How much should a big budget movie make at the box office relative to its production cost to be considered to be a likely financial success?
4 Answers

%name HOW EXACTLY DO MOVIES MAKE MONEY?

In general, the rule of thumb for a Hollywood movie is the movie theater gets 45% of every ticket sold and the studio that created the movie 55%.  (That’s not exactly true; the percentage breakdown changes from week to week of a movie’s release, but it’s close enough.)

So in general, a movie has to recoup both it’s budget and advertising/promotional costs. For a $75 million dollar movie A&P can range from $10 million to $70 million, sometimes doubling the costs of production.  But these numbers are often murky estimates, and it’s not always clear how much money a studio really spends.

I often hear people say that a movie has to make TWICE its production budget in world-wide box office receipts to start making money.  This is why a movie such as Cowboys and Aliens, which cost 163 million and made 175 million worldwide, is considered a “flop.”

None the less, the phrase “considered a financial success” is a slippery at best.  Often a movie is judged not against its budget but against “industry expectations.”  These expectations are sometimes driven by tracking numbers that gauge the public’s awareness of a movie and how eager they are to see it.

However, expectations can also be driven by how much money an earlier installment in a franchise made at the box office, or how much money a big star or big director usually brings in with one of his/her movies, or even how much money films in a similar genre have recently taken in.

For example, a movie like this summer’s Spider Man, which cost 230 million and made 680 million worldwide, can be regarded by some as a “disappointment” when compared to The Avengers, which cost about the same but brought in 1.5 billion. *

So a “financial success” is really a very murky function of  costs and expectations.  Big “hits” are easy to spot of course, especially when they far exceed both the films budget and industry expectations.  An example is Rise of the Planet of The Apes, which cost about 90 million, was expected to make around 150 million, but made close to 500 million.*

I imagine that a producer or studio executive could answer this question in much finer detail, but that’s an approximate answer.  Check out Marie Stein‘s answer to this question as well.

* All numbers were pulled from IMDB on 8/11/2012.

%name HOW EXACTLY DO MOVIES MAKE MONEY?

Adding to previous answers:
Disregarding expectations and speaking in generalities…

For easy math, use 50% take for wide releases:
If a film’s budget was $20M and makes $40M in it’s first weekend, that can be considered a success, because “essentially,” for lack of a better description, that $40M means the film has earned back its budget and any subsequent box office dollars, PLUS all the ancillary: ON-demand (Mark Cuban stated earlier this year that his films have been pulling over $4M just ON-demand sales, but again, this is Mark Cuban saying so), subscriber (Netflix, Blockbuster.com, etc.), airlines, pay cable, basic cable, network, DVD sales, etc., can be considered profit– presuming that the P&A costs were modest.

Now keep in mind this “50%” usually increases the longer a film is in theaters–which is a reason why theaters only keep films in theaters for a short time.  However, they will keep a film for over a year, if it continues to fill seats.  Filled seats, means more concession customers and that’s where theaters make their real profit.  (e.g. “Big Fat Greek Wedding” and “Winter’s Bone” were in theatrical release for over a year).  Generally, most films are out of theaters in 2 to 3 months.

Using examples from earlier this year:

In the last weekend of February 2012, “Act of Valor” made almost $25 Million* that weekend.  The budget was $12 Million.  So, it essentially broke even—which is great, because from that point on every ticket sale will be a profit (although not significantly that much more due to its subject matter).  Along these same lines, “The Vow,” another recent box office winner for that weekend earned $61.9 Million in its first week ($30 Million production budget) and had a 2 week total of $103 Million and continued to do well in upcoming weeks–because the film is geared towards women.  Women buy more tickets/decide which film to see and also do more repeat business than men.

In comparison, “This Means War” did about $33.5 Million at the box office in 2 (two) weeks of release.  But the budget of the film was $65 Million.  So, it’s considered a failure (and credit again, women ticket buyers for even getting this dreadful movie up to $33.5 M in ticket sales).  For a studio film, it’s considered a failure, since the likelihood of it breaking even (in this case reaching $130 Million domestic) at the box office within a few weeks was unlikely.

As of the first week of June 2012:
-“Act of Valor” made $80,419.713, 670% ROI
(approximately $70,012,847 in domestic profit)

As of the second week of May 2012
-“The Vow”  made $196,114,570, 654% ROI
(approximately $125,014,030 in domestic profit)

As of the second week of June 2012:
-“This Means War,” the largest budget of the these examples AND the longest in theatrical release, made $156,491,279, 241% ROI
Tom Hardy and Reese Witherspoon helped with the foreign sales, but, domestic profit was just $54,760,791
(approximately a NEGATIVE $10,239,209 on the domestic front in comparison to its budget)

In 2010, Warner Brothers continued to state that Harry Potter and the Order of the Phoenix, which grossed $938.2M worldwide was still -$167M, because of outrageous P&A costs and other fees:
http://www.deadline.com/2010/07/…

I consider it quite difficult for a big budget film to ever really be considered a success.

If anything, history has shown that lower budget independently financed films bring in a better return or as you stated are a “financial success” than studio financed films:

The Top 3 ALL-Time Grossing Studio Financed Live Action Films (Non-Sequel)
Worldwide Grosses ROI:
1.  “Avatar” (including 3-D sales) 1,174%
2.  “Tiantic” (not including recent re-release) 922%
3.  “Alice in Wonderland” (2010) 512%

compare that to some recent independents:
“The Best Exotic Marigold Hotel” (as of 7/9/12) was at 1,242%
“Black Swan” 2,534%
“The King’s Speech” 2,761%

and because I mentioned them above:
“Big Fat Greek Wedding” 7,375%
“Winter’s Bone” 692%

Of course, none of the above figures factors in P&A, but it also does not include any ancillary figures.  So the two cancel each other out for the purpose of keeping these calculations basic.  In my opinion, you would want a ROI of over 300% to be considered a “financial success.”  Over 500% to factor in the higher P&A.

Using your $75M budget example, you’re looking at $75M (ideally $150M+) opening weekend and over $375M for a total haul.

I hope the above has been helpful in answering your question.

*All Film Budgets and Theatrical Grosses Figures from Box Office Mojo

%name HOW EXACTLY DO MOVIES MAKE MONEY?

Check out Box Office Mojo for some interesting numbers…Box Office Mojo tracks theatrical box office earnings: “Additional sources of revenue, such as home entertainment sales and rentals, television rights, product placement fees, etc. are not included. All grosses published reflect domestic earnings, i.e., United States and Canada, unless otherwise noted”.  Movies these days can make a LOT of money through those additional sources of revenue.  Additionally, international sales and distribution is very significant, especially for specific genres.

http://boxofficemojo.com/
http://www.boxofficemojo.com/abo…  (for additional feeds and definitions – and note, they don’t talk about currency translation, or tax breaks for productions in some parts of the country/world, etc.)

For a $75MM production budget, add in about $25MM for P&A (“prints and advertising” – which is a huge number)…but you don’t necessarily need to gross $100MM in box office for it to be a “financial success”.  Depends on who’s calling it a “financial success”, for one thing.  For the studio, gotta make bizillions, always; for some of the fortunate who made good deals off the gross, you don’t need to make that kind of money at the box office, at all…all depends on who your lawyers are.  PLUS, you might end up making money without money, sort of – because of tax breaks, investment structures that allow for diversification against a slate of films, etc.  Complicated business…

%name HOW EXACTLY DO MOVIES MAKE MONEY?

Check this post out – and it will likely help you do the required calculations:

StoryAlity #24 – On Feature Films and RoI (Return On Investment)

A movie usually makes around twice on `ancillary media’ (eg DVD, Bluray, TV, cable, VOD, airplanes, oil rigs, etc) whatever it makes in cinemas (see: Vogel 2011, 2014, Entertainment Industry Economics for more). ie Cinema performance of a movie provides an indication of `subsequent’ (ie ancillary media) demand.

As a (very) rough guide, in the cinemas, you probably want to make 2.5 times the budget, to break-even. So, probably, $187.5M. Sometimes more, for complex reasons. This is partly because, studios spend about the same on the Marketing (Advertising) as, the production-budget of the movie. So a $75M movie may have $75M spent on advertising.

But, it’s complex… see what Stanley Kubrick says, here…

StoryAlity #24 – On Feature Films and RoI (Return On Investment)

Maybe check out my blog sometime for more on this sort of stuff: ie StoryAlity

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