A24 Wants to Evolve. Can it Maintain its Brand Along the Way?

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The future of A24

This week’s memo and podcast are on A24. The beloved film studio made a name for itself with low-budget, high-volume, auteur-driven movies. But after a few box office misses, outside investments, and bigger ambitions, there’s a big question:

Can the indie darling maintain its identity as it expands?

I’m joined by Dr. Marcus Collins to break it all down. You can listen to us here or read a few highlights below:

When Cord Jefferson won his 2024 Oscar for Best Original Screenplay, he dropped a line about Hollywood that went viral:

“Instead of making one $200 million, try making 20 $10 million movies.”

Ironically, that’s the model for Tyler Perry Studios, which was not-so-subtlety critiqued in Jefferson’s film, American Fiction.

But that has also been the A24 model for over a decade. A24 gave us Hereditary, Moonlight, and Everything, Everywhere, All At Once, and more. Hit after hit. But after a sluggish stretch in 2023 and an influx of outside capital, the indie darling faces pressure to become more like the companies it once distinguished itself from.

A24 now wants to produce bigger-budget films that can command more dollars at the box office attendance. It also wants to acquire popular IP-based projects, like its rumored interest in the Halloween franchise.

The ambitions are understandable. Those investors who got in A24 at a $2.5 billion valuation want to see a return from their $225 million investment. And it’s harder to do that with films from a studio that has yet to generate $225 million in box office revenue from a single movie.

Changes are inevitable. Can the beloved indie darling maintain its energy along the way?

The difficult task

The path that A24 is on isn’t uncommon. It works like clockwork, especially in media and tech. Here’s the flow:

– An upstart company notices a gap in the market and embraces new tech trends to address it
– It solves the problem successfully and profitably, yet at a much smaller scale than the incumbents
– As the indie grows, it faces pressure to expand due to economic trends, rising costs, market, or regulatory changes
– It feels pressure (internal and external) to scale
– It eventually gets acquired by an incumbent and evolves into a clone of the incumbent, losing its unique edge

This happens in the music business often. Look at the individual labels and companies owned by Universal, Sony, and Warner Music Groups. The logos on those pages are full of brands that started as unique standalone entities with distinct brands and genres.

It’s not that those companies lacked the skills or patience to break through. They lacked the major label’s moat— their back catalog of valuable music, that provides cost and resource advantages that well-funded upstarts can struggle to surpass. If you can’t beat em, join em.

Hollywood has had its own examples of this. Miramax, which was acquired by Disney in 1993, faced ongoing tension with its parent company until the founders left the business.

For A24 to expand and scale without diminishing its brand, it needs to acquire an IP that fits its brand ethos.

Halloween makes perfect sense, and there are plenty of other good horror fits too. A24 could revamp one of the campier IP stories. Sony is reportedly planning on another sequel for I Know What You Did Last Summer. The original was a classic “not good but peak 90s nostalgia” movie that was popular enough for a sequel at the time. What would an A24 version look like? There are plenty of franchises where that came from.

We want to be them, they want to be us

In our recent episode, Why Top Artists Stick With Record Labels, we talked about how record labels and distributors have become more like each other. Labels now offer more flexible deals. Distributors offer bigger advances and more label services. Their worlds have blended.

A24 and Hollywood are similar. A24 wants bigger budgets, IPs, and franchises. The major film studios want to fight franchise fatigue with lesser-known IP and original stories.

Despite the tradeoffs for both sides, they face the same post-pandemic challenges in theaters:

– A movie being “good” isn’t enough to generate box office returns
– Due to streaming, beloved movies that are box office misses rarely get the same second life in DVD or VHS sales that they once did
– People aren’t showing up in droves to the box office unless it’s an event movie.

Sure, there are exceptions. The Northman (2022) did quite well in on-demand sales, deservedly so. But that’s not the norm. Well-reviewed 2024 movies like The Fall Guy and Furiosa will have to hope for similar on-demand success given their big budgets, massive marketing spends, and tepid ticket sales.

Despite the challenges, I believe that A24 will figure this out. This is a hit-driven business. All it takes is one or two big hits, especially if those hits are from bigger swings. It won’t be easy, but the opportunities are out there.

Listen to the rest of the episode! We also covered:

– Marcus’ pitch to HBO for its Max rebrand
– Our favorite A24 films
– Misconceptions about “coastal elite” and “middle of the country” audiences

Chartmetric stat of the week

One of the original A24 films is Spring Breakers, which has a bunch of fun needle drops like Nicki Minaj‘s “Moment 4 Life” with Drake. It’s a 13-year-old song that has gotten at least 233 spins per week in the past year on terrestrial radio.