Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

I hear a lot about movies that cost upwards of $100 million to make and only earn $35 million at the box office in return. This happens ALL THE TIME. Most recently, Prince of Persia had a $200 million operating budget, yet has 'only' earned $85 million so far--and doesn't stand to make much more with Inception around the corner. Did Buena Vista just lose $115 million? No, because when 'Prince' passes $100 million it will be probably be considered a minor success. I know DVD sales and video rentals count for a lot, but over $100 million?!

To complicate matters-don't production companies, distributors, and exhibitors collect only after the movie is released? And don't actors, writers, and directors earn bonuses at benchmarks like $25 million, $50, etc...? How much of the budget, then, is actually paid for and how much is just calculated to be taken out of the domestic box office receipts?

Our film industry is still one of the most bankable commodities the U.S. has, so I know I must be overlooking something. Maybe I'm confused as to what goes into the budget? Maybe it already accounts for expenses like promotion and advertising (usually about $20 million for a major studio release), star/director salaries ($10-20 million), and studio fees?? I'll start a different thread for that...

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

I don't think Prince of Persia will, in fact, be considered a success, unless a) it didn't really cost $200 million (quite likely; that sounds crazy high to me), or b) it makes a fair amount overseas.

You're right in that a film like that isn't going to make up $100 million or more in red ink through home video alone...but it can make up a heck of a lot, and overseas markets can make a huge difference, as well, particularly with a less American-centric film.

As for when people collect: I don't think that matters too much, as long as they do. And as for benchmarks: I'm fairly certain only the hugest stars have those sorts of things available to them, and they're often negotiated individually. And when they have them, they almost invariably take less upfront, which offsets costs, anyway.

So anyway, I don't think you're overlooking anything, I just think movies can chip away at the margins overseas (or more, with some films) and make quite a bit over time on video. Not to mention selling premium channel rights, on-demand video, and eventually TV airing rights, and any other merchandising that might go along. There are a lot of ways to mitigate losses, or even turn a profit on a disappointing film.

Even when these films do lose money, however, I'd think it's more than offset by the instances in which a franchise is created. The money that can be made from successfully launching a new franchise can help pay for several disappointing big budget films.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

It's quite interesting isn't it how one should make a movie? Do they Americana it? Or, as you describe, Yoda..."less American-centric film". I suppose what comes into play also are the bankable stars. Do they pay the 20-25 million for Brad Pitt, Robert Downey Jr, Cameron Diaz. Tom Cruise, use to be the most bankable star around, but, a visit to Oprah and all that diminished, well, within America anyway.

I suppose a good example would be Avatar & the Hurt Locker. The Hurt Locker gets critical acclaim & Avatar laughs all the way the bank. Even if there were no subtitles you could still appreciate the Avatar, whereby, the Hurt Locker you would be totally lost.

So, where do you get the best return for your buck? A big buget CGI 3D movie with all the special effects or paying a "star" millions of dollars to perform and sell it? We have an Australian production Happy Feet by George Miller, and that seems to make a killing. Employ a few stars for voice over work, and computer animated characters as the stars who don't complain. It's sad though, that studio's get the bulk of their money from kids & tweens...:(

I forgot the most notable bankable star..Will Smith

[quote=Yoda;634363]I don't think Prince of Persia will, in fact, be considered a success, unless a) it didn't really cost $200 million (quite likely; that sounds crazy high to me), or b) it makes a fair amount overseas.

a) Yeah, it sounds absurdly high, especially considering the end result, but the movie did cost $200 million (IMDb, Box Office Mojo, several industry news articles...)

b) I can't believe I completely ignored the overseas factor here.

Naturally. You are from America. ;)

Yep, that's a big factor you initially forgot to take into account. Prince of Persia made (is still making) a killing outside of the USA. Buena Vista earned their entire production budget back from international ticket sales. Add everything else that Yoda said and the conclusion is that Prince of Persia is a commercial success.

Unfortunately, that's also true for Sex and the City 2.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

I don't think it's true for Sex and the City 2. It's not the knd of flick that does well overseas amd it tanked over here.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

It's actually made about two-thirds of its gross so far overseas. Wouldn't have expected it to, but there ya' go.

Anyway, in case anyone's wondering, Prince of Persia has made just under $90 million domestically, and over $220 million overseas. As for the budget, however: it certainly could be that high, but these numbers are notoriously unreliable, and even multiple sources aren't terribly helpful, as they could easily just come from one another, or all from one source to begin with.

The Studios are pretty tight with exactly what they make on DVD/Blu-Ray and television rights sales, but yes, they could easily be in excess of $100-million per each "major" title like a Prince of Persia. Also the "budget" that is made public is not often very accurate and rarely includes major costs like advertising. That's one of the reasons the release dates between theatrical and home video are getting so tight, because unless you have a bonafide monster like Avatar there is more money to be made after it has left the multiplex, and they want to get the home release out while the major advertising push for the theatre debut is still relatively fresh in the public consciousness.

As for what any movie ever really "makes", Studios and production companies are notoriously untrustworthy with such figures. Ask Art Buchwald (see Wikipedia entry HERE). OK, Art Buchwald is dead, but you know what I mean.

Interesting, never heard about that before.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

If any of you make a movie, never take a percentage of the net. According to the accounting books the studios use, there is no such thing.

[quote=Cries&Whispers;634410]I'm going to guess the 200 mill includes marketing costs, which routinely equal the production budget, so 100 mill each.

with that property though you have to include the multiple revenue streams..DVD and foreign distribution obviously, but just as lucrative the game-tie in, not too mention all the jake gyllenhall merchandise that teenyboppers will go crazy for.

then theres the ppv , and later the hbo deals.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

I never trust marketing being that high, I would be more inclined to believe it being half of the budget, unless they really really really push for it.

Today it's safe to say that most movies make their money on DVD, how do you think Kevin Smith still has a job? He makes cheap films that do okay at the B.O. then make a killing on DVD.

Thew two most profitable genres are Horror and Family Films. Cheap horror flicks are easy to make and they will get the teenage demo in the seats. As for family films, well, we all know how well they do, no matter how crap Kids Movie Entry Number One they are, or how good: Movie Entry Number Two.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

The budgets listed on IMDb do not including marketing costs, but then again, they're only as accurate as the studio/distributor who provides them.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

I have a question: If a movie does flop and doesn't make what it cost to make do the actors ever take a cut in their pay?

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

They don't take a cut if they were paid a flat salary. If they have a percentage, that would translate into something resembling a "cut" if the film tanked.

NEVER.

The biggest names attached to a project get plenty of money up front. They also often have a piece of the "back end", at least on big mainstream Studio projects, but the definition of what "profit" and returns are for those purposes are not as strict as when they're determining whether a film is actually in the black. A star will have a piece of box office after a certain agreed upon amount, different plateaus and markers reached.

One of the first and most public back end deals in this era of Hollywood was Nicholson's on Tim Burton's Batman (1988). Jack got a decent chunk of change up front, but he made MUCH more after the film was released. His contract had him receiving percentages of not only box office returns but also merchandise tied to the movie. His take was reportedly in the $60 to $70-million range when all was said and done.

http://moviepatron.com/blog/wp-conte...-the-joker.jpg

Most every major star headlining a big movie these days has some variation, though nobody has gotten as sweet a deal as Jack's on Batman. Nor do they completely defer their upfront salary in favor of the back end deal. Although sometimes if an established star is appearing in a true indie film they will greatly decrease their quote for a piece of whatever back end there is, even though an indie is far less likely to make loads of money at the box office and beyond.

Rest assured, the better Iron Man 2 does financially, the more money Robert Downey Jr. makes. But if Iron Man 2 would have flopped, they would not have taken a dime away from him. He would have lost potential "bonus" income had the film been a success, but however many multiple millions of dollars he signed for before the cameras rolled were his no matter if the flick made $20-million or $2-billion theatrically.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

You hear that often in Movie's dont ya? 3-4% of the gross and **** like that. Who's worth 20-25 million, seriously?

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

They always take a percentage of the gross (which starts after a certain number is reached). Before Hollywood accounting was better known, those who agreed to a percentage of the net saw nothing because even the biggest moneymakers never show a profit. There have been people like James Garner who have sued over this and it usually gets settled out of court so Hollywood can continue to use their 'fuzzy math" accounting methods.

Re: Movies earn less $$ in theaters than they cost to make-how do they get it back?
 

I know! I learnt that watching Movies. It may have been the one with Tim Robbins? All the shady Studio people. Aren't that all a bit shady, really?