HOLLYWOOD PROFITS CLIMB SHARPLY
BY SHIFTING TO FAMILY FILMS
By Dick Rolfe

What makes for a successful movie? Some people point to box office receipts, or to awards and accolades. For others, it’s the feeling one gets after experiencing a compelling story as a member of the audience. While all of those reasons are valid, I’m sure you agree that movies are not made in a vacuum. It takes a successful, sometimes mysterious blend of creative talent, financial resources, and, of course, a large audience. Ultimately, the road to success is paved with profits, and the bottom line is the bottom line.

For some filmmakers, profits equate to specific content formulas. There seems to be a reigning consensus in the industry that if a movie contains a certain amount of sex, profanity and violence, it has a better chance of being a financial success.

To determine whether that was the case, The Dove Foundation commissioned two Film Profitability Studies, one in January of 1999 and one just released in June of 2005.  Both studies evaluate the gross revenue and expenses of thousands of the leading films, and compare the average gross profits per film by each MPAA ratings category.

We hired the leading media research company in the industry, Kagan Media Appraisals to gather the data, with the finance department of Seidman College of Business providing the analysis. The data includes worldwide revenues from box office, television and video/DVD.  Major expenses, such as production, exhibitors’ fees, printing and advertising, and video/DVD duplication and distribution costs are calculated. Revenue does not include any income from ancillary sources such as toy licensing, etc.

In the ten-year study released in January of 1999, the average G-rated film was eight times more profitable than its R-rated counterpart.  The 2005 study which can be downloaded from our website at http://www.dove.org/research reports an even greater disparity between R- and G-rated fare. 

Analysis of the 3,000 most widely-distributed movies released between January 1989 and December 2003 shows the profit ratio jumped to 11:1 in favor of G-rated films.

Put another way, over 15 years, the average R-rated movie made $7 million, while the average G-rated film made $79 million.

WOW! Then why does Hollywood make so many R-rated movies (51% of all films made)?

There is an obvious disconnect between Hollywood and the family audience. Too often, the bottom line for many in the industry is a statue or a plaque, and not a paycheck. The reason? An Oscar or Golden Globe guarantees many future high-end paychecks for an actor, director or writer who has one. And yet, over time it’s been proven that there is no consistent correlation between industry awards and profits.

Hollywood is worried about the recent decline in attendance and the resulting loss of profits. It has had a negative impact on the movie business. Teens have been the primary target audience for films over the past several years. Here’s the chicken-egg argument; did Hollywood create movies that attracted a teen audience, or did they make movies to serve a teenage audience that was already there? And do the majority of teenagers really want crude, rebellious, mean-spirited, excessive movies with explicit sex, exploitive nudity, vulgar language and exploding body parts?

Whatever the industry thinks of teenagers, the real audience is the family. This has been proven time and time again by the tremendous financial success of such G-rated blockbusters as Finding Nemo, The Incredibles, Monsters Inc, Polar Express, Princess Diaries, Santa Clause II.  Even family-friendly PG-rated action and drama films like Miracle, Radio, and National Treasure were big profit makers.

Clearly, today’s movie-goers are voting with their feet, and walking away from R-rated movies at the box office. There are too few movies of good taste to keep them coming back.  

If filmmakers will turn around and begin catering to the family audience with high quality, wholesome movies, they will reap their reward in increased profits.

Hopefully, this study will get the attention of filmmakers and cause them to focus on family-friendly movies as the new “Gold Standard.”