News

Global P&A Often Surpasses Production Cost

Apr 25 addition that "Avengers: Endgame" launched with super-jumbo $200 million global marketing budget
By Robert Marich
   April 17, 2019—Deadline.com’s annual analysis of single-picture profit/loss indicates marketing costs continue climb and often surpass 
 
New Line/Warner's The Nun generated an estimated $155m in gross profit with a $22 production cost and $90 million in prints & advertising marketing expense

the production expense of major-studio films. The reality of surging marketing costs runs counter to some (ill-conceived) predictions that social media and other online media would replace costly TV advertising (ill-conceived because wide-reach TV is need to launch films that are essentially “new products”).
   A case-in-point of larger marketing costs than production expense is Bohemian Rhapsody, the rock band drama that grossed a blockbuster $900 million worldwide for distributor 20th Century Fox and studio-allied producer New Regency Productions. The drama about rock band Queen cost $52 million to make, per Deadline.com, but was propelled by $121 million in global prints-and-advertising support. P&A is cost to distribute the movie to cinemas and expense for buying advertising on TV and the like. Bohemian Rhapsody’s $52 million production budget may be a little understated because it seems structured to generate bonuses quickly for talent, which presumably took lower upfront salaries. But still P&A far surpasses any way one counts production expense.
   For Sony Pictures’ live-action comic book yarn Venom, worldwide P&A is pegged at $127 million, more than the $100 million in production costs, according to Deadline.com in its Most Valuable Blockbuster Tournament analysis,
   Universal Pictures’ Mortal Engines was called out for incurring a huge loss. The $110 million production received $120 million in global P&A.
   In the medium-production budget class, which can generate hugely profitable films, the Deadline.com analysis finds Warner/New Line’s The Nun is one of the most profitable films. The P&A estimate for The Nun is $90 million worldwide, against just $22 million in production cost. Marketing costs can dwarf production costs in the medium-budget level, when distributes decide to fund a major-studio-caliber marketing campaign.
   So worldwide P&A are typically in the $100-150 million range for top major-studio releases, and production budgets for the most expensive major studio films exceed this. A case in point is Disney’s animated Incredibles 2 that Deadline.com pegs at costing $200 million to make, surpassing the estimated $150 in global P&A. Disney’s Black Panther also sported that dynamic with $150 million in global P&A and $200 million production cost.
   My sense is production costs are creeping up very slowly—and studios sometime grant downstream performance bonuses to talent to keep upfront production fees level. But marketing costs exemplified by P&A keep climbing briskly.
    A few years ago, global P&A was just over $100-120 million for big films, but now the top of the range expanded to $150 million. Some films exceed this range. This month's big theatrical Avengers: Endgame is reputed to be propelled by a $200 million global marketing expense, per an article in Deadline.com by Anthony D'Allesandro. "Touting a record 10 custom ad-supported spots, this year’s group of Avengers global ad partners are hitting key audiences that traditional media can’t buy," says the Deadline article.
For full text, click links below; this website’s text is searchable via searchboxes on top of web pages:
https://deadline.com/tag/movie-profits/
 
https://deadline.com/2019/04/avengers-endgame-mcdonalds-google-coca-cola-ultra-beauty-audi-all-time-record-marketing-campaign-videos-1202595738/
 
https://deadline.com/2019/04/best-movie-profit-2018-green-book-halloween-a-quiet-place-the-nun-crazy-rich-asians-1202589429/
 
http://marketingmovies.net/chapters/chapter-3-paid-advertising/
 
http://www.marketingmovies.net/chapters/chapter-13-prints-ads-funds/