Wednesday, February 25, 2009

Nobody Knows Anything, Part 3: Movies and Money

Wednesday is usually reserved for posts about math, but today it's part of Nobody Knows Anything week, and so it's about movies and the money numbers. You might think numbers and math are the same thing, but I take a nerdier view. Math is about patterns and relationships. There are no detectable patterns in the numbers I am about to relate.

On the Box Office Mojo website, they make a list of reported domestic ticket sales for all the movies in theatrical release. With some of these movies, about a third, the budget is listed as well. In a Nobody Knows Anything tradition, no one can say when a movie will break even by comparing the budget to the ticket sales. The rule of thumb is that income somewhere around two to three times the production budget is the break even point. With ticket sales, not all the money is going back to the movie makers, as it is split also with film distribution companies and the theaters. The split changes over time, with the studios getting a huge cut in the first few weeks, and then the theaters getting a larger cut as time goes on. A big opening weekend is great news for a studio, but the theaters are only making money that weekend if the customers are buying the sodas, popcorn and nachos. (Movie theater nachos! Yuck!)

While some movies last year did incredibly great business, with The Dark Knight at the top of the heap, here are some warnings against putting your money in the movie industry.

Budget: $130 million
U.S. ticket sales: $49 million
Worldwide tickets: $196 million
Foreign percentage: 75%

From the U.S. perspective, Baz Luhrmann's Australia has been listed as one of the huge bombs of 2008. Given the lavish budget, nearly $50 million in ticket sales is a drop in the bucket. But one of the things about bankable stars is how much they help the overseas draw, and Hugh Jackman and Nicole Kidman still have the power to put butts in the seats in places other than the U.S. of A. This movie might make it to the two to three times budget level with DVD sales, but even now, with the movie having been released three months ago, Nobody Knows Anything.

The Curious Case Of Benjamin Button
Budget: $150 million
U.S. ticket sales: $124 million
Worldwide tickets: $277 million
Foreign percentage: 55%

Benjamin Button, on the other hand, is looked upon as a financial and critical success. Given how expensive it was to make and the huge advertising budget, this movie is also still waiting to see if it will become profitable in the long run. (Note: the main reason for the vague two to three times production budget equals the break even point is because advertising budgets vary so widely.)

A good rule if thumb is that if your movie makes more money overseas than it does domestically, that can be credited to having bankable stars, and Brad Pitt and Cate Blanchett certainly qualify as bankable stars right now.

Even so, think about the risk this film entailed. Bet $150 million that an odd little short story by F. Scott Fitzgerald can be turned into a box office smash, which is even more problematical given that many of the adaptations of Fitzgerald's major works have disappointed at the box office over the years.

Definitely not a business for the faint hearted.

Synecdoche, New York
Budget: $20 million
U.S. ticket sales: $3 million
Worldwide tickets: $3 million
Foreign percentage: 1%

A more reasonable budget is no promise of less risk in the movie business. Writer-director Charlie Kaufman makes very quirky films. He wrote Being John Malkovich, and that's about as mainstream as his films get. The cast of Synecdoche, New York is headed by Philip Seymour Hoffman, who can be a bankable star in films of this size, and the largely female supporting cast is a bevy of the best actresses working, including Samantha Morton, Michelle Williams, Catherine Keener, Emily Watson, Dianne Wiest, Jennifer Jason Leigh, Robin Weigert and Hope Davis.

But this movie. People couldn't pronounce it, people didn't see it, and overseas, box office poison is way too kind.

Do not expect a federal bailout of Synecdoche, New York. It is plenty small enough to fail.

Budget: $50 million
U.S. ticket sales: $140 thousand
Worldwide tickets: $4 million
Foreign percentage: 96%

As I said earlier, high foreign percentages show a bankable star. Well, maybe not this time, especially when a movie can't even sell a million dollars worth of tickets a month into its theatrical release.

If you were still in a mood to invest in the motion picture industry, consider Outlander. The high concept is simple enough. Vikings fight aliens from outer space.

Seriously. Is the screenwriter seven years old, or is that just his emotional age?

The bankable star here is Jim Caviezel, the guy at the top of the heap in the poster and the only Viking who gets a hair stylist. This shows that if you make a truly awful film, Jesus Christ himself cannot save you.

These things happen. Somebody makes a movie and for whatever reasons, the studio that put up the money has no confidence in it whatsoever. Sometimes, it is because of a change of leadership at a studio, and the new regime kills the work of the old regime. Sometimes, it's just because studio execs finally see the finished product and they hate it.

Whatever the reason, there's a saying for movies like this in Hollywood.

Outlander wasn't released. It escaped.

Now this is the movie you wanted to invest in. $5 million budget, worldwide revenues of $369 million. Yeah, baby! There's no business like show business!

Well, I can honestly say it's like no business I know.

The producers of My Big Fat Greek Wedding have had to take Gold Circle Films, the official owners of the film, to court for their share of the profits. Even in Hollywood, you can't go into court with a straight face and say that a movie that took in $75 for every dollar invested isn't in the black yet.

So who is this poor sap of a producer who had to sue? What rube from the sticks was seen coming a mile away by the clever Hollywood types?

A guy from Northern California. He even went to high school with a friend of mine.

A rube named Tom Hanks.

Matty Boy, Investment Advisor to the Stars*, recommends investing in a saloon before investing in a movie. There's a lot less stealing going on.

*Don't invest in a saloon. Too much stealing going on.


namastenancy said...

I don't understand how Baz can still get financing. Every movie of his that I've seen has been a choppy mess. Normally I adore Hugh Jackman but I wouldn't go to this one even if there's the obligatory shirtless scene..
Outlander - I think I've seen that on the Sci Fi channel? Probably shown at 3 AM? It's goofy enough to be fun and I never though about Caviezel's hair until you pointed it out.
The things I learn from reading your blog.

Matty Boy said...

Outlander WILL be on Sci-Fi, but not yet. It just got out to theaters in January. I'll probably rent it out of curiosity when Netflix makes it available. I still have an inner seven year old who'd like to know who could whup, Vikings or space aliens.