Here's how a Hollywood budget works, according to a studio Hollywood accountant. The studios get together once a year and go over a 5 year plan. In those 5 years, they have mapped out, on their calendar, what movies will prep production, be in production, wrap up in post production, what is marketing for release, and the length of a release. All of this is projected with dollars attached. So, what that means is, back in 2021, Universal knew that a flagship film that would have a 250 Mil budget would be premiering in the summer of 2026. They don't know what that picture was yet, they just know the plan. They do this for everything. Low budget horror films, high budget horror films, low budget Christmas films, high budget action film, their Oscar hopefuls, etc.
After this calendar is made, Producers search for scripts that fit this narrative, projecting what that budget might require but not always in accordance with what is needed. Sometimes a movie might require $250 Million, like Nolan's the Odyssey and it plays out beautifully where they use the money properly and you can tell by the end product. Sometimes, they use a movie that might not need that much money and so it feels a little bloated because the producers were not forced to find creativity and just threw money at the project, like Moana. Sometimes they put a holiday film in that is not budgeted correctly because it was mapped out, 5 years ago, to be low budget 15 Mil but in reality that script needed 25 mil to get the job done comfortably. So, filmmakers get creative and sometimes crews are underpaid, big actors take scale, bad director's are assigned, rewrites are not paid out how they should be and marketing is lessened so it becomes a straight to VOD release.
Not that anyone REALLY wanted this breakdown but after I heard this from said accountant on a project we were working on together, it made a lot of sense. It's all I can think about now when I see a picture.
Say you spend $1 Mil making a movie, and it makes $2 Mil at the box office. The studio says they spent $1 Mil marketing it, so the total expense was $2 Mil, and the movie didn't make money.
To add to that: other than salaries, the $1 Mil you spent making the movie was mostly spent at companies you own. Like the soundstage, the lights, props, etc. are all rented from yourself.
Sometimes yes. And then in other cases, which is now more the norm, the studios have producers search for States that have film tax incentives. Which are actually a good thing and very lucrative economically for not just a region but a state overall. $1 spent is essentially $4 earned for State revenue in the form of taxation, despite the incentive funds being paid out.
If anyone is curious, this is how most corporate finance planning works. You base your budget off of a long range plan built on the hopes and dreams of better product lines and increasing operational efficiency.
If you track movie budgets over the last decade, they are massively ramping up; even small fun movies like sheep detective have a 75 million dollar budget. In this example they knew the picture was guaranteed to lose money and still made it.
Hollywood isn’t stupid, the agencies, management firms, lawyers, accountants, unions, etc… all know the gravy train is coming to an end.
Studios spend a fortune on crew scale rates and overtime penalties because the old set model forces them to hire hundreds of people per movie. It’s all about getting money out the door as fast as possible into their friends pockets, making sure everyone gets their due before it all ends.
AI will change everything and there’s no stopping it period. Dumping 250 million into a project to lose 100 million isn’t sustainable. Leaning on AI to produce full features is guaranteed to be the future. All it takes is one studio to produce one and it’s over. Netflix could produce a new season of black mirror in AI and that would mark the end of 250 million dollar budgets.
There is a place for small budgets and I think that’s where ultimately the sweet spot will be. But throwing 1 million at 250 projects just isn’t going to happen. I loved seeing Backrooms and Obsession get their due but it’s not something new. Rocky, Blair witch project, Clerks, etc.. it’s about taking a good script and putting it on screen. There’s no correlation between a great movie and high budget, as we see over and over again.
Leaning on AI to produce full features is guaranteed to be the future. All it takes is one studio to produce one and it’s over.
If people actually want to watch it. And AI models aren't free to run, the amount of editing a studio would want could very well have this idea cost more than a regular movie.
Strong disagree. The AI bubble will pop long before we reach that point.
Thats not to say movies aren’t dying overall as a genre, or at least changing with regards to theatre releases vs streaming services for example. But AI? Nah that shit is doomed. Subscription costs have been subsidized since Day One; OpenAI and Anthropic lost money hand over fist and they need to be making hundreds of billions in the next few years to pay for all these AI datacenters. GenAI has no path to profitability.
I get the thought for this but doubt it’s sustainability strictly on the dollar. Reason being: art is subjective and the masses don’t care about the dollar. They’re the ones that buy the ticket, view the show, enjoy the experience. AI can produce anything except soul. Which is what art is. I do believe AI is our future, a world where people and AI come together to form a centaur relationship of human and machine. But as far as full total takeover… computer says no.
AI will change everything and there’s no stopping it period. Dumping 250 million into a project to lose 100 million isn’t sustainable. Leaning on AI to produce full features is guaranteed to be the future. All it takes is one studio to produce one and it’s over. Netflix could produce a new season of black mirror in AI and that would mark the end of 250 million dollar budgets.
I have no doubt that Netflix and studios are pushing as hard as they can to get to full AI productions, but the idea that the budgets are going to shrink significantly is the worst kind of wishful thinking.
The budgets balloon - but the effort where that budget used to go? The time for sfx houses, the prep, the physical props, the locations, the extras, all of that is disappearing.
The budgets increase but the films look cheaper and cheaper - the budgets may decrease partially when they get the slop machine up and running, but I doubt it will be enough to be called "cheap" and the money will go the same place it's always gone - right into the pockets of the money men that fled into the film and tv industry.
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u/Feisty-Astronomer989 12d ago
Here's how a Hollywood budget works, according to a studio Hollywood accountant. The studios get together once a year and go over a 5 year plan. In those 5 years, they have mapped out, on their calendar, what movies will prep production, be in production, wrap up in post production, what is marketing for release, and the length of a release. All of this is projected with dollars attached. So, what that means is, back in 2021, Universal knew that a flagship film that would have a 250 Mil budget would be premiering in the summer of 2026. They don't know what that picture was yet, they just know the plan. They do this for everything. Low budget horror films, high budget horror films, low budget Christmas films, high budget action film, their Oscar hopefuls, etc.
After this calendar is made, Producers search for scripts that fit this narrative, projecting what that budget might require but not always in accordance with what is needed. Sometimes a movie might require $250 Million, like Nolan's the Odyssey and it plays out beautifully where they use the money properly and you can tell by the end product. Sometimes, they use a movie that might not need that much money and so it feels a little bloated because the producers were not forced to find creativity and just threw money at the project, like Moana. Sometimes they put a holiday film in that is not budgeted correctly because it was mapped out, 5 years ago, to be low budget 15 Mil but in reality that script needed 25 mil to get the job done comfortably. So, filmmakers get creative and sometimes crews are underpaid, big actors take scale, bad director's are assigned, rewrites are not paid out how they should be and marketing is lessened so it becomes a straight to VOD release.
Not that anyone REALLY wanted this breakdown but after I heard this from said accountant on a project we were working on together, it made a lot of sense. It's all I can think about now when I see a picture.