What percentage of movies lose money overall?

May 22, 2005 9:20 PM

Given all of the brouhaha about file trading and lost movie sales, is there a way to figure out what percentage of commercially released movies don't recoup their production costs, when all avenues are factored in (theater runs, dvd, cable, etc...).

It seems like making a movie is basically a license to print money, and I've never heard of one that didn't eventually make back more than it cost to make, in dvd/video or overseas markets.

Is there such a thing as a money-losing film?

posted by Caviar to media & arts (11 comments total)

That's actually why you're seeing a ton of sequels and a ton of remakes of old films being made in Hollywood right now. Movies aren't made by the major studios unless they are sure the film will make money. They play it safe by playing out the same tired storylines, time and time again.
posted by banished at 11:46 PM on May 22, 2005

actually, from what i heard a few years ago (and this may not hold true now that dvd sales have exploded), most films DON'T make their budget back, at least not for some time, and especially not when you take into account not just production costs, but marketing as well. the reason they still make so many movies, is that one hit will pay for a handful of chances to make another hit. so the studio makes, say, 6 films, and if one of them does well and 5 bomb, they can still afford to make 6 more. something like that. again, i heard this years ago, from a film teacher, so the source is reliable, but possibly outdated.
posted by cathodeheart at 12:29 AM on May 23, 2005

Yes, there's definitely such a thing as a money-loser film. Lots, in fact. There have been several studio movies that bombed so big they've earned legendary status. Heaven's Gate bankrupted its studio. Ishtar was synomous with "money-loser movie" for years until Gigli finally came along to give us an update on that pop culture reference.

It's actually quite tough to get a movie into profit, in part because "cost to make" (i.e. production cost) is not the total cost. There's marketing/promotion, negative printing and shipping, DVD/VHS production and packaging, etc. The major studios are able to beat the odds more frequently (though by no means all the time...) in part because they have such deep reach into int'l markets, ancillaries, franchising, etc. while being able to mitigate risk through co-production and taking advantage of elaborate schemes for foreign tax incentives and tax shelters; but talk to some of the producers of indie movies and they'll tell you that it's quite tough to be profitable even on a very modest budget.
posted by nakedcodemonkey at 12:34 AM on May 23, 2005

That wikipedia page is interesting, but their table is misleading - it doesn't include DVD or video numbers for any of them!

Some of those movies on the list spent a number of weeks as the #1 selling DVD.
posted by Caviar at 6:28 AM on May 23, 2005

I guess my question is this - of the movies that bomb in the theater run, how many of those make back their costs in the DVD/video followon (not, "does this happen", but "how often")?
posted by Caviar at 6:38 AM on May 23, 2005

Well, as one datapoint, The Rocky Horror Picture Show is the fourth most profitable film ever. I believe it's in the top 20 gross-wise, also. Those midnight runs add up real nice. :-)
posted by baylink at 7:38 AM on May 23, 2005

The usual rule of thumb in Hollywood is that 75% of all studio movies lose money. However, Hollywood accounting is not like regular accounting, and even though a movie may have been a nominal money loser, the studio can still pick up millions of dollars of profit from distribution fees, licensing revenues, advertising charges, and the like.

Also, DVD revenues for a typical Hollywood release slightly exceed box office revenues. For some movies that people crave to own (e.g. Finding Nemo, Shrek, etc.) DVD sales outstrip box office by a pretty fair margin.
posted by curtm at 8:39 AM on May 23, 2005

I can't answer your specific question, but a good book on this topic in general is The Big Picture: The New Logic of Money and Power in Hollywood by Edward Jay Epstein. The impression I got from the book is that most of the time, movies that bomb in their (domestic) theatrical run do eventually make back their costs, in home video, cable licensing, international distribution, etc.

(on preview: or what curtm said)
posted by Carol O at 8:52 AM on May 23, 2005

Box Office Prophets ran a series on the financing of movies a little while ago that you might find interesting.

Part 1
Part 2
Part 3 (the most directly related to your question)
posted by freshgroundpepper at 8:53 AM on May 23, 2005

I guess my question is this - of the movies that bomb in the theater run, how many of those make back their costs in the DVD/video followon?

Not quite an answer to your question, but this Slate article makes it clear that most movies bomb financially at the box office, since it seems promoting movies costs more than it gains you in extra takings.
posted by cillit bang at 9:28 AM on May 23, 2005

If anyone tells you that there's a hard-and-fast answer to your question, they're big fat liars (or probably agents). Although box office and DVD sales numbers are generally reliable, budget numbers are closely held secrets. When you see numbers, on IMDB for instance, those are generally estimates that have never been verified. Then there's P&A, prints and advertising, which can cost as much as the movie itself or more. That's the cost of printing the movie (tres expensive, believe it or don't) and advertising the movie.

Sidenote: When I worked for an indie production company that was just moving into distribution, I did a lengthy analysis of rock bottom P&A for getting a movie into ten theatres simultaneously and determined that the least amount we could possibly spend on releasing this film we considered buying (and, indeed, any movie) was 3 million dollars. Seeing as how every single similar movie of the last five years had never cleared more than 500 grand, we opted not to buy it. You can't even GIVE movies away in this town.

The individual film numbers simply aren't important. They determine little things like salaries of directors and writers (although only tangentially) and they determine which executives get promoted and which get fired, but they can be easily manipulated for whatever your dark purpose. Hollywood accounting is maleable. You can shift production costs from one movie to another with the blink of an eye. Is "Weekend at Bernie's III" costing too much? Have "Ocean's Thirteen" buy the beachhouse from the movie at an inflated price, and put Andrew McCarthy's hair and makeup team onto the balance sheet for "Harry Potter and his Big Fat Who."

The only numbers that are at all reliable are the overall profit/loss statements for the studios, and even those are suspicious. In the end, there's this little secret that no one tells you -- movies don't make money. Never have. Never will. Corporations that buy movie studios end up getting screwed from a financial standpoint. What they're really getting is control over content for their delivery systems. (And a little slice of magic!)

I swear, this whole Hollywood thing is a complete sham.
posted by incessant at 10:14 AM on May 23, 2005