Critically acclaimed at its release and considered a benchmark for sequels thirty years later, Terminator 2 is considered a classic of Western cinema. Originally released on 3-7-1991 in the United States and on 16-8-91 in the United Kingdom, it generated little controversy, but it did raise concerns within the film industry as it approached release. If it proved to be commercially successful, there were worrying ramifications for the future of filmmaking. Arnold Schwarzenegger’s (1947-) character had turned from villain to hero in the storyline of the film, but would Terminator 2 be a villain the film industry would rather avoid?
Approaching release, Terminator 2 was seen as a potential blockbuster in the summer of 1991. In the months between Memorial Day (24th May) and Labor Day (2nd September), film studios would make 40% of their annual revenue. 1991 was going to be a competitive summer, with 51 major releases compared to 31 the previous year. In the early summer, Robin Hood: Prince of Thieves took $57 million in its opening two weeks; City Slickers took $47m in its first three; Thelma and Louise had been a sleeper hit. 1989s summer success had been Tim Burton’s Batman, which grossed $200 million, and many wondered if Terminator 2 could break the record.
It would release during a dark patch for Hollywood. The previous year, big expensive sequels had been outperformed by smaller films. Die Hard 2 (1990) had been moderately successful, as had Days of Thunder (1990). Problems at major studios, including Paramount and Colombia, effected their releases. Even Disney films were struggling to gain traction. There were predictions of a financial crash in Hollywood despite greater global markets and home viewing options increasing revenue streams.
Despite these worries, cinema chains hoped Terminator 2 would be the saviour of the summer. It could drive box office sales, prove that sequels and big stars could still be commercially successful, and challenge the monopoly of the big studios. With the opportunity to set new records and generate unprecedented revenues, why were some worried the impact would be negative?
Commercial success and the filmmaking industry: the impact
If Terminator 2 was going to make its money back, it would need to break the record. Including advertising and promotion, the cost of the film was estimated to be around $125 million (£74 million). This was the first concern: if it were commercially successful, it could encourage studios to focus too much on big budget action films, seeing an ‘easy win’ formula that could replicate the success each year. Another commercially successful action blockbuster could be disastrous, stagnating the output of studios in attempt to make easy money.
The rise of big budget special effects films could start a wave of spiralling costs. In 1991, the average film cost $26.8 million to produce and around $22 million in global marketing: only 30 would make over $20 million at the box office. If films like Terminator 2 were financially successful, it could encourage the industry to become economically irresponsible. Terminator 2’s production company Coralco were criticised for their free-spending approach to making films, offering exorbitant wages to actors, and operating with significant debt. Cynicism among investors led to fluctuating share prices, and their expenditure on global promotion ballooned costs. Success could set an example resulting in more studios and production companies becoming financially negligent.
At the time, their business model was as innovative as it was risky. On one hand they relied heavily on high grossing, big budget successes for revenue (exemplified by their previous income from 1982’s Rambo: First Blood and 1990s Total Recall). On the other hand, these high grossing films funded straight-to-video releases and promotion in international markets for the blockbusters, increasing the income they could generate. Their innovation was combining action-led, dialogue-light movies that could easily run in non-English speaking markets with broad international distribution networks that could sell them effectively.
It could also increase expectations among the audiences which would drive up the cost of filmmaking. Terminator 2 had shown it was possible to deliver advanced special effects and post-production on a schedule, which previous attempts had failed. This caused two problems. Firstly, audience expectations on post-production could push companies into ever greater costs, further destabilising finances. Secondly, the special effects were central to the film, putting it at risk of financial failure if they were not well received. These two problems combined into a larger issue around risk and reward, and whether studios would increasingly gamble on higher costs of new effects techniques on unpredictable returns.