Why Box Office Results Don't Explain How Movies Make Money
HTML-код
- Опубликовано: 11 окт 2024
- In this video we’re going to look at how movies make money, and why box office numbers are misleading….
There was a time not all that many years ago when the public didn’t generally know how much money a movie earned at the box office on its opening weekend. That made it possible for a film to start slowly and, if it had good word of mouth, become a hit over time.
Now, box office totals are widely reported.
But it’s important to remember that box office totals reflect how much people have paid theaters for tickets for a movie. And a film becomes profitable after the movie company has recouped all the money it spent not only making the movie but marketing it.
So, let’s take a hypothetical superhero movie based on lesser-known DC character Marvelous Man. Due to the success of Aquaman, Marvelous Man: The Movie gets a green light and a budget of $100 million -- a relatively small amount for superhero film. And let’s further assume the movie actually comes in exactly on budget. At this point the studio is $100 million in the red.
It then has to let the public know the movie is coming. It does this by advertising, promotional tie-ins (like a Marvelous Man Happy Meal toy), and media junkets with the film’s stars. That all costs money too and that has to be recouped as well before the movie can be considered profitable.
Let’s pretend that another $50 million was spent on marketing Marvelous Man: The Movie - there’s no hard and fast rule for marketing budgets, but half of production budget isn’t uncommon.
Now that movie has been made and promoted, it’s time for opening weekend. Say Marvelous Man: The Movie sells $100 million in tickets on opening weekend. It’s a big number, but it’s very important to remember that the studio does not receive all of that money -- the theaters get a cut.
How much is that cut? It varies. For a huge film like a new Star Wars or Avengers movie, Disney has leverage. It can negotiate a bigger cut and demand the theater show the film on multiple screens. It can also ask for a higher percentage of the gross in succeeding weeks.
In general, the studio’s percentage gets lower the longer a film has been in theaters. That’s done to entice theaters to keep films playing longer.
So, in the first week of a film that’s not a sure thing, the company producing the film might get 60% of the box office. That means that on the shocking $100 million in tickets sold by Marvelous Man: The Movie at the domestic box office, the company that made the film gets paid $60 million… meaning it’s still $90 million in the red.
Foreign box office is even more complicated but it’s all based on the theaters getting a cut and the movie producers getting a cut. The math varies, but in a very broad sense movies haven’t made any money until their box office roughly equals twice the money spent on production.
Of course, a movie isn’t done once it leaves theaters. Money is paid for streaming rights -- a number that can be challenging to actually apply to any one movie since deals tend to be studio-based for multiple films. There’s also DVD sales, rentals, an eventual pay cable window, then maybe a free cable or broadcast deal. And don’t forget about licensing opportunities with merchandise.
But in general, the bulk of a film’s revenue comes from its theatrical run.
Let’s take a look at a real example to break down how fixating on just the gross box office figure warps the picture of a movie’s profitability.
Much-maligned film Solo: A Star Wars Story made $392 million globally at the box - but the studio only got a cut of that total.
It had a reported production budget of $275 million and had a big marketing campaign behind it. We don’t know the exact number, but it’s safe to assume promotion cost $100 million, maybe even $150 million.
So it’s entirely possible that Solo lost a decent chunk of money, even on the nearly $400 million it posted in ticket sales.
Unfortunately running the numbers on the movie industry involves a lot of guesswork because the cuts on ticket sales aren’t always reported and marketing spend often isn’t made public.
The bottom line, however, is that most movies make the bulk of their money from the revenue split with theaters and there’s no clear way for the public to know exactly how much money any given film makes or loses.
Now next time you see a big box office number, you’ll know there’s more to the story!
Thanks for watching this video - which movies do you think were the biggest box office flops? Sound off in the comments section.
If you liked the video, be sure to give us a thumbs up and subscribe, it helps us reach more people, which lets us make more awesome content.
------------------------------------------------------------------------
Subscribe to The Motley Fool's RUclips Channel:
/ themotleyfool
Join our Facebook community:
/ themotleyfool
Follow The Motley Fool on Twitter:
/ themotleyfool
revenue doesn't mean profit.
Yup yup! Always gotta check the bottom line
Excellent comment.
The list of recent flops at the box office wouldn't be complete with out "John Carter".
We loved Taylor Kitsch as Tim Riggins in Friday Night Lights, but ... yeah. John Carter, not so much.
Unless they get deferments, back end participation deals (% of net profits) and other residual income then cast and crew don’t get paid !!
However the distributor will pick up a chunk of the 40-50% net profits from theatrical release (whether it is either Studio Financed 20%, Independent 35% or a Negative pick up 50%) distribution deal, less P&A and Marketing and overheads fees.
Plus without a Studio financed project then Sales agents usually get a chunk of pre-sales (fees, commission and overheads) ; banks and gap finance houses get a chunk (fees + interest) and before a independent can get see any profits himself, they may need to pay back their investors so they may see around 15-22% of theatrical box office! The remaining money ancillary and windows such as home video, VOD and TV won’t usually trickle down for 2 years or more years after it’s release ?
Thank you for this video, it was super informative.
I do have a question though: how does the profit of a certain movie gets split between cast, crew, production house, distributors... For example, does the cast (let's say lead actor), still get paid after the release and the grossing profit or they stick to their contract?
The Actors and crew get paid from the budget not the profit unless in the original contract they agree to a percentage of the films income
How is that video only got 5k views by now? It's 300k view grade at the very minimum. Keep up the good work sir.
Not sir the motley fool is a corp
Let me make sure I'm understanding this.... Let's say the total production of a movie I'm making is $12 million and let's say I spent another $7 million on promotion, that means I'm now $19 million in the hole. This basically means that in order to break even, my box office totals need to be at least $38 million in the US? Obviously a little more because I don't get all of the money from those ticket sales.
Note this system means that any artist with participation points on the back end has no independent way of auditing the movie to see if the studio has fulfilled their contract obligations.
can you explain what you mean?
@@cargocultpod Classic contractual problem where only one side has access to all the data and has a financial interest in minimizing the amount of data released. So in this case, the artist is told how much they have earned as a percentage of the "profits" but they do not get to verify the bookkeeping.
@@markbernier8434 Thank you!
I'm following the Johnny Depp trial where they admitted he made $650 million in a 14 year span, mostly due to the Pirates movies. But even Alice in Wonderland made him $68 million, because it was a back end loaded deal in which he barely spoke, having only 2 pages of dialogue.
Very interesting , thank you for sharing
Thanks Jeff!
Fascinating. Can you elaborate again including how much producers make?
Our local theatre shut down despite nice crowds claiming Disney and SJWs forced them out. Now we have to travel over 100km to a movie and those theatres usually swamped with Super Hero BS(so tired of men always inferior even as super heroes, same with anything anymore).
It's ridiculous driving all day to find out your movie only shows in 1 theatre and sold out while Ubergirl is in 7 theatres and only a dozen or so each. Leads to next question, how much do theatres make on tickets compared to victuals?(food, drink). Thanks.
so does that mean Motley believes Walt Disney stock will most likely go below or come close to $125 coming October?
We don't sweat price targets too much, but tend to look for solid businesses built for the long-term. Disney has a deep catalog of IP that should have it doing just fine for years to come :).
More detailed video please on Movie Business
What specifically do you want to see?
Marketing shouldn't be considered. That's the studio's own separate department budget yearly for that.
It's still tied to the movie's ROI.
Great video in demystifying the biz behind showbiz!
Great video! Very insightful
John Carter will always be one of the biggest holes burned in Disney’s pockets, also Cutthroat Island is another film
Theaters don't make any money for the first three week the film is shown then after that they make a percentage of the film. Theaters make profit from sweets drinks and popcorn that's why food a so expensive.💰💰💯
What about entertainment tax by different government ?
Lets learn from disney how to make money from movies.
They're best in the biz for a reason. Are you going to scoop up the new streaming offering from them?
@@MotleyFool No i mainly just watch youtube
@@InvestingEducation Fair enough, plenty of good stuff on YT!
When you want a FOOL hat on, then you will know that Movie business is the one of the worst business, where the ROI never meets the expectation that's why 80% of the films are basically a Flop.
john carter 😂
how does revenue sharing work for third party movies released on platforms like netflix?
Mortal Kombat ,it is
Will Smith wild wild West movie was part of the worst movie ever
Almost informative
Kids friendly films......Avengers