John Carter Flop Shows Disney Too Big to Fail

Action flick failures can be costly, but don't expect more arthouse movies just yet.

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Disney announced today that it expects John Carter, its latest big-budget spectacle, to lose $200 million, putting it among the biggest money-losing films of all time, according to the AP. While that kind of a flop could ruin a lesser company, entertainment giant Disney will live to fight another day

"If it were Lion's Gate it'd put them out of business. But it's Disney—it's hard to get much bigger or more successful than Disney," says Lawrence Turman, a former movie producer and chairman of the Peter Stark Producing Program at the University of Southern California. "They've been around forever, they'll be around forever," he adds.

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Just looking at ticket sales, the John Carter failure looks as epic as the film's storyline, about a Civil War veteran who finds himself transported to Mars. The film has taken in around $184 million in ticket sales thus far, compared to the $250 million production budget, plus $100 million for marketing, the AP reports.

But within the broader context of the Disney empire, the loss looks like much less of a blow. $200 million equals around 14 percent of Disney's first-quarter, fiscal year 2012 net income, and around 4 percent of its fiscal year 2011 net income. That's certainly not insignificant, but it's not a bank-breaker for the international entertainment conglomerate.

One reason why is that Disney has a business model that is much bigger than movies and includes theme parks, television, and music. In that way, Disney exemplifies a key tenet of business: diversifying can be a safe and smart strategy.

But the John Carter flop illustrates one point that makes the film industry different from many other industries, says Turman.

"Oddly enough, making movies is one of the few businesses where you manufacture an expensive product that you're not sure everybody really wants to see," he says.

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That's because betting on big-budget blockbusters, though risky, is good business.

"Today two-thirds of the revenue for a movie comes from outside the U.S.," says Turman, which means that it makes sense to center a film around action, not language. "You want lots of physical action and special effects because [foreign audiences] don't all speak English, and they don't want to pay a lot of money to read subtitles."

Meanwhile, subtler, dialogue-driven flicks don't have the same pull—and therefore have much smaller revenue potential.

"Those films," which might cost somewhere closer to the $50 million range, says Turman, "seem to be more risky in the studio's point of view than spending $175 million on a movie that can play throughout the world."