Saturday 15 September 2012

Movie Budgets

I've been fascinated by the movie business. Who invests such large amounts of cash up front to make a movie? How much of a gamble is it?

I've been looking at a movie budgets table published by The Numbers. It lists over 3600 (mainly US and British) movies and estimations of their budgets and grosses. It includes some unreleased and recently-released films for which the grosses are unavailable or unreliable. For the purposes of this discussion, I've excluded films before 1946 and after 2011, and those that have no income information whatsoever. That left me with 3512 movies.

I bucketed the films by logarithmic budget:

Losing Movies
Total Budget
Total Profit
Up to $9,999
2 (29%)
$10,000 to $99,999
9 (27%)
$100,000 to $999,999
57 (37%)
$1,000,000 to $9,999,999
309 (36%)
$10,000,000 to $99,999,999
781 (35%)
$100,000,000 and over
26 (13%)
1184 (34%)

Even from such a simple table, there are a number of interesting observations:
  1. Very few low-budget films make it to the cinema. Those that do generally make huge profits (speaking relatively).
  2. Only two-thirds of cinema releases recoup their budgets (modulo Hollywood accounting).
  3. The vast majority of releases are in the $10M to $100M bracket; but this has the lowest return on investment (ROI, calculated here as [Budget+Profit]÷Budget).
  4. Nine-figure budget movies are much less likely to lose money.
We can also plot ROI (y-axis) against budget (x-axis):

This produces some interesting outliers:
  • "A" is Paranormal Activity (2007) which supposedly cost $15,000 but grossed $200M worldwide. That's over one million percent ROI.
  • "B" is My Date with Drew (2004) which supposedly cost $1,100 to make, but grossed over $180,000. It's the cheapest movie I could find with a successful cinema release.
  • "C" is Pirates of the Caribbean: At World's End (2007), the most expensive film on the list at $300M. It grossed over $660M.
  • "D" is Evan Almighty (2007), the most expensive film ($175M) on the list that failed to make a profit, but only just.
  • "E" is Nomad (2005), a film in which the Kazakh government invested $40M. It only made $79,123 at the US box office. [Actually, these figures are slightly out-of-date: the film made $3M in international releases]
  • "F" is Ed and His Dead Mother (1993) which cost $1,800,000 but only made $673 (or $1097 depending on your sources) at the box office.
Also of note:
  • Mars Needs Moms (2011) which only recouped $40M of its estimated $150M costs, making it the greatest absolute dollar loser on the list.
  • Avatar (2009) made a profit of $2547M on its costs of $237M.
  • Rocky (1976) which made $225M off of its $1M costs. This the best ROI for a movie costing at least $1M.
The naive conclusion seems to be either (i) make lots of movies for about $100,000 in the hopes that one of them is a huge success; or (ii) persuade people to give you more than $100,000,000 thereby guaranteeing a sure-fire success.

1 comment :

  1. my guess is that the nine-figure ones spend a lot of that on marketing, to push the consuming public towards the movie. movies seem to be wanting a huge opening weekend, i've heard to the detriment of their longer-term staying power in the theatres. believe it or not, marketing works. sometimes. :-)