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Global P&A Often Surpasses Production Cost

April 17, 2019 by Robert Marich Leave a Comment

Deadline.com’s annual analysis of single-picture profit/loss indicates marketing costs continue climb and often surpass 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”).

New Line/Warner Bros. “The Nun” cost $22 million to film but even more to market with $90 million in prints & advertising, according to Deadline.com

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’Alessandro. “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.

Related content:

  • Deadline’s Latest In Movie Profits
  • “Avengers: Endgame’s” $200m+
  • 2018 Most Valuable Blockbuster Tournament

Filed Under: advertising, cinema distribution Tagged With: campaigns-strategy, data, expenses

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