filming, causing various Sony executives to lament that it had become the most expensive movie ever made. Since then, the studio claims that thanks to product placement deals and tax incentives the final budget ended up in the $250 million range. Um, sure, that’s clearly better, but it’s still quite easily a franchise high and far more expensive than 2015’s other big movies like Jurassic World ($150m), Furious 7 ($190m) and Mission Impossible: Rogue Nation ($150m).
Of course, Spectre just shattered box office records in the UK, and it opens in nearly 4,000 domestic theaters and over 60 foreign markets this weekend. However, for those who pay attention to such things the excitement of the movie and the curiosity of how much money it will make is being offset by the lingering question, “Yeah, but will it be enough?”
If you go back to 2012, the franchise celebrated its 50th anniversary with one of its best movies, Skyfall, which critics and audiences loved equally. It set franchise highs for domestic ($304m), foreign ($804m) and worldwide gross ($1.1 billion). According to The Wall Street Journal (via Variety), Sony only made $57 million off of that – $57 million from $1.1 billion! It’s because they had to spend $200 million to make the movie, over $100 million to market it, and then after splitting ticket sales with theater owners around the world they then had to split the remaining ticket sales profits with franchise rights holders MGM ($175 million) and Eon Productions ($109 million).
That all sounds like the embodiment of a recent Simpsons joke about the state of Hollywood blockbuster filmmaking: “We’ll make millions…after spending hundreds of millions!”
But, wait, it gets worse. When Sony re-negotiated its distribution deal with MGM/Eon after Casino Royale in 2006 the former studio head Amy Pascal threw The Girl With The Dragon Tattoo and 21 Jump Street into the pot as an extra incentive, e.g., if you re-up Bond with Sony we’ll let you in on these other two big movies we’re making. MGM remains attached to both of those properties to this day.
Cut back to the present, there’s ample reason to suspect that Spectre won’t be quite as big as Skyfall. It’s simply not as good (65% on RottenTomates versus Skyfall’s 93%), there’s more competition, the dip in foreign currency in countries like Russia, etc. However, at the time when Spectre’s budget was spiraling out of control, Sony’s head of business affairs explained in one email exchange that even if Spectre somehow replicates Skyfall’s $1.1 billion success the studio would only realize about $30 million in profit.
So, the question at hand is this: Is it even worth it for Sony to keep making James Bond movies?
Ticket sales are but one way that studios make money. However, if Sony’s deal with MGM/Eon is so bad that they only saw $57 million of $1.1 billion worldwide on Skyfall how much do you think they got from the film’s reported $95 million in home video sales or any of the related merchandise sales? No, seriously, I’m asking you because I don’t know, but I’m guessing it’s less than we expected.
Now, Sony’s distribution deal with MGM expires after Spectre. Every other studio will be able to bid on the right to make the next Bond movie. Speaking to Variety earlier this year, Sony’s new entertainment chairman Tom Rothman didn’t exactly sound optimistic, “The reality is that Sony’s had a fantastic run with the Bonds. Sure we’re going to compete for (the rights), but let’s be honest, so is everybody in the business.” Deadline hears that while pretty much every studio is in on this Warner Bros. is making the biggest push, and will work very hard to turn its MGM co-production Creed into a huge hit this Thanksgiving as a, “See, we worked well together on this franchise. Why not try Bond now?”
Of course, Tom Rothman’s early pet projects at Sony, Ricki and the Flash and The Walk, bombed, a harsh reminder that franchises are the currency of the day. Sony has precious few of those – Hotel Transylvania, Ghostbusters, James Bond for now, Spider-Man – shared with Marvel. However, the evidence indicates that when you make a James Bond movie nowadays you are gaining the markets share bragging rights at the expense of actual profit. At least that’s the deal Amy Pascal negotiated, and if Spectre does turn into a box office behemoth equal to Skyfall MGM is going to have even more negotiating leverage than it did in 2006, even if Daniel Craig is on the way out.
As we’ve been promised by so many closing credits sequences over the years, James Bond will return. He may not be played by Daniel Craig. Sam Mendes may not be the director. Sony may not even be the distributor. But Bond will return. However, figuring out where he goes next is going to take a while to sort out, and it’s more complicated than we might have realized. It’s not a slam dunk that Sony would want to keep essentially making James Bond movies as loss leaders. However, as Variety argued, “There is a halo effect to these pictures that makes them valuable, insiders say. Distributing the films strengthens partnerships with brands and exhibitors.”