Background Note | HBS Case Collection | July 2006

Out of Frame: The Coming Digital Disruption of Hollywood

by Stephen P. Bradley, Brian DeLacey and Reed Martin

Abstract

The record opening of the Pirates of the Caribbean: Dead Man's Chest, starring Johnny Depp, had finally provided the industry with incontrovertible proof that it was still possible to draw massive audiences to movie theaters. Grossing $136 million during its opening weekend, the special effects swashbuckler had trounced the $115 million opening weekend record set by Spider-Man in 2002--something few thought would ever be possible in the era of MySpace.com, X-Box 360, video iPods, and digital privacy. Dead Man's Chest, which followed the adventures of Depp's roguish but charming Captain Jack Sparrow, also did what few movies had been able to do in recent memory: prove that producing Hollywood blockbusters could still be a lucrative and relevant endeavor. Dead Man's Chest had cost more than $200 million to make but the film had grossed a record breaking $258 million in its first 10 days, and the best was yet to come. Not only was the film in line to gross $400 million in the United States alone, but The Walt Disney Co. had decided to produce the second and third Pirates films simultaneously, so another Pirates sequel was already completed and ready for release in the summer of 2007. Disney's good fortune seemed like good news for everyone, as it signaled a rebound from 2005, when the industry's domestic theoretical revenue had dropped by 6.2% to $8.99 billion and when that year's all-important summer revenue had dropped 8.5% to $3.62 billion.

Keywords: Disruption; Decisions; Film Entertainment; Revenue; Success; Technology Adoption; Entertainment and Recreation Industry; United States;

Citation:

Bradley, Stephen P., Brian DeLacey, and Reed Martin. "Out of Frame: The Coming Digital Disruption of Hollywood." Harvard Business School Background Note 707-418, July 2006.