Movie Margins: Bad Ending
I’ve thought to myself: If I ever had ample amounts of wealth lying around, what would I do? I can think of about 5 or 6 plans or business ideas but one attractive idea is to create your own film production company. I have an imagination, a love for movies & writing and to start the costs can be quite manageable (but with less than mediocre results of course). I headed down another rabbit hole on the internet to see the feasibility of this daydream to find pretty interesting results.
Movie making–although important and I’m sure fun, generally sucks at making money. Note the average production budgets and how much revenue the film generates.
Just take the number of movies X the annual budget and it’s well above the revenues coming in generally (or divide the number of movies by the total box office and this is less than the money spent). Some places are far more profitable than others despite having far fewer films released. It could very well be that the Pareto principle holds true as well where the 20% at the top or so achieve a huge proportion of the box office sales.
Using a dataset of 279 Hollywood movies I found that overall 51% made a profit and 49% made a loss. This pattern of 50:50 seems to be the common understanding of movie economics of those in the industry. Additionally, movies studios are estimated to receive anywhere from 20-60% of box office sales–only a fraction of the totals displayed above.
This begs the question, why is there so much effort in funding these movies then? Who is backing the production, and why? My speculative, conspiracy side that the CIA & country-equivalents who already have a deep relationship with Hollywood are merely funding a large chunk of the industry. Ultimately, it gets written off as a government expense. You can sort of see this happening if you look at the countries at the top with top budget allocations (& consequently the most significant global media presence). Your tax dollars may be going to Adam Sandler movies, Americans.
On The Ball, LLC is interested in the prospects of film. We believe there are interesting opportunities in the upcoming decades.
The art of filmmaking is dying. It’s more virtue signalling & ideology than story-telling; but it will come back to entertainment, it ebbs and flows with the cultural times, it will come back
For those of you interested in film production, or my future wealthy self, not all hope is lost. In fact, the majority of budgets seem to be wasting money. My hunch is that those looking into film making are more arts’y and less adept to money management though.
Of course, big budget or not, it has to be a good production– but the input costs matter a lot. There’s an article produced earlier this year that looks at the top profit margins between box office revenues and movie budgets. They found the top 20 findings. Check them out:
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20. Another Earth (2011)
Profit: $1,900,000 Budget: $100,000
Profit Margin: 1800%
19. She’s Gotta Have It (1986)
Profit: $7,100,000 Budget: $175,000
Profit Margin: 3957%
18. Slacker (1990)
Profit: $1,280,000 Budget: $23,000
Profit margin: 5465%
17. Pi (1998)
Profit: $4,678,513 Budget: $68,000
Profit Margin: 6780%
16. The Birth Of A Nation (1915)
Profit: $11,000,000 Budget: $110,000
Profit Margin: 9900%
15. Catfish (2010)
Profit: $3,500,000 Budget: $30,000
Profit Margin: 10666%
14. Clerks (1994)
Profit: $4,400,000 Budget: $27,000
Profit Margin: 16196%
13. Halloween (1978)
Profit: $70,000,000 Budget: $325,000
Profit Margin: 21438%
12. Night Of The Living Dead (1968)
Profit: $30,000,000 Budget: $114,000
Profit Margin: 26215%
11. El Mariachi (1992)
Profit: $2,000,000 Budget: $7000
Profit Margin: 28471%
These numbers are before inflation… Has inflation hurt you the last couple of years? You MUST read this than: What is coming next…
10. Super Size Me (2004)
Profit: $22,200,000 Budget: $65,000
Profit Margin: 34053%
9. The Brothers Mc Mullen (1995)
Profit: $10,000,000 Budget: $28,000
Profit Margin: 35614%
8. Facing The Giants (2006)
Profit: $38,551,255 Budget: $100,000
Profit Margin: 38400%
7. Open Water (2003)
Profit: $55,500,000 Budget: $120,000
Profit Margin: 46150%
6. Mad Max (1979)
Profit: 99,750,000 Budget: $200,000
Profit Margin: 49775%
5. Eraser head (1977)
Profit: $7,000,000 Budget: $10,000
Profit Margin: 69000%
4. Deep Throat (1972)
Profit: $22,528,467 Budget: $25,000
Profit Margin: 90013%
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3. The Blair Witch Project (1999)
Profit: $248,600,000 Budget: $60,000
Profit Margin: 414233%
2. Tarnation (2003)
Profit: $1,200,000 Budget: $218.32
Profit Margin: 545354%
1. Paranormal Activity (2007)
Profit: $193,400,000 Budget: $15,000
Profit Margin: An unreal 1289233%…talk about Paranormal activity…
Interestingly, the latest of these top 20 was in 2011, almost 13 years ago. Some of these movies were extremely successful, but it’s certainly possible to make a profitable film by keeping costs low (these profit margins are absurd). The most expensive film created was Star Wars: The Force Awakens at 447,000,000 dollars and that was dogshit to say the least. It was the only movie in my life where I fell asleep in the theatre, so I believe that is saying something…
I hope you found this interesting & you learned something you can use as a movie goer, businessman/investor or someone wanting something to say something to break the silence at an awkward party
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