Film Break Even Point according to Forbes and Moviemaker.com

In order to even come close to turning a profit, a movie has to earn twice it’s production budget.  Plus the millions spent on marketing such as print & advertising (P&A) which can reach 50% of production budget.  Don’t forget federal, state, & municipal taxes too.

In 11/10, Forbes had a report called “The Top 200 Film Turkeys of 2010”. It reports that of those Top 200 movies with the most revenue only 4 broke even. Broke even is not profitable

The 200 movies with highest revenue are less than 50% of the 560 films in the US and Canada that were theatrically released in 2010. Those 560 movies were about 20% less of the 706 that were rated by the MPAA for release.

Those 706 are in addition to the 2,640 rated films in China and India in 2010. These figure don’t include Europe and Latin America. So it’s safe bet that 10,000 films are attempting to be pitched to VC on any week. 4 broke even films out of a pool of 10,000.

Incidentally, the Spring 2013 edition of http://www.Moviemaker.com Magazine reports that 85% of indie films fail to “recoup” their investment. Recoup means break even. So does that mean film producers will need more preparation on proving to capital markets on what guarantees there are that most investors look for in making a profit?

In 2/13, Slated reported 9 films that recently out-grossed their production budget but no indication if P&A budgeting was separate or included. The 9 films out of a pool of 10,000 claimed gross returns (ROI) on a production budget upwards of 729%. (Hollywood accounting?) The report admitted that these 9 film exceptions would be “inconceivable” in being approved for funding by the mass majority of risk-adverse professional investors, lenders, and funders.

Remember the Burbank film producers call centers in 2012 who offered unrealistic ROI’s of 1,000%? Here is a recap on the fallout;

http://www.free-press-release.com/news/print-1308516443.html.

Remember, if your not in the business of making a profit for investors when making a film then it’s just a hobby.

** For the sake of clarity the typical ROI for equity capital is 25%. This is twice as expensive as compared to ABL funding or hard money.

http://www.Globalcrossroadscapital.com is the only firm listed for ‘film funding’ on http://www.Nevadafilm.com.  Also see http://www.IMDB.me/sincityfinancier

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5 thoughts on “Film Break Even Point according to Forbes and Moviemaker.com

  1. Is not most of the ‘not profitable’ status of movies based on creative accounting by the studios? I know of one instance where the studio effectively double dipped and charged off a distribution fee to a movie that it made in house. This sucked in $200M in potential profits….

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      • Taking away the Hollywood Accounting would show the reverse, actually.

        The reality is, winners pay for losers, and the studios can afford to do this, simply because for the most part, they own their distribution arm.

        An independent can afford to make less of a profit, with a smart distribution scheme, which your company effectively diminishes in its calculations of ROI. I’ve got a friend who won’t invest in my company, simply because he can make more as a day trader. Of course, I’m trying to get him to change his mind, simply to help me.

        What kind of ROI are you looking for on say an investment of One Million, US?

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      • Your opinion is out of touch with the fact that only 15% of indie films even recoup their original costs much less any profit.

        Profit ROI’s do depend on type of capital received. And we have already beat that horse to death on our blogfeed for years

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      • Of the TOP 10 studios all operate on diversified income streams and films consistently comprise less than 20% of overall revenues. This is the real reason why they can “afford” to take a hit. For example Disney has theme parks, cruise ships etc.

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