Agreed. In big business sometimes you spend a LOT of money to get very, very tiny gains.

Good topic btw.

First post, registered because I'm sick of seeing the misconception of the definition of "profitbility"

A movie grossing it's cost is still a HUGE disappointment. Just being in the black means nothing from the point of view of investors.

The movie business is inherantly a risky business. As such, studios probably require a profit of 20-30% before they consider a film successful. Otherwise, they may as well take the money and stick it into government bonds that yield 5% a year with no risk. This is called opportunity cost.

A movie that just makes back it's cost is like giving someone $100million for 3 years and then getting the same $100million back after. You would incur a "real" lost after inflation.

If we take SR's $200M cost for example (leaving out all that pre-production cost), the studio would only be happy if it get's back $250M. If you calculate in the theatre split, the movie needs to make close to $600M worldwide to even start looking at being profitable.

Hi welcome to KJ. Nice to have you here. No offense, but about 90% of us know that here. Thanks.

There is a theory of decisions BY a group that purports their decision is more accurate than the predictions of any ONE of it's members... So when this forum knocks about an estimate for months, we are behaving in that theory... But we have 'later' information as well.... I see a lot of information expressed in terms like " it should do 'Old School' numbers... These analogies offer more than a raw number...
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cheers,descartes.........

Good points. By the way, group estimation, e.g. HSX, considered part of game theory? A lot of intriguing material is being published on this topic.

I don't know if game theory is it or not.. I was thinking also of the group dynamics/ organizational behavior aspect.. Everyone modifies based on what others post...

Actually, I think Disney was very enthusiastic about POTC, that they gave it a $125 m budget, despite the fact that Pirate movies had a string of failures, and were almost a non-existence genre. They had shocks over Depp's character at first, but I think they really, really supported the first film, and did show quite a bit of enthusiasm, to be able to give a supposed box office poison genre, a $125 m budget.

Also, we don't know if some of us already work for the studios, now do we?

For all the praise one can bestow on any studio for their successes, one can just as easily dock them three times as much for their failures. Obviously, some studios like WB are worse than others. But every single studio has been a culprit in the screw up department.

As for Mr. Dhun's (I presume that is not your real name) point about studios knowing beforehand a movie is about to underperform or bomb. They absolutely know. Universal knew King Kong was tracking well below expectations. In the last couple of weeks before release, they came up with different trailers to make it attractive to women. The same with Superman Returns. WB advertising was all over the place.

Too bad in cases like Poseidon, they did not realize that they were throwing money down the toilet, till it was too late. Then all can the studio can hope that the tracking is wrong and somehow the movie is a superhit.

May be the studios need a scout system to evaluate the viability of every movie (similar to sport talent scouts). While this may not save them from bombs, it may reduce the number of those embarassing failures. If the scouting fails, Ryan Leaf ends up as the second overall pick that would be akin to greenlighting Pluto Nash, The Alamo, Poseidon and The Hulk with Ang Lee ( ). I was kidding about the last one.

Well, this, also is a simplified view of things. A movie will generally bring 5 times its domestic box office in overall revenue, counting DVD sales, TV rights, merchandising, etc. So the picture is not as gloomy as you paint it.

I predict that only 82.35% know that here.

Well, we'll meet half way then...86.25%

I think most people here know roughly that movies are less of a success than they seem. But the insight about the 5% government bonds is news to almost everyone here. I also think a lot of people SAY it will be profitable just out of hope and because they can't face the truth, not because they really think DVD will bring a profit. Fanboys grasp at straws by making declarations like this all the time. They just can't bear the thought that so few other people paid to see their pet movie.

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I'm pretty sure that studios and directors know how good a movie is even while they are making it. If it's bad, at that point their only hope is to market the heck out of it, get a good OW, let the weekend drops fall where they may, and start printing DVDs. Even if the movie is good, there's still that chance of low BO from low demand -- like Superman R and King Kong. PotC1 got lucky with the WOM (and Depp).

One reason studios can afford all this risk is foreign rights. That's how LotR got made. New Line didn't have $300M lying around gathering dust that they could give to PJ. They shopped the idea of LotR to foreign theatres, selling rights to show LotR, then used that $$ to make the movie. New Line itself was liable for something like $27M(?). (don't quote me) If LotR had been awful, the foreign theatres would eat part of the cost.

What boggles my mind is how much money these studios are risking on marketing. It's upwards of $50M for a tentpole. Every $50M in marketing has to generate something an extra $100M at the box office, somthing like that right? Maybe Warner thought all that marketing would generate WOM -- "Superman is good... if we can only get people into the theatre, they'll see how wonderful it is." Even if it had worked, I find it hard justify all that money. Was there really ~$80M worth of potential WOM out there?

I think that's where DVD sales come in. The margin on these things are ridiculous. I'm willing to bet a $25 DVD the studio gets $15 in net profit. They sell several million units and they have the marketing cost covered.