Games win consoles Warner after films flop

It is a story as unlikely as a boy who can fly.

PAN the movie featuring Hugh Jackman, Levi Miller.

It is a story as unlikely as a boy who can fly: Hollywood’s biggest studio is in the midst of a prolonged slump at the box office at the same time it is racking up a high score in video games.

The fairytale reboot Pan bombed with a $US15.5 million ($21.1m) opening last weekend, likely landing it where most of Warner Bros’ big-budget movies this year have: in the red. With a production budget of at least $US150m, Pan joins other high-profile Warner flops, including Jupiter Ascending and The Man From U.N.C.L.E., along with smaller duds such as Entourage and the action film Run All Night.

Two exceptions were January’s surprise blockbuster American Sniper and the solidly performing disaster flick San ­Andreas.

Despite releasing more movies than the other five major Hollywood studios, Warner is ranked No 3 in global box office with $US3.2 billion so far this year, and may fall to No 4 before the year is out. The Time Warner-owned studio has long spent more making and marketing its movies than competitors in search of the highest results and hasn’t finished a year lower than No 2 in box-office rankings since 2006.

While the 92-year-old Warner is losing at the box office, however, its 11-year-old video game division is beating established publishers such as Electronic Arts and Activision Blizzard at their own game.

The studio’s Warner Bros Interactive Entertainment is ranked No 1 in video game sales and has a domestic market share of just over 20 per cent through August, according to data from research firm NPD Group.

Other Hollywood studios have taken a stab at the video game business, but none have stuck with it like Warner.

After ranking No 6 or 7 the past few years, the studio has shot to the top, thanks to major hits including Batman: Arkham Knight and the fighting game Mortal Kombat X, which have each sold more than five million units globally. Lego Jurassic World, based on the movie from competitor Universal Pictures, has sold about four million copies.

Warner Interactive in several key ways has aped the strategy of the studio’s motion picture business by making large investments in hopes of creating market-dominating franchises.

It spent hundreds of millions of dollars to buy the development studios behind Arkham Knight, the third game in a successful Batman franchise; Mortal Kombat; and the Lego game series, which turns popular movies such as Harry Potter, The Avengers and Star Wars into kid-friendly interactive worlds.

“We really do feel this year is a culmination of a lot of the investments we have been doing for about a decade,” said David Haddad, who runs Warner’s video game business.

Though it may not keep its No 1 ranking all year, Warner Inter­active is on track for a record $US1.5bn in revenue this year, said Mr Haddad — likely more than 10 per cent of the studio’s annual total.

Two weeks ago, it made its biggest bet with the launch of Lego Dimensions, a “toys-to-life” game similar to Activision’s Skylanders, which lets players build special, separately sold Lego sets that can appear in the game. Such toys-to-life games typically cost more than $US100m to develop, manufacture and launch.

Warner’s entry into the video game business was led by former home entertainment chief Kevin Tsujihara, who is now chief executive of the studio.

Mr Tsujihara has worked closely with the heads of movie production, marketing and distribution to steer a slate that is rebuilding following the recent conclusions of the hugely successful Dark Knight, Harry Potter and Hobbit series.

This year’s attempts to start new franchises — some of which were under way before Mr Tsujihara was named chief executive — have fallen flat. Pan, which has grossed an additional $US25.1m internationally, is just the latest example.

With Warner Bros’ large television business still performing well, the studio is on track for record revenue this year despite its movie woes.

“Our business is intentionally diverse, so in a year where we’ve faced challenges at the box office, our games and TV businesses have been off the charts,” a spokeswoman said.

The Martian, the Ridley Scott-directed science fiction thriller from 21st Century Fox’s Twentieth Century Fox, was No 1 for the second weekend in a row, grossing $US37m.

It has collected a robust $US228m worldwide.