For Hollywood bottom line, it's better second time around

A still image from the movie "Avengers: Age of Ultron"
Source: Marvel
A still image from the movie "Avengers: Age of Ultron"

Last weekend belonged to "Avengers: Age of Ultron."

It's hardly a surprise that the second film in the Marvel franchise would rule the box office. It's mid-May, which in Hollywood means the start of summer movies and the return of sequels to American movie theaters.

The number of sequels coming out peaks in the summer when kids are out of school and the heat and the humidity drive people to find comfort in air-conditioned theaters. Among movies with budgets of more than $10 million, 48 percent of sequels released since 2001 came out between May and August, according to data from OpusData, a database of movie financial information.

"The studios will say for their summer plan, 'We've got to have the next big franchise,'" said Bruce Nash, founder of Nash Information Services, which runs OpusData. "Then they might have one or two less expensive films that they're hoping are the next franchises for next year."


Financial franchise

Of the top 100 grossing films of 2014, 21 were sequels. But sequels made up a disproportionate number at the very top, with seven out of the top 10 grossing movies.

"The investment is so vast," Nash said, "that they want to go with something they have a good handle on who will go see it and how many people will go see it."

Stringing together sequels—or, as movie executives politely call them, franchises—can be good business for studios. They don't always make as much as original movies ("Age of Ultron" excepted, of course), but their return on investment is often higher.

For the top 100 grossing movies of 2014, the median return on investment at the box office for sequels was 272 percent, compared with 208 percent for original movies. Sequels can be a safe bet for studios because the characters and story have a proven track record: it's easier to get fans in the seats when they know some of what to expect.

"When it comes to franchises that inspire tremendous fan devotion, 'Star Wars' certainly set the standard," Disney chief Robert Iger noted in a recent earnings call.

Iger should know, the company is diving deep into sequel territory with "Star Wars: The Force Awakens" set for release in December. Disney is also the parent company of Marvel Studios, which owns "The Avengers."