Lionsgate Revenue Sunk By Huge Marketing Costs

By Katey Rich

Over the weekend word got out that Lionsgate posted a sharp overall loss for the second quarter of the year, the period from July 1 to September 30. Despite a record-high total revenue of $343.5 million, the studio lost $56.2 million, compared to just a $14.4 million loss last year.

Studios aren't usually in the business of losing money, especially once their product has really taken off, so Lionsgate's overall loss is particularly curious. The Hollywood Reporter attributed the loss to high marketing costs for its second-quarter projects-- chiefly War, 3:10 to Yuma and Good Luck Chuck-- reaching $122.5 million. Total motion picture revenue for the period was $234.4 million.

Lionsgate roared back in October, with heavy-hitters Saw IV and Why Did I Get Married? each conquering the box office on opening weekend; both continue to play well even now in mid-November, having collectively grossed over $100 million. Still, the studio has no releases planned for the rest of the year, and given the ever-present posters all over the city for both of those October movies, it's not hard to guess that those pesky marketing costs will be sky-high once again.

So, what gives? Clearly the marketing mavens over at Lionsgate are not trying to fritter away the studio's money by giving us Dane Cook and Jessica Alba during every commercial break, but why such heavy marketing when it's clearly not working? 3:10 to Yuma and Chuck were both modest hits in their own way, each featuring popular stars and recognizable properties (a Western remake in one case, and Dane Cook's comedy in another). So why push the marketing to the point of overload? Saw IV is an extraordinary case of built-in audience-- you know exactly what you're getting with each of those movies--and it especially didn't need a marketing blitzkireg.

Lionsgate is clearly doing extremely well by picking projects that appeal to a certain demographic and getting virtually every member of that demographic to go see it. It's baffling, then, that the studio is posting losses, though after October was Sawed and Married the third quarter may perk up. Perhaps its overall tinkering that needs to be done, or just experimenting with how much marketing is enough, and when it becomes too much. The next Saw installment could provide a great opportunity for this-- even with minimal marketing, I guarantee a strong opening weekend. You know how the people love their blood.