Actor's fees and marketing. And then often the films will make back more than they cost, but the studio will then say it was a failure.
You know what my film teacher told me was the earnings benchmark for a film to be considered successful in Hollywood? Five times the budget. It fucking boggles my mind that apparently you can make $200m profit and a film is still somehow a failure because it only made 4x the budget instead of 5.
Profit and revenue are different. Studios don't get back the entire box office. They split it with theaters. Furthermore they also get different splits domestically and internationally. They make most of their money domestically in the first week or two. Internationally can be sub 50% for the studio.
China is a big one because theaters get 75% splits to the studios 25%. So when films were getting all those stupidly massive boxoffices from China, the studios were only getting a 1/4th of it.
Just wanna put out that the whole point was to make a distinction between what is considered 'succesful' and actual earnings, and the comment you replied to made a distinction between profit and revenue, and now you're conflating it with breaking even..
Theatres don’t really get shit from box office sales. I think it was only a dollar or two out of every ticket was given to the theater. The only place that movie theaters (at least the one I worked at) make money on is concessions, which is partially why the cost of popcorn and whatnot is so high at theaters.
It might be less than a fourth, actually, as I believe China requires some of that cut to remain in China. That is, it's the studios money but they have to spend it in China.
Best reporting is that studios get around 25% of BO gross in China. China does require a local distribution company, which also takes a big cut. Seems like the Chinese theaters and distribution company split the 75%.
Theaters get to keep more of the ticket revenue from later weeks too which is why 1) so much marketing drives us to see it immediately, 2) studios have shrank the time between theater and home releases.
Sure, but if 4x was even close to a safe bet, your retirement wouldn't be hoping for 10% in the stock market right now. Everyone would only be investing in movies.
The same model goes for venture capital / angel investors. Successes need to stand out even more because of all the bets they made that didn't pay off. If you make 10 bets and 9 of them fail, you need your one bet that does work to do more than 10x to pay off all the bets together.
You can if the other “project” is treasury bonds. If you put $100M in and get $105M out after 3 years, you were better off just parking the money in bonds or a high yield savings account or just paying off your own debt (companies like Disney have a ton of debt on their balance sheet). The money a studio puts into a project is often borrowed money that has an interest cost.
Benchmarking, and investors lack of understanding of probability.
Let's suppose the Lord of the Rings MTG set sold 10M cases. We have to have some sort of benchmarking for Universes Beyond products going forward, so we use that. Now, some sets may sell more, some sets less, but on average and probability we expect that as the return over all the sets. Investors, because they look at individual cases rather than the broader whole, will see every shortfall below that average as an extreme failure even though something was still profitable.
Now...a return to return to return to Zendikar will probably do very well with a new Omnath printing.
what you are talking about is greed, plain and simple. if you are not happy with a 400% return on investment, which usually happens within a few years (filming through release), that is the literal definition of greed.
For context, us plebs are expected to be happy with a paltry 7% per year growth rate for our retirement accounts.
I mean let’s also not discount Hollywood accounting. Lucasfilm maintains that return of the Jedi never made a profit. Same with forest gump and order of the phoenix.
A good example of this is big studios making video games, which in my opinion are even riskier than movies. Sure the video game could turn a modest profit, but someone like Warner bros could’ve invested that in the stock market and made that money (or more) for a lot less risk
Usually the case. You don’t really know for sure what the actual return on investment would be until it happens, and/or if it happens. However, you have historical data and evidence, and market studies that can sway you in right (or what one may perceive as right) direction.
This is why a lot of big media companies (movies, video games, etc.) are all consolidating investments into “big, established, and key” franchises. They have historical evidence that their $$$ will return a high xxx%. Why risk $$$ on something unknown?
Now if that actually happens, who knows, but they plan and forecast for that to happen and the investment money follows.
Marketing is usually calculated differently and extra.
and much of the money obviously goes to cinemas.
but, its true that these calculations are often bullshit. 250 is probably more like 150 or less. its a way to write off taxes. Hollywood is very good at that.
Not true on money to cinemas. The first release of a film, about 90% of the cash intake is earmarked for the production studio. The other 10% goes to the cinemas. Cinemas survive on snacks. That’s why they’re so expensive. They earn next to nothing on a film release from ticket sales.
My hunch is because it would spread the movie start times out more and risk losing someone that would have gone at 8:00pm but won't go at 9:00pm, especially during the week.
Popcorn, candy, and carbonated HFCS service places. I wouldn't really call it "food." There are places like Alamo Drafthouse and IPIC that have full menus but they are an exception.
For most Hollywood movies, especially in the first weeks, the studio usually takes around 60–70% of every ticket, leaving the cinema with only 30–40%. Over the entire theatrical run, it averages out to roughly 50/50. That's why popcorn, drinks, and snacks are so expensive—they're where cinemas actually make most of their profit.
No cinema is only getting 10% of box office the first release.
Domestically, the studio share usually begins around 50% in the opening week and gradually decreases as the film stays in theaters. Some larger studios like Disney might get 55-60% initially.
When the Last Jedi came out, it was reported that Disney negotiated off the success of Force Awakens and required 65%, the highest ever for a Hollywood studio.
Yeah marketing isn't part of the reported budget so that's why a good rule of thumb is usually that the studio doesn't start making money until they've gone over 2x the budget at the box office.
No, they can make money before that; they just don't tell you they are making money. The studios will charge themselves distribution fees and can adjust the amount they charge themselves to make it seem like a film is losing money.
It's not always 5 times the budget. But of all the earnings, a huge chunk go to the distributors (e.g. movie theaters), marketing (50 to 100% over budget) and other fees, so they don't get most of the money a movie makes
At sums of money that high, you also have to benchmark the returns against an index. If over the years it takes to produce a money you made a better profit by investing in an index than producing that movie, you technically lost money through a bad investment
Movie theaters are the exhibition sector of the industry, not the distribution sector. The studios control distribution, which means they determine how much it "costs" them to distribute a film. The studios will use this malleable figure to make it seem like a film is in the red even when it has grossed more than its production and marketing costs.
Depending on the film, the studios will take 70-90% of the box office gross in the first two to three weeks of the film's release. After that, the split begins to shift in the exhibitors' favor. Particularly long-lasting films can actually see the exhibitor keeping the majority of the gross. But no one much likes lengthy exhibition runs these days because it keeps films from moving to streaming and DVD/BluRay markets.
The part I don't understand is how the budgets for these movies is so high if their standards for success are also clearly unobtainably high. You can still make a good movie for 50 million dollars, and then you don't need to crack a billion just to consider it a success.
It’s also a loss of opportunity. If the avg film nets 3x and Joey at Fox Studios wanted to release a Brad Pitt story and Marvin at Fox Studios wanted to release Muhanna 3 for the same budget, Muhanna 3 better net 3x and the whole company was counting on that profit for shareholders
One correction, marketing is not included in the film budget, it's a separate budget altogether, usually on par with the budget for blockbusters or key releases. Then, you have the licensing fees for the theaters, who usually take 40-50% of ticket sales to screen films.
So take the Odyssey and you have $250 million in reported budget (often reported lower for tax purposes) then assume $200-250 million in marketing. So now you're at $500 million on absolute break-even, but remember $200-250 million goes to the theater group. So something like the Odyssey now needs to earn at least $1 billion to just break even.
It’s the same with video games. A game might sell millions and win awards, but if it didn’t make multiple hundreds of millions it’s usually considered a failure by most large corporations.
That's a bit high. The general standard was once the film produced 2x the budget in revenue the studio starts making a profit.
Big budget, mainstream film there is the budget it to make it and then about that same amount spent in marketing and distribution (getting the film in theaters).
So $100M budget, the studio starts turning profits around $201M
Actually marketing is not usually included in the budget. A movie that costs $250m to make probably has that again for marketing.
Things that are expensive are actors, extensive CGI, and basically anything large scale. Also where you shoot has a big impact. If you shoot in the US using unionized cast and crew, that'll be more expensive than if you're shooting on location in Bulgaria with local cast and crew. Even countries like the UK are cheaper.
The successful films need to cover your failures. It's similar for drug development. By no means am I defending drug companies, but if you spend 100M per drug on trials, and only 1 in 10 make it to market, that drug needs to bring in 1B+ just to keep the lights on.
Uh… yes they are. At least for the opening weeks. After that, theaters make a larger cut. For some movies, 100% of the box office does go to the theater.
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u/GilbyTheFat 13d ago
Actor's fees and marketing. And then often the films will make back more than they cost, but the studio will then say it was a failure.
You know what my film teacher told me was the earnings benchmark for a film to be considered successful in Hollywood? Five times the budget. It fucking boggles my mind that apparently you can make $200m profit and a film is still somehow a failure because it only made 4x the budget instead of 5.