2023 is a do-or-die year for its future as an independent studio. Can its upcoming IP-rich movie slate live up to the expectations?
With Wall Street turning its back on streaming-centric metrics like content spend and subscriber growth, a studio that can still make money the old-fashioned way, from theater tickets to VOD and licensing fees, is suddenly more valuable. And there’s a lot at stake for Lionsgate: Its box office performance could determine whether it continues as a standalone business in an industry eager to consolidate.
Lionsgate began the year with a solid studio programmer in Gerard Butler and Michael Coulter’s “Plane.” The $30 million actioner has earned $46 million worldwide to date, apparently enough alongside the PVOD take to justify a Coulter-fronted sequel titled “Ship.”
Much of the rest of the slate is made up of Lionsgate’s biggest IP: sequels to “John Wick,” “Saw” and “Expendables,” alongside a “Hunger Games” prequel closing out the year. Throw in the sure-to-be-buzzy “Are You There God, It’s Me, Margaret?” and you have the studio’s most promising theatrical lineup in ages.
There’s precedent for this kind of slate-driven stock run-up. Back in the mid-2010s, Lionsgate stock was trading in the high $20s and low $30s, including an October 2015 high of over $40 shortly before the final “Hunger Games” movie debuted.
Success is not a sure thing, even if Wall Street seems optimistic. The studio still has to execute its plan. Lionsgate’s “2023 slate carries a fair amount of IP,” noted BoxOffice.com chief analyst Shawn Robbins. “Have most or all those properties already reached their box office peak? If so, can the studio manage costs and still effectively market each as its own deserved high-profile release?”
It’s a do-or-die year for Lionsgate. Victory at the box office will strengthen the notion that the mini-major can stand on its own, especially after it completes the split of its studio business and Starz, anticipated for this fall. Failure will mean it’s waiting to get bought at a matinee discount: It’s hard to persuade investors that “The Hunger Games” and “Saw” are A-level IP if their latest theatrical installments flop in theaters.
That’s the risk in traders’ Lionsgate bet, but it speaks to the cyclical turn back to theatrical-driven releases and away from a pure emphasis on driving streaming sign-ups.
Rosenblatt Securities credited “what looks like one of [Lionsgate’s] biggest movie slates ever” as a reason for optimism, alongside the Starz transaction. Analysts at the firm pegged the year as potentially topping $1.5 billion in domestic box office alone, which would be the studio’s best performance since the days of “La La Land” and “Hunger Games.”
While plans to turn “La La Land” into a stage show don’t count in terms of theatrical revenue, it’s another sign of how a hit theatrical film can spawn multiple revenue opportunities.
“John Wick,” which was picked up and turned into an IMAX-worthy wide theatrical release in just over a month, began as a lower-budget actioner whose main point seemed to be giving Keanu Reeves his own “Taken” knockoff. Today, the trilogy has earned over $500 million in worldwide grosses with a fourth chapter, a series of cable and streaming movies, and a high-profile video game on the way.
“Lionsgate is benefiting from the continued search for quality content,” said Hatem Dhiab, a managing partner at Kawasaki Wealth and Investment Management. Lionsgate “has movies available in almost every streamer, and their library is nothing short of impressive generating almost $900 million in revenues,” he added.
To Wall Street, though, the overall mass of content to exploit may be more impressive than any individual title. A property like “John Wick” is arguably more suited for expansion and spin-offs than, say, “The Expendables,” which arguably peaked at a $315 million-grossing sequel back in 2012. Even “The Hunger Games,” which earned $2.9 billion over four films in the mid-2010s, could seem like a relic of the Barack Obama presidency to today’s younger moviegoers. Movies aren’t widgets, which is what makes the business unpredictable.
Lionsgate “is a studio that has beaten the odds before,” said Robbins. It’s certainly an underdog story that has new fans on Wall Street.