08-31-2011, 01:43 AM
Ah Robert, you ask the eternal question: How can a film that takes in more than it cost still lose money?
Hollywood's famous "creative accounting" is often blamed, and some of that blame is well deserved, but for the films listed above, the answer is far more prosaic.
It is important to remember that although a film might enjoy a Box Office gross of $165 million, in fact the studio does not receive all of that money. Depending upon the distribution deal made, the studio might only receive half or two thirds of that amount with the remainder going to the Theatre itself. The exact percentage of that split varies from film to film and studio to studio. I remember well that when Return Of The Jedi was released in the summer of 1983, it opened in Hawai'i two weeks after the mainland US. Why? Because Lucas Film and 20th Century Fox were asking for a higher rental fee for the first two week window and the theatre chain in Hawai'i was unwilling to pay the higher price -- so we waited.
Generally speaking, the rule of thumb is a film needs a box office gross 3X the production costs. This is a rough guide and of course does not account for all of the ancillary markets / revenue streams (DVD, TV and Cable, sales to Air Lines or On-Demand, and now, thanks to Star Wars, Action Figures, T-shirts, posters, books, cookie jars, etc. etc. etc.)
Now, your fist thought might be, "Wait a minute, are you saying that Stone's Alexander needed to gross $500 million to break even?!" Well ...
That is why so many films never pay their profit participants -- there are no profits.
Henslow: But how will we pay the actors?
Fennyman: Out of the profits.
Henslow: But there are never any profits.
Fennyman: Precisely.
Henslow: Ah, Mr. Fennyman, I think you're on to something.
But there's more.
Look, for example, at Gladiator:
Worldwide Box Office: $544 million
Worldwide Rental: $267 million (what the studio received)
Production Cost: $116 million
Prints & Ads: $59 million
Distribution Fee: $95 million
Negative Interest: $17 million (including $5.7 million paid to Russell Crowe, but not payments to gross participants)
Loss: -$20.6 million
*From George Lucas's Blockbusting edited by Alex Block & Lucy Autrey (all figures in 2005 dollars)
As Orson Wells once said, "A movie studio is the best toy a boy ever had." And certainly the most expensive.
As for Eagle Vs. Centurion... I do not know why Eagle cost nearly double but I would guess the actors cost more. (Tatum was fresh from GI Joe and perhaps could command a bigger salary.) Then too, Eagle enjoys a major advertising campaign, where as Centurion played for about two weeks in LA. It opened without any advanced fanfare and disappeared with nary a trace. I believe it has done well on DVD, but that is only a guess -- I do not have nay numbers on that. :oops:
:wink:
Narukami
Hollywood's famous "creative accounting" is often blamed, and some of that blame is well deserved, but for the films listed above, the answer is far more prosaic.
It is important to remember that although a film might enjoy a Box Office gross of $165 million, in fact the studio does not receive all of that money. Depending upon the distribution deal made, the studio might only receive half or two thirds of that amount with the remainder going to the Theatre itself. The exact percentage of that split varies from film to film and studio to studio. I remember well that when Return Of The Jedi was released in the summer of 1983, it opened in Hawai'i two weeks after the mainland US. Why? Because Lucas Film and 20th Century Fox were asking for a higher rental fee for the first two week window and the theatre chain in Hawai'i was unwilling to pay the higher price -- so we waited.
Generally speaking, the rule of thumb is a film needs a box office gross 3X the production costs. This is a rough guide and of course does not account for all of the ancillary markets / revenue streams (DVD, TV and Cable, sales to Air Lines or On-Demand, and now, thanks to Star Wars, Action Figures, T-shirts, posters, books, cookie jars, etc. etc. etc.)
Now, your fist thought might be, "Wait a minute, are you saying that Stone's Alexander needed to gross $500 million to break even?!" Well ...
That is why so many films never pay their profit participants -- there are no profits.
Henslow: But how will we pay the actors?
Fennyman: Out of the profits.
Henslow: But there are never any profits.
Fennyman: Precisely.
Henslow: Ah, Mr. Fennyman, I think you're on to something.
But there's more.
Look, for example, at Gladiator:
Worldwide Box Office: $544 million
Worldwide Rental: $267 million (what the studio received)
Production Cost: $116 million
Prints & Ads: $59 million
Distribution Fee: $95 million
Negative Interest: $17 million (including $5.7 million paid to Russell Crowe, but not payments to gross participants)
Loss: -$20.6 million
*From George Lucas's Blockbusting edited by Alex Block & Lucy Autrey (all figures in 2005 dollars)
As Orson Wells once said, "A movie studio is the best toy a boy ever had." And certainly the most expensive.
As for Eagle Vs. Centurion... I do not know why Eagle cost nearly double but I would guess the actors cost more. (Tatum was fresh from GI Joe and perhaps could command a bigger salary.) Then too, Eagle enjoys a major advertising campaign, where as Centurion played for about two weeks in LA. It opened without any advanced fanfare and disappeared with nary a trace. I believe it has done well on DVD, but that is only a guess -- I do not have nay numbers on that. :oops:
:wink:
Narukami
David Reinke
Burbank CA
Burbank CA
