April 9th marked the official beginning of the Easter weekend box office competition.
Three new films premiered in North American theaters this Friday: "Wayne's World 2" by New World Pictures, with 2,516 screens; Fox's "The Sandlot," with 1,819 screens; and New Line Cinema's "Wes Craven's New Nightmare," with 1,365 screens.
Hollywood's lowbrow slapstick comedies often fall into the trap of seeing their sequels suffer massive box office declines after the success of the first film.
In Simon's memory, the "Wayne's World" series was one such case.
However, because the production costs for these types of comedies are usually low, sequels typically remain profitable for the studio.
The key lies in cost control.
Otherwise, studios risk becoming cash cows for the stars. They might end up spending huge budgets and securing prime release dates only to break even, while the main actors and creators walk away with hefty paychecks.
When Daenerys Entertainment signed the deal for the "Wayne's World" series, they secured a two-film contract with creator Mike Myers. Thus, after the first "Wayne's World" grossed $120 million domestically on a $20 million budget, the sequel's budget was kept under control at $30 million.
There have been instances where the curse of the underperforming comedy sequel was broken.
The original "Wayne's World" series couldn't escape this fate. Interestingly, another series by Mike Myers, "Austin Powers," managed to break this trend. The first "Austin Powers" movie barely reached $50 million in ticket sales, but the sequel grossed over $200 million domestically and maintained strong performance with the third installment.
Because of this common sequel downturn phenomenon, Simon had decided against developing a sequel to "Forever Young."
In the case of "Forever Young," the novelty of a baby speaking would amuse the audience the first time around, but that interest wanes quickly. Moreover, Mel Gibson, already a major star, demanded a hefty paycheck. In previous "Lethal Weapon" sequels by Warner Bros., Gibson took most of the profits. He showed no signs of compromising for Daenerys Entertainment, making a "Forever Young" sequel risky. Fortunately, Daenerys didn't lack other projects.
However, for "Wayne's World," the initial deal with Myers effectively controlled costs. Moreover, with the precedent set by the "Austin Powers" series, Simon approved the development of the "Wayne's World" sequel.
Why the first "Wayne's World" was a hit is hard to pin down.
Once the sequel was greenlit, the team at New World Pictures and Mike Myers spent considerable time discussing this, with Simon offering numerous suggestions based on his knowledge of the "Austin Powers" franchise.
The key is consistency.
For comedy films, the audience often seeks familiar, funny moments.
Take "The Hangover," for instance. The drunken mishaps amused viewers twice, but when the creators tried to innovate in the third film by avoiding the same drunken antics, the box office plummeted.
Thus, whatever worked in the first film, the sequel should maintain that style.
In terms of story, gross-out humor doesn't need much innovation.
If the audience loved the "Bohemian Rhapsody" scene in the first film, pick another great song for the sequel.
If breaking the fourth wall and talking to the audience was a hit, do it again in the sequel.
Additionally, Daenerys Entertainment leveraged its resources to bolster the sequel's cast with stronger musical cameos. Music stars like Madonna and Guns N' Roses, who had good relations with Simon, made guest appearances in the sequel.
Given the green light, "Wayne's World 2" was produced with a $30 million budget and a $15 million marketing budget. In today's market, strong promotion is essential for a film's success.
Even the Easter release date was carefully chosen.
With the first "Wayne's World" grossing $120 million domestically, the sequel could have entered the summer or year-end release slots. However, these periods often feature intense competition. If the film received mediocre reviews or faced a surprise hit, its box office would suffer significantly.
The Easter period, on the other hand, while gaining more attention in recent years, doesn't match the fierce competition of summer or year-end slots.
Take this upcoming Easter, for instance. "Wayne's World 2," with its strong franchise following and marketing push, outshines its competitors. Unless an unexpected hit emerges, it's poised to dominate the weekend.
The other two releases, "The Sandlot" and "Wes Craven's New Nightmare," don't seem to have breakout potential.
Fox's "The Sandlot" is a coming-of-age story about a group of baseball-playing kids—a standard sports youth film.
New Line's "Wes Craven's New Nightmare" might have the word 'new' in its title, but after six installments, audiences are likely tired of Freddy Krueger's repetitive slasher antics. Even with a modest $50 million domestic box office goal, Hollywood is skeptical about the film's commercial prospects.
Over the Easter weekend, Simon accepted an invitation from Joseph Lewis, whom he had recently met, and flew to the Bahamas with the two Janets for a private vacation.
Joseph Lewis, a British businessman, had been living in the Bahamas for tax reasons.
As one of the world's renowned tax havens, the Bahamas only levies a small license fee on locally registered companies, with no sales tax, VAT, inheritance tax, or capital gains tax.
After last year's operations in the European currency market, Joseph Lewis planned to shift his focus to real industries and was astutely attempting to establish business ties with the rapidly rising Westeros system. Simon, in turn, saw potential in Lewis's Tavistock Group, which is registered in the Bahamas.
Though Tavistock Group appears to be an industrial company, it's essentially a diversified investment firm.
In recent years, while continuing to speculate in currency markets, Joseph Lewis has invested through Tavistock Group in numerous projects across North and Latin America, including real estate, energy, sports, hospitality, and healthcare.
However, despite last year's significant gains in the European market, Tavistock Group's total assets currently stand at around $3 billion, most of which are in cash and short-term convertible bonds. Their investments in tangible assets are relatively modest.
Of Tavistock Group's $3 billion in total assets, about $600 million belongs to Joseph Lewis personally, accounting for one-fifth of the total.
A $600 million net worth classifies him as a super-wealthy individual by the standards of the time.
However, in front of Simon, it's insignificant.
Simon's plan over the next few years involves gradually cashing out from the tech stocks amidst the expanding internet bubble. With Cisco and AOL alone having market caps exceeding $30 billion each, even a 1% sell-off at peak valuations would bring in billions in cash for the Westeros system.
This divestment strategy could potentially extract hundreds of billions from the tech stock market.
Thus, even considering the previous idea of partnering with the Johnston family to create a mega mining group in Australia, there will likely be substantial surplus funds. These resources will not be reinvested in the internet sector but rather directed towards traditional industries.
Tavistock Group, with its interests in real estate, energy, sports, hospitality, and healthcare, could serve as the Westeros system's investment vehicle for these traditional sectors.
Not only in North America but Simon also aims to extend the Westeros system's reach into the vast Latin American market.
Latin America's economy, though often suppressed by North American influences, represents a vast market with over 500 million people and abundant natural resources.
Moreover, using Tavistock Group as a shell can help obscure the Westeros system's assets.
If managed correctly, many of the Westeros system's future ventures could be attributed to Tavistock, with the actual control by Westeros remaining hidden.
This is similar to how many large Wall Street funds operate.
While public information may reveal that these funds hold significant stakes in various companies, it's often unclear who the true controlling entities behind these stakes are.
It's important to note that large fund companies typically manage dozens or even hundreds of sub-funds, each with different investment objectives. This structure provides ample room for investors wishing to conceal their true targets.
An investor might buy into a fund and influence it to acquire a specific company's stock. To the public, it appears that the large fund itself holds the shares, but in reality, another party controls these shares behind the scenes.
Such operations often skirt the edges of federal securities laws.
But who cares?
As a joke in New York's legal circles goes, the crimes committed over a Wall Street lunch could rival those of a war.
Without close scrutiny, these operations proceed unnoticed.
Cersei Capital can already be considered one of the Westeros system's facades, though it's still in the open. Tavistock Group, on the other hand, is another shell Simon has selected. It will engage in North American investments, but its primary focus will be overseas, particularly in Latin America.
Over the weekend, Simon and Joseph Lewis quickly reached an agreement for Westeros to inject $100 million into Tavistock Group as a preliminary test. Although $100 million represents a small fraction of Tavistock's $3 billion in total assets, the limited familiarity between the parties means Simon won't rush to commit more.
Joseph Lewis understood.
To show good faith, Lewis even offered to liquidate other investors' capital, though Simon declined.
It was unnecessary.
If the Westeros system held too significant a stake in Tavistock, the company would lose its critical function as a discreet front.
Instead, Simon suggested that Lewis continue to attract more capital.
Despite having $3 billion, primarily in cash or bond assets, large-scale operations might still struggle
to finance a few big projects.
Take the Eaglet stake transfer, for example. Had Simon agreed initially, it would have consumed half of Tavistock's funds.
Even with ample funds, finding sufficiently large projects in the short term is challenging.
Although the Eaglet share transfer deal didn't materialize, Simon advised Joseph Lewis to invest in other U.S. tech stocks. The internet bubble is still in its early stages, with plenty of room for growth. How much Lewis decides to invest remains to be seen; Simon is curious about his investment acumen.
If Joseph Lewis were to bet all his funds on tech stocks and successfully exit at the market's peak, his current $3 billion could grow more than tenfold.
If it were Simon, he would certainly go all-in.
However, if Joseph Lewis took such a risk, Simon would regard his approach with caution, even if Tavistock Group's capital grew significantly.
Without the foresight advantage Simon possesses, such a move by Lewis would be purely gambling.
And in gambling, the odds are overwhelmingly against you.
The Westeros system has no need to take such risks now.
After the weekend, returning to Los Angeles, the Easter weekend's box office results were in.
Following Friday's release, New World Pictures' marketing efforts secured "Wayne's World 2" a favorable media score of 7.3, making it marginally good.
However, the film's opening weekend gross far exceeded many expectations.
The New World Pictures team initially hoped "Wayne's World 2" would achieve a $20 million opening weekend, setting up a potential $30 million first-week gross.
The first "Wayne's World" managed to sustain a strong long-term box office presence through word of mouth. While the sequel couldn't expect the same, even with a steep 50% drop in the second week, a $30 million start could lead to at least $60 million in domestic box office earnings.
This figure alone wouldn't cover the $45 million combined production and marketing costs.
However, global box office sales would ensure a modest profit, and subsequent revenue streams would bring significant returns to Daenerys Entertainment.
Of course, with such earnings, any plans for a third installment would be off the table.
Given the rising costs of production and distribution, most Hollywood films struggle to break even at the box office, relying on video and TV sales for profit. This long-term financial strategy is increasingly challenging for mid-tier studios, as handling these channels requires considerable time and resources. Time, especially, as managing a film's lifecycle can span three to seven years—something mid-tier studios can ill afford.
Against the $20 million opening weekend forecast, "Wayne's World 2" defied expectations with a three-day gross of $31.79 million, averaging over $10,000 per screen. The first week's total was anticipated to surpass $40 million.
With a first-week gross exceeding $40 million, even steep declines in subsequent weeks could easily push the domestic total to the $100 million threshold.
Breaking $100 million domestically means "Wayne's World 2" would turn a profit in the home market alone.
Due to the strong performance of "Wayne's World 2," Fox's "The Sandlot" only managed to pull in $5.36 million over the weekend.
New Line Cinema's "Wes Craven's New Nightmare," which the company had pinned its hopes on, grossed a mere $3.71 million in its opening weekend. Its domestic total was projected to barely reach $10 million, crushing New Line's hopes of a revival through the film.
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