The creators of the movie do not receive 100% of the money from sales. They need to make significantly more than the budget because the theater keeps some of the profits. Also, there are other expenses involved not included in the initial budget.
$100M is just the cost to make the movie. The studio will tend to spend about as much more to promote it – ads on TV, posters, billboards, promo spots, etc.
Then on top of that, when you read xxx movie took in $300M at the box office, well, the theaters do get some of that money, so it doesn’t all go to the movie studio.
You know theaters take a cut, the producers take a cut, the actors take a cut many times, there’s a lot of people and companies filling their pockets with the earnings
The production budget doesn’t include the advertising budget. Rule of Thumb is that the advertising budget is at least equal to the production budget, sometimes more. I can’t remember, but post-production re-shoots might be counted separately, as well.
The figure of 100 is just to make the movie. Hiring actors and crew, renting locations, craft services, special effects, etc
After you shoot the movie and edit it and get a cut the director and studio like this is not the final step. Now you have to tell everyone you made a movie, when it’s coming out, what it’s about, and what actors are in it
This is the advertising and promotion of the movie. TV commercials, billboards, bus ads, talk show circuit, product placement on cereal boxes, etc for a couple of weeks or months before your movie comes out so people talk about it and tell their friends and then see the movie when it comes out.
This stuff costs a shitload. A general rule is it will cost about the same as the actual budget is the movie. If it’s Oscar bait, you will also spend extra money bribing the judges for picking Oscars, paying to get it screened in at least x theaters to make it eligible for the awards you want, making a new different trailer just for the judges to beg for an award (called “for your consideration”) and other things of this nature that are also all expensive
If it’s a movie you’re expecting to release globally to pander to the Chinese like the latest piece of capeshit or video game reboot, you will have to do this in a bunch of different countries too in various languages catering to different demographics which costs extra money
This is why a movie needs to make double or triple its budget to break even
In addition to what other people have said about marketing costs and how much ticket sales actually make back to the studio.
There is also opportunity cost and risk. You are spending $100M, you want to be sure that you get a significant return on that. If you somehow knew you’d only profit $3M on a $100M movie, you probably judge it not worth the effort and opportunity cost of pursuing a different project that has a perceived higher return.
100m is only the cost of production, usually at least additional 50% is spent on marketing.
Box office sums all the money spent by people, who went to watch the movie. Movie theaters have to earn something, so they take their cut. There are also taxes. The rule of thumb is that the movie producers get roughly 50%.
Hence (100m + 50%) * 2 = 300m. However, investors expect to make a profit, so it isn’t enough to break even. A successful movie should earn much more than it costed. Typical investments should bring 10% a year, so if a movie has been in production for three years, it should give you roughly 30% (33.1 % to be exact) of pure profit.
As others have said there are things like the marketing. But something that you need to also remember is that you want to make another movie later at some point. Which is also going to cost money.
So let’s say it costs 100m for just getting your cash back on the physical making of the movie, you need 100m for marketing, and 100m to put towards your next movie which may have a higher budget and also to make some profit.
Historically theaters would get around half. Add in the cost of 2000 prints (back when it was real of film) and a big advertising budget and that’s what is needed.
Now, if you are someone with a piece of the film, that ratio jumps up even more. Distribution fee (used to be 20-30%) and costs would be deducted. Hence, show business accounting rarely show a “profit.”
Take the recent Snow White film. The “official” budget for that film is around $250 million. Here is the first problem. That is probably an old number and does not reflect all the chaotic rewrites, reshoots, and the hasty CGI. We do not know exactly how much they spent. But it is almost certainly more.
Then there is the marketing. This is hard to pin down. The amount I have seen ranges from $70 million to $200 million.
At the end of the day, the entire investment will probably be close to the “rule of thumb” to just double the official budget. This means Disney needs to make back $500 million to break even.
But wait. Keep in mind that Disney could have just thrown that money into some stocks instead. So in order for the investment to actually make sense, they really need to make 5% per year that the film was in production. This film was in production for 3 years, so Disney really needs to make around $580 million to really “break even”. Even if we take into account that some of the money really gets spent later, that is still going to mean Disney needs at least $550 million for any of this to make any sense. (If you don’t like “stocks” there are other fairly safe investment options, or they could just make smaller, better films)
And then the big one that people forget: Disney does not own the theaters. For really hot movies, Disney can sometimes get more than 50% for a few weeks. This is not a hot movie. If they are *lucky* they might have gotten 50% (the estimate I have seen is actually 45%, but we’ll go with 50%). So in order to get that $550 million, the box office receipts would need to be $1.1 billion. Just to break even.
So let’s see how things are stacking up for our princess.
The current worldwide box office is around $180 million. Let’s give the film a little more time and say it manages to squeak out $200 million. About $100 million is going to flow to Disney (if they are lucky). With a budget of around $500 million (and with lost interest more like $550 million), that means the film has lost Disney more than $400 million. If this holds, it will be the biggest bomb (in absolute terms) of all time.
It need to be able to pay for itself and its marketing as well as the the next film and its marketing to be made, just to keep products rolling out, not to mention that it doesn’t simply earn 100% of its proceeds, it needs to earn twice its budget just to break even, same goes for videogames
Comments
A) they spent $200 million on marketing
B) Hollywood accounting
Usually the marketing budget is equal to the spend on the film. Also, they don’t get 100% of ticket price.
The creators of the movie do not receive 100% of the money from sales. They need to make significantly more than the budget because the theater keeps some of the profits. Also, there are other expenses involved not included in the initial budget.
$100M is just the cost to make the movie. The studio will tend to spend about as much more to promote it – ads on TV, posters, billboards, promo spots, etc.
Then on top of that, when you read xxx movie took in $300M at the box office, well, the theaters do get some of that money, so it doesn’t all go to the movie studio.
box office numbers are not profits for the studio, it is ticket sales.
Cinemas take a cut as well, and is sometimes about 50%
Often times, marketing is also not included in production costs
100m for the marketers, 100m for the distributors.
First, a movie’s production budget does not include marketing costs (they are spent by the studio rather than the production company).
Second, the share of the box office that theaters pay to studios is known as a “rental fee” and theaters keep around 49% of the takings on average.
That means it’s plausible for a film with a production budget of only 100M to need a 3X return to break even including its marketing spend.
You know theaters take a cut, the producers take a cut, the actors take a cut many times, there’s a lot of people and companies filling their pockets with the earnings
The production budget doesn’t include the advertising budget. Rule of Thumb is that the advertising budget is at least equal to the production budget, sometimes more. I can’t remember, but post-production re-shoots might be counted separately, as well.
No
The figure of 100 is just to make the movie. Hiring actors and crew, renting locations, craft services, special effects, etc
After you shoot the movie and edit it and get a cut the director and studio like this is not the final step. Now you have to tell everyone you made a movie, when it’s coming out, what it’s about, and what actors are in it
This is the advertising and promotion of the movie. TV commercials, billboards, bus ads, talk show circuit, product placement on cereal boxes, etc for a couple of weeks or months before your movie comes out so people talk about it and tell their friends and then see the movie when it comes out.
This stuff costs a shitload. A general rule is it will cost about the same as the actual budget is the movie. If it’s Oscar bait, you will also spend extra money bribing the judges for picking Oscars, paying to get it screened in at least x theaters to make it eligible for the awards you want, making a new different trailer just for the judges to beg for an award (called “for your consideration”) and other things of this nature that are also all expensive
If it’s a movie you’re expecting to release globally to pander to the Chinese like the latest piece of capeshit or video game reboot, you will have to do this in a bunch of different countries too in various languages catering to different demographics which costs extra money
This is why a movie needs to make double or triple its budget to break even
In addition to what other people have said about marketing costs and how much ticket sales actually make back to the studio.
There is also opportunity cost and risk. You are spending $100M, you want to be sure that you get a significant return on that. If you somehow knew you’d only profit $3M on a $100M movie, you probably judge it not worth the effort and opportunity cost of pursuing a different project that has a perceived higher return.
There are two things to consider:
100m is only the cost of production, usually at least additional 50% is spent on marketing.
Box office sums all the money spent by people, who went to watch the movie. Movie theaters have to earn something, so they take their cut. There are also taxes. The rule of thumb is that the movie producers get roughly 50%.
Hence (100m + 50%) * 2 = 300m. However, investors expect to make a profit, so it isn’t enough to break even. A successful movie should earn much more than it costed. Typical investments should bring 10% a year, so if a movie has been in production for three years, it should give you roughly 30% (33.1 % to be exact) of pure profit.
As others have said there are things like the marketing. But something that you need to also remember is that you want to make another movie later at some point. Which is also going to cost money.
So let’s say it costs 100m for just getting your cash back on the physical making of the movie, you need 100m for marketing, and 100m to put towards your next movie which may have a higher budget and also to make some profit.
Yea a movie basically has to make like 320% of it’s budget to break even.
Kinda why flicks over $150m aren’t sustainable.
$100m is the PRODUCTION budget.
Marketing budget is approximately equal.
Exhibiting the film, selling the film, and distributing the film around the world is not a charity either, they all cost money.
Generally 2.5x budget is breakeven, not 3x. But it’s somewhere in there for most wide release films
Historically theaters would get around half. Add in the cost of 2000 prints (back when it was real of film) and a big advertising budget and that’s what is needed.
Now, if you are someone with a piece of the film, that ratio jumps up even more. Distribution fee (used to be 20-30%) and costs would be deducted. Hence, show business accounting rarely show a “profit.”
Take the recent Snow White film. The “official” budget for that film is around $250 million. Here is the first problem. That is probably an old number and does not reflect all the chaotic rewrites, reshoots, and the hasty CGI. We do not know exactly how much they spent. But it is almost certainly more.
Then there is the marketing. This is hard to pin down. The amount I have seen ranges from $70 million to $200 million.
At the end of the day, the entire investment will probably be close to the “rule of thumb” to just double the official budget. This means Disney needs to make back $500 million to break even.
But wait. Keep in mind that Disney could have just thrown that money into some stocks instead. So in order for the investment to actually make sense, they really need to make 5% per year that the film was in production. This film was in production for 3 years, so Disney really needs to make around $580 million to really “break even”. Even if we take into account that some of the money really gets spent later, that is still going to mean Disney needs at least $550 million for any of this to make any sense. (If you don’t like “stocks” there are other fairly safe investment options, or they could just make smaller, better films)
And then the big one that people forget: Disney does not own the theaters. For really hot movies, Disney can sometimes get more than 50% for a few weeks. This is not a hot movie. If they are *lucky* they might have gotten 50% (the estimate I have seen is actually 45%, but we’ll go with 50%). So in order to get that $550 million, the box office receipts would need to be $1.1 billion. Just to break even.
So let’s see how things are stacking up for our princess.
The current worldwide box office is around $180 million. Let’s give the film a little more time and say it manages to squeak out $200 million. About $100 million is going to flow to Disney (if they are lucky). With a budget of around $500 million (and with lost interest more like $550 million), that means the film has lost Disney more than $400 million. If this holds, it will be the biggest bomb (in absolute terms) of all time.
It need to be able to pay for itself and its marketing as well as the the next film and its marketing to be made, just to keep products rolling out, not to mention that it doesn’t simply earn 100% of its proceeds, it needs to earn twice its budget just to break even, same goes for videogames