Mid-Budget Movies Could Be The Future, And Lionsgate Should Lead The Way

The pandemic has altered just about every major industry on the planet, and the movie business is certainly no exception. Everything from production all the way through distribution has been impacted greatly. The major push for streaming over the past couple of years has truly left movie theaters and the box office on somewhat shaky ground. Much will change in the coming years and we are already feeling the effects of that in many ways. There are no sure things at the box office anymore, and that might mean mitigating risk at the studio level. One studio that can stand to gain from all of this, the way that I see it, it's Lionsgate.

If you've been to the movies with any frequency over the last 15 years, you're probably very familiar with Lionsgate's output, as the studio behind franchises such as "Saw," "John Wick," and "The Hunger Games," as well as standalone hits such as "I Can Only Imagine" and "The Cabin In the Woods." They are what is referred to in the industry as a "mini-major." This means they are not one of the biggest of the Hollywood players such as Disney or Warner Bros., but they're not small potatoes either. They exist somewhere in the middle, and the point I'm about to try and make is all about the studio embracing its place in the food chain — the middle.

There is a lot of focus on big-budget blockbusters in modern Hollywood, as these are the movies where the big money can be made. Look at "Spider-Man: No Way Home." Look at "Godzilla vs. Kong." But on the other side of those potentially big rewards comes huge risk, which can mean huge losses when it goes belly-up. For that reason, the era of mid-budget movies just might be able to make a comeback, and no studio in town is better positioned than Lionsgate to lead the revolution and, in the process, potentially help save the theatrical experience.

A history of big failures

Lionsgate launched in 1997 and, slowly but surely, built up its business and became a player in Hollywood. But the notion of the studio chasing big-budget blockbusters really all comes back to 2012 and "The Hunger Games." The adaptation of the YA novel series proved to be a gigantic hit and spawned a four-movie franchise that grossed just shy of $3 billion at the global box office. But that came at a price, with the movies costing $80 million on the low end and a huge $160 million on the high end. That was the moment when Lionsgate began chasing the white whale of the mega-blockbuster. It has not necessarily gone well in the years since.

There are more than a few examples of big-budget failures in recent years at Lionsgate that illustrate just how poorly the attempt to get into this arena has gone. "Midway," the 2019 war flick from director Roland Emmerich, took in just $126 million worldwide against a budget of $100 million. There are no positive ways to spin that, though it's easy to see why they would partner with Emmerich, who churned out one of the studio's biggest hits in "The Day After Tomorrow" back in 2004 ($555 million worldwide). But Emmerich bombed out again with the studio recently, as the disaster flick "Moonfall" tanked in glorious fashion, having amassed just $31 million worldwide against a gigantic $150 million budget. Granted, in this case, Lionsgate was just distributing the film so they weren't fully on the hook but still, this absolutely did not pan out.

A couple of other prominent examples include 2017's "Power Rangers" reboot, again looking to tackle popular IP as a big-screen franchise, which made a mere $142 million globally against a huge $120 million budget. Another truly brutal attempt was 2018's "Robin Hood" starring Taron Egerton and Jamie Foxx, which made just $86 million in total with a big, fat $100 million budget. Maybe the worst of the bunch is 2011's "Conan the Barbarian," another established IP play, that cost a whopping $90 million and made a paltry $63 million. These are disastrous numbers. And, for the most part, this is what happens when Lionsgate goes big. It's closer to the rule and not the exception for them — that is a big problem.

Mid-budget movies can and should make a comeback

For quite a few years, Hollywood has largely been avoiding mid-budget movies because the risk was not quite worth the reward. The big money was in big blockbusters and movies costing between $20 and $40 million carry a pretty hefty risk when accounting for marketing and the fact that they can't reasonably be expected to become $1 billion hits. So it's been low-budget ($10 million or less) or big-budget stuff, with few mid-budget movies along the way for quite some time. But post-pandemic Hollywood has changed and the mid-budget movie is potentially on deck to make a comeback.

Let's look at some mid-budget movies that succeeded in 2021, the industry's first real recovery year in these pandemic-stricken times, to illustrate why these movies may once become attractive. "A Quiet Place Part II" was one of the highest-grossing movies of the year, taking in $297 million against a comparatively small $61 million budget. And that was possible because "A Quiet Place" stunned the industry with $334 million in 2018 against a $17 million budget. The sequel justified the higher budget because the first one proved the audience. We can also look at "Wrath of Man," the Jason Statham action flick that quietly made a solid $103 million worldwide against a $40 million budget.

Hell, let's even look at something that seems modest but quietly worked out pretty well. "Nobody" was released in March of 2021 when vaccines were just getting rolled out wide in the U.S. and still managed to make $55 million against a very reasonable $16 million budget. Making nearly 3.5 times your production budget is, in a word, nice. Imagine what this could have done if moviegoer confidence had been a little higher at the time? In the horror world, let's look at "Candyman." The reboot of the classic franchise was made for a responsible $25 million and brought in $77 million, with very little help coming from overseas.

On the very high-end of mid-budget (though arguably low-end of big-budget), let's look at "Ghostbusters: Afterlife." The legacy sequel was produced for a very reasonable $75 million (about half of what the 2016 reboot cost) and earned just shy of $200 million worldwide, again with little help from overseas markets. The lower budget lowered the ceiling for success, and that is a key takeaway here.

Budget to your audience

The movie business really comes down to the economics of scale. If you spend $200 million on a movie like Disney did with "Jungle Cruise," it needs to generate a lot more money to be considered successful and thus needs to reach a wider audience. The movie barely made its budget back but apparently did well enough on Disney+ to warrant a sequel, so the studio saw value in it beyond the raw box office. But the point stands, big budgets carry big risk and must appeal to just about everyone.

This is why horror movies tend to do so well and have for decades. They can be made on the cheap, meaning that the audience doesn't have to be $1 billion worth of box office to make for a success story. Look at the new "Scream," which soared past $100 million and got a sequel greenlit within weeks of its release. On the flip side, those returns would be disastrous for a Marvel film. It's all relative.

The fact of the matter is unless you're "Spider-Man: No Way Home," global audiences simply aren't there right now and may not be for a while in the way they used to be — if ever again. This is where budgeting to your potential audience makes sense. Let's look at Channing Tatum's "Dog," which recently hit theaters. Even though it opened against "Uncharted," it managed to make back its entire $15 million budget in a single weekend, paving the road to success. This is where the opportunity truly seems to exist in the moviegoing landscape we are emerging into.

Lionsgate is in a unique position

Lionsgate is in a bit of an odd situation right now. The studio only has a small handful of movies on the calendar for the rest of the year, while they are also out there trying to make big moves, such as purchasing STX. Every other major studio is doubling down on streaming while focusing on big, franchise plays for theatrical. Lionsgate does not have a dedicated major streaming service like Disney+ or Netflix. Their business model is still predicated on theatrical releases and very cheap home video stuff. Therein lies the seemingly obvious move for them going forward.

With the mid-budget movie making more sense on paper again, Lionsgate is in a position to kind of corner this market. "John Wick" was a mid-budget success story that kicked off one of the studio's most successful franchises. "Knives Out" was not only a box office smash but an Oscar-winning critical darling (but unfortunately Netflix shelled out big money for the sequels, leaving Lionsgate out of it). The family-friendly "Wonder" earned a staggering $311 million against a $20 million budget. Hell, even "Kick-Ass" proved superheroes can work on a smaller budget way back in 2010.

The point is, mid-budget movies are what has seemingly always worked best for the studio. Lionsgate knows how to make these movies and find the audience for them. Why continue to lose money on $100 million pie-in-the-sky plays when you can make the three or four movies like "Sicario" for the same price? Lionsgate can not only wind up with a winning business model here, but they can provide the exhibition side of the industry with product that it desperately needs. Theaters can't live on superhero movies alone and Lionsgate can win out by being the other side of the coin.