Box Office Mendoza Line

Mendoza Trading CardMany times critics and filmmakers argue about the quality of a film’s content or message against its story. Star power and a filmmaker’s ability to draw in an audience also factor into arguments about what makes a film successful. But, one factor stands the test of time and survives all arguments about the monetary success of a film: the box office Mendoza line.

Named after baseball’s Mario Mendoza, whose mediocre batting average defined the threshold for incompetent hitting, the box office marks the threshold when theaters drop titles from its screens for the next best opportunity to make money.

The moment a film drops below a per screen average of $2,000 per weekend, it’s no longer viable as a money making device. This amount has stood the test of time based on competitive new releases, negotiated house nuts and the duration of marketing budgets.

When a film crosses the Mendoza line distributors stop promoting the film in order to cut its potential losses and replace it with new selections. Films that fail to rise above the Mendoza line rarely survive past the second week in theaters, as numerous films fight for the few open screens during each release period.

This is partially due to distributors not wanting to lose a screen to a competitor and desiring to manage risk mitigation on the film’s current margins. Theaters also need to maintain a certain level of revenue stream in order to protect its house nut (its negotiated take on concessions).

While the exit strategy on films typically cause titles to have a long distribution tail, very little revenue is generated during this period. Most films only make 5-10% more unless it’s in a light distribution window that can generate an additional15%.

Analysts that estimate each film’s market potential and weekend predictions, use additional tools that determine expected thresholds of a film’s longevity. For instance, prior to making adjustments based on the impact of social media, all films will make 50% of its opening during its second weekend. The third weekend will make 50% of the second weekend’s box office and so on.

However, advertising and social media directly impact the percentage. The alterations can change the percentage from 50% to 35-55%. The addition or dropping of screens due to contract changes or regional performance success can also impact the percentage by a plus or minus 30-45%. While these sound like huge swings, an analyst who has tracked the market for two years can easily estimate within a plus or minus 5% of accuracy.

Analysts do take into account outliers and transitions within sub-genres, which paint clear pictures of market trends. This gives production and acquisition departments a leg up when determining future investments and expansion.

Production companies also benefit from understanding and tracking the Mendoza line. Any picture that never rises above it or falls too quickly below it either has too few super-fans or has a story that didn’t connect on a universal basis. In a fragmented market that’s filled with social media, a film only needs 1,000 super-fans (or influential fans) to succeed.

The combination of factors that keep a film above the Mendoza line for numerous weeks includes a great story, influential super-fans, star power and provocative social media. Writer/directors have also become a factor over the past ten years, but are still considered new to the promotional cycle.

Copyright © 2015 by CJ Powers

A Creative Approach to Productivity

Andrew CarnegieAndrew Carnegie never intended to use right-brain thinking to increase production volume between the night shift and the day shift, but he stumbled upon it the day he wrote the number of items produced by the night shift on the cement entryway floor with chalk. That morning the day crew surmised what the number represented and by the end of the shift, erased the old number and replaced it with a larger one.

The night shift didn’t want to be beaten, so they got creative in reducing the process steps and placed a larger number on the floor at the end of the shift. The day shift wasn’t about to be undone, so they came up with creative ways to increase volume and capacity. This continued for several weeks until the factory was consistently producing more items than before the chalk incident.

The funny thing was “when” Carnegie wrote the number on the floor that started it all. He had come from a meeting were he asked leaders to increase productivity by 10% and they fought him with a myriad of comments about how it was impossible to create double-digit growth. But thanks to right-brain thinking on the part of the workers, Carnegie saw triple-digit growth within several weeks.

While some might suggest that friendly competition was to be praised for the growth, it was actually the creative juices of brainstorming that looked at the processes differently. The idea of reworking what had always worked is a right-brain event. Dropping unnecessary steps is also a right-brain activity.

The left-brain was represented in the meeting that said no to a double-digit increase based on the way it had always been done. The left-brain also suggested that there is a ceiling for everything and therefore no reason to conclude that a ceiling can be broken.

When I managed the receiving department at a warehouse retail store, I timed my team’s ability to breakdown pallets and move the merchandise to the sales floor. When the store manager required us to do it his way, the team broke down 4-6 pallets during the four-hour window. This was due mostly to his required set up that was easily interrupted by unscheduled truck deliveries and the top-priority customer service team accessing stored items for customers.

When I asked the team to come up with a creative solution that avoided the customer service pathway, they were able to breakdown 12-14 pallets. Then I asked how we could better facilitate the process to avoid truck deliveries and customer service people. One person came up with a circular approach requiring less physical steps that allowed the team to breakdown 18-20 pallets.

Then it happened. I stumbled upon a guy over one weekend that lined everything up the length of receiving using half of the pathway, so anyone could get in and out without any interruptions. I also noticed that every time he broke down a pallet, he immediately packed it out in the store, dramatically reducing the workload of the night crew.

This creative approach solved the problem of having congested aisles during sales hours. It also reduced the number of non-packed out items returning to the back room at the end of a shift, again reducing the workload of the night shift.

Unfortunately, no one in upper management noticed the increase in productivity, so everything eventually went back to business as usual. The reason was simple, it takes right-brain creativity to find a new way of increasing productivity, but it takes left-brain logic to manage and sustain it as the new process going forward.

Copyright © 2015 by CJ Powers