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The movie business played a high stakes game of poker nearly every weekend this summer. Sometimes, as in the case of “Finding Dory” or “Captain America: Civil War,” the bets paid off spectacularly. But not every hand was a winner, with the likes of “Ghostbusters,” “The BFG” and “Ben-Hur” racking up tens of millions of dollars in losses and illustrating the dangers of playing the wrong cards. It’s all part of the price of navigating a globalized, tentpole-obsessed movie landscape.
“These big films have become an obsession with Hollywood,” said Jeff Bock, an analyst with Exhibitor Relations. “Studios want to have their cake and eat it too. They want all the merchandising, video games, and spinoffs that can come with a hot property. It’s not just about box office. It’s about total pop culture domination.”
Reports of the movie business’ demise may be premature after the summer ended on an unexpected high note. A record August helped drive summer revenues up slightly to roughly $4.4 billion domestically. That will be make it the second largest summer in terms of grosses after 2013, an unexpected piece of good news considering that heading into July ticket sales were down roughly 10% and a host of big-budget flops such as “Alice Through the Looking Glass” and “Warcraft” had media outlets prepping the obituaries.
“There was something of a misperception about the summer,” said Chris Aronson, Fox’s domestic distribution chief. “Some high profile misses early on sort of tainted everything, but we ended up in a much better spot. “
The numbers may be better than expected, but there are still reasons to be concerned. Record ticket prices helped paper over waning interest in the part of consumers for what Hollywood was selling. Admissions dropped year-over-year from 531 million to approximately 500 million. That’s the second worst result in nearly twenty years.
First quarter box office was up 12.7%, second quarter fell 9.25% and the third quarter is up 16.25% so far. Year-to-date revenues stand at $7.94 billion, a 4.68% improvement that could put 2016 on track to hit a new milestone at the box office.
The gap between monsters successes and more modest hits also widened. Summer saw a well-defined split between the most successful films and other titles, noted Dave Hollis, distribution head for Disney, who pointed out that there were no films that wound up in the $200 million to $300 million range domestically.
“We did not see a ton of films in the middle ground this summer,” Hollis noted.
Disney led with two films over $400 million – “Finding Dory” at $480 million and “Captain America: Civil War” at $407 million – followed by Universal and Illumination Entertainment’s “Secret Life of Pets” at $353 million and Warner Bros.’ “Suicide Squad,” due to cross the $300 million mark around Labor Day. The next highest film was Fox’s “X-Men: Apocalypse” at $155 million, representing a fairly wide gulf.
Hollis pointed out that the dearth of big hits beyond the top four films meant that the cumulative domestic total of the top 10 films of the summer will finish about $500 million behind last summer, which saw “Jurassic World” lead the way with $652 million. Disney was dominant in terms of market share, carving up 26.5% of revenues, a significant lead over runner up Warner Bros., which had 16.5%. It’s an impressive accomplishment given that Disney released 15 fewer films this year than Warner Bros. did.
It’s a sign of how formidable the studio has become after shelling out billions of dollars to buy Pixar, LucasFilm, and Marvel, giving it the rights to hugely successful franchises such as the Avengers and Star Wars. Of course, not everything the Mouse House touched turned to gold. The studio saw disappointing results from “Alice Through the Looking Glass” at $77 million, “Pete’s Dragon” at $57 million and “The BFG” with $54 million.
There were two major areas of strength — horror and animation. “Finding Dory,” a followup to 2004’s “Finding Nemo,” is the year’s biggest domestic success and a rare sequel that outperformed the original, while “The Secret Life of Pets” was such a monster hit that it spawned a new franchise.
Even more impressive, nearly every major horror film that hit theaters, scored. “The Purge: Election Year,” “The Conjuring 2,” “Lights Out,” “The Shallows,” and “Don’t Breathe” will be among the most profitable films of the year. In fact, the last horror movie that failed at the box office was “Victor Frankenstein” last November, a sign of the genre’s durability.
This summer did reveal that many of the major franchises are running out of steam. “Jason Bourne,” “Teenage Mutant Ninja Turtles: Out of the Shadows,” “Star Trek Beyond,” “X-Men: Apocalypse,” “Independence Day: Resurgence,” “Ghostbusters,” “Ice Age: Collision Course,” and “Alice Through the Looking Glass” either flopped or failed to match the box office returns of their predecessors. Some of the issue may have been execution. In most of these cases, critics found the films to be lacking or faulted them for failing to live up to the standards of previous chapters.
“There has been a sense that the there’s a panacea in tentpoles and franchises but there’s no panaceas if audiences don’t have a personal connection,” said Imax Entertainment Chairman Greg Foster. “Quality begets momentum.”
It’s also imperative to find a new spin on the tried and true. In “The Conjuring 2,” for instance, the first film’s paranormal investigators returned, but they were tracking supernatural occurrences in a different house and another country.
“Too many of the sequels had a been there done that element,” said Aronson. “That limits your audience to the core fans.”
Hollywood is becoming ever more reliant on foreign markets, such as China, Russia and Mexico. Those audiences can help prevent films such as “Ice Age: Collision Course” from drowning in red ink and kept “Warcraft” from being a complete disaster as China grosses hit $220 million, nearly five times the $47 million in the U.S. But currency issues in parts of Europe, for instance, and a stronger dollar mean that certain territories aren’t contributing as much as they once did.
“We’re getting much less in U.S. dollars than we did three of four years ago, so when you’re looking at sequels, that’s going to impact the budgeting for future films,” said Veronika Kwan Vandenberg, president of worldwide distribution at Warner Bros. “It’s part of doing business globally. You benefit from the highs and work through it when it goes the other way.”
Despite the softer returns for many sequels and reboots, STX Motion Picture Group Chairman Adam Fogelson said he did not think it would result in a dramatic change to their business plans.
“It’s not the first time in history that audiences have rejected sequels,” Fogelson said. “Studios are under pressure to make as many tentpoles as possible.”
One area of improvement was in so-called counter-programming. Films like the Dwayne Johnson and Kevin Hart comedy “Central Intelligence,” the animated parody “Sausage Party,” and the raunchy comedy “Bad Moms” cost a fraction of what studios shelled out on superhero adventures, but still managed to connect with audiences. They also enjoyed more capacious profit margins, because their budgets were so much lower. After pruning their slates to focus on a few, big titles, some analysts believe that there will be a correction, with studios offering up more lower-budgeted offerings to help soften the blow if one or two of their franchises falter.
“You’re going to see a lot more counter-programming squeeze in,” said Bock. “A lot of people are going to be greenlighting more stuff.”
After all, in Hollywood, no original idea stays that way for long.