'Masters of the Universe' has been far from masterful at the box office, but looks likely to still get a sequel.

Courtesy of Amazon Content Services

Masters of the Universe seems set to get a sequel despite only grossing $89.9 million at the worldwide box office as its ingenious business model gives it a second chance to reach fans of the beloved 1980s action figure franchise and cartoon that the movie is based on.

He-Man, the movie's protagonist, played on screen by Nicholas Galitzine, is famous for his rousing battle cry of 'I have the power' but his performance in theaters has been far from punchy. Masters of the Universe failed to muscle its way to the top of the charts when it debuted at the end of the first week in June to a domestic haul of $29.4 million. It finished in second place, resoundingly beaten by the low budget Scary Movie reboot which grossed a massive $54.3 million.

Backrooms and Obsession, two other no frills horror films, weren't far behind Masters of the Universe, with takings of $26.3 million and $25.4 million respectively. They went from strength to strength the following weekend whereas He-Man's movie lost even more of its punching power slipping to fifth in the rankings with only $8.9 million of ticket sales.

Theaters typically receive 50% of the takings from movies with the remainder going to the studios which make them. It gives Amazon MGM Studios just $45 million from Masters of the Universe so far which is less than the $52.1 million that it spent on pre-production alone as this author revealed. According to Variety, the movie's total cost comes to around $170 million and if accurate this means it would need to gross around $340 million in theaters to break even. Masters of the Universe is a massive quarter of a billion Dollars short of that tally giving Amazon a considerable loss on the movie. Or so it seems.

The movie initially seemed destined to have a happy ending as audiences awarded it an impressive 87% on review aggregator Rotten Tomatoes. A classic popcorn flick, its vivid visuals and eye-catching action scenes earned it praise. There is no doubt that cinemagoers enjoyed the movie. The problem is that not enough of them have been to see it due to changes in the demographics of audiences in the wake of the pandemic.

Audiences all over the world became hooked on streaming during lockdown and movie theater audiences still haven't recovered. Industry experts Gower Street Analytics predict that this year's worldwide box office takings will hit $34.7 billion which is 18% less than their peak in 2019. As the popularity of streaming surged during the pandemic, so too did the number of platforms which caused household spending on the services to soar. It explains why adults tend to be in charge of streaming subscriptions and they are the audience that is most interested in Masters of the Universe.

Despite the success of an animated revival of the franchise a few years ago, it has failed to catch on with children. Testimony to this, kids under 12 only represented 4% of the audience for Masters of the Universe during its opening weekend according to Deadline, with the over 35 age group dominating at 57% and the over 45s, who grew up on the original cartoon, coming to 36%.

Although Masters of the Universe is an undoubtedly kid-friendly movie, it isn't aimed at kids in the same way that The Super Mario Bros. Movie and A Minecraft Movie were. Those movies succeeded, in part due to parents taking young children to see them. A trip to the movies is still seen as an effective way to keep young 'uns occupied, whereas horror movies appeal strongly to couples.

It reflects comments that Hollywood luminary Michael Eisner told me in an interview for the Daily Mail three years ago. "Your children are not going to want to date whilst you are sitting in the other room," he said. "They are going to want to take a date to the movies. Movies in movie theatres are inexpensive entertainment. So concerts are not going away and the movies are not going away."

It may seem like Masters of the Universe is evidence to the contrary but that's far from the case as even in the heydays of cinema there were movies which were critics' darlings but bombed at the box office.

Amazon certainly doesn't seem deterred by its performance. In fact, there could be more to come as the movie sets up a sequel by introducing He-Man's long-lost twin sister, Princess Adora. Better known as She-Ra, the Amazonian-esque character starred in her own cartoon in the '80s and it appears she could be in for more time on the silver screen.

When asked about the character in a recent interview with ComicBook.com, Masters of the Universe director Travis Knight said that "this movie stands on its own two feet. It tells a story from beginning to end. I think it has a satisfying conclusion. And yet there is a world that exists outside the frame of the film." There is good reason why he may get a chance to show fans more of this world on the silver screen.

The biggest hint at the business model behind the movie came in a recent statement from Amazon MGM Studios' domestic distribution chief Kevin Wilson when it opened.

"This weekend represents a very solid start for Masters of the Universe and the passionate, multigenerational audience response we're seeing around the world has been fantastic," said Wilson. "Travis Knight and the entire cast and filmmaking team have delivered something truly special, and this opening is exactly the kind of critical first moment that validates our holistic distribution strategy – building awareness and engagement that will carry well beyond the theatrical window."

He was hinting at the film's second life on Amazon's Prime Video streaming platform after its theatrical run comes to a close. In its bid to build a streaming giant, Amazon is ensuring that key genres are covered with exclusive content.

Buying MGM gave it the rights to renowned spy thriller James Bond while action adventures are covered by a big budget reboot of The Thomas Crown Affair. The acclaimed Project Hail Mary is Amazon’s sci-fi spectacular, The Sheep Detectives is a mystery-comedy for kids and American author Don Winslow’s novella Crime 101 is its detective drama with Chris Hemsworth, Mark Ruffalo and Halle Berry in the lead roles. Masters of the Universe is aimed at adults seeking nostalgia for the '80s and there's no doubt that it excels in that area.

Each of these pictures contributes to the platform's overall variety so even if they make a loss in theaters individually, together, this exclusive original content helps to drive subscribers to Prime Video.

"The main purpose of Prime (alongside peripheral things like making the overall Prime subscription even more stickier for consumers) is to sell third-party video subscriptions (i.e. Prime Video Channels like Paramount+, Discovery+ etc) and rent films – original Prime content is a hook to get viewers there in the first place," says Tom Harrington of media researchers Enders Analysis.

Tom Forte, media analyst at Maxim Group adds that "we see Amazon’s video strategy as similar to its e-commerce one. The company is focused on the long term and building a large business and willing to invest and lose money, on a short- and near-term basis." As he explains, “Amazon is playing the long game here. To the extent these tentpole efforts increase its ability to be, ultimately, successful they should be deemed risky, but successful initiatives.”

Ultimately, Amazon won't judge Masters of the Universe on its box office haul but on the fact that it gives it exclusive content in a key genre. The movie is a hit with fans so it has significant power to drive streaming subscriptions. Putting it on Prime Video will bring it to the attention of an older audience which is ideal as they are most likely to be interested in it.

Subscribers don't pay to watch specific movies and instead get access to all of them, along with the other content on Amazon Prime. This makes it difficult to say how much streaming revenue, and therefore profit, is generated by individual movies. So even Amazon may never know if Masters of the Universe makes a profit or a loss and it is perfectly happy with that. The movie plugs a crucial gap in its content slate and stands a good chance of attracting subscribers as it is a fan favorite.

In short, although Masters of the Universe plays in theaters, it isn't really made for them. Perhaps the clearest evidence of this is that the movie hasn't been released at all in France. The reason for this is that the country has strict laws which require Amazon to wait 17 months after releasing a movie theatrically before showing it on its streaming platform. By that time, Masters of the Universe will be old news and a sequel may already be well into production so Amazon doesn't want French subscribers to have to wait that long.

Instead, it has skipped the theatrical run entirely in France and will release Masters of the Universe there direct to Amazon Prime later this year. It shows that streaming isn't just the studio's top priority, it's the big picture.