2012 Film Profitability Study

commissioned by The Dove Foundation

ROIOne well-worn axiom in Hollywood is that movies are not made in a vacuum. The audience must be part of the equation if a film is to make money. The exciting nature of filmmaking is that the audience is not homogeneous, but rather it’s segmented  into a wide variety of categories and cross-sections based on gender, age, lifestyle, life experience, and personal taste to name a few.

Once a film is “in the can” the next illusive ingredient in that equation is devising a way to attract the largest possible audience into local theaters and convince folks to plunk down between $8 and $18 for a movie ticket. (IMAX and 3D have contributed to the higher dollar amounts.)

According to an industry source, theatrical revenues only cover about 40% of the costs of a film. In some respects big screen films have taken on the role of loss leaders, using media hype and social mobilization to give the movie legs when it goes through the rest of its paces.   This means the investors must concentrate on the subsequent sources of revenue that will hopefully generate a profit from their joint venture; sources like foreign theatrical, retail sales (DVD/BluRay/Ultra Violet), rentals, VOD, domestic and foreign television. Another significant source of revenue is brand and merchandise licensing. The 2012 FILM PROFITABILITY STUDY takes into account all of these sources of revenue and their related costs.

The industry largely focuses on the opening weekend box office to determine the potential value proposition of one movie compared to its rivals. Once a movie opens in theaters, subsequent revenues are fairly predictable primarily due to output deals like television, etc. that are negotiated up front. While that prognostication works occasionally, Dove’s STUDY focuses on the ultimate number after all the deals are consummated—profit.

The Dove Foundation has been tracking movie messages and content on behalf of faith and family audiences for 22 years. Our experience has shown that the audience standards do not necessarily comport with the MPAA ratings. Therefore, we have included a section beginning on page 8 of the Study that compares Dove-approved theatrical releases between 2005 and 2009 with all other movies. The Dove vs. non-Dove portion of the study is of particular significance because it matches the content standards set by the MPAA against audience preferences for movies based on Dove’s family-oriented standards.

The data used in this study are from the top 200 most widely distributed films for each year based on the number of theaters. The data measures the profits of an average film by first aggregating the films within each MPAA ratings category.  All costs and revenues used were limited to a period of two years from each film’s release date.

Download the Complete Study in .PDF Format

Footnote: The data was compiled by Kagan Media Appraisals, Inc. and analyzed by Dr. Sridhar Sundaram, Chair of the Finance Department at Siedman College of Business, Grand Valley State University.