Deadline.com’s annual rankings of film profitability highlights one of oddities of the movie biz. How much one spends on making “the product” — meaning film production cost — frequently has little bearing on profitability and is sometime dwarfed by basic marketing expenses.
Universal Pictures spent just $20 million to make cheapie horror film “Five Nights at Freddy’s” but $60 million in prints-and-advertising. “Freddy’s” generated $161 million in studio net operating profit, estimates the Deadline stories by Anthony D’Alessandro.
Meanwhile, lop-sided in the other direction, Walt Disney Studio’s “Guardians of the Galaxy Vol. 3” cost an estimated $250 million to make and was marketed for less with $160 million in prints-and-advertising, yielding a $124 million studio net operating profit. Both films were rated PG-13. That “Guardians” proportion fits the common belief that production cost usually exceeds marketing expense. Yet “Freddy’s,” which ranked No. 8 in Deadline’s top 10 based on studio net operating profit, placed higher than No. 9 “Guardians.”
Prints-and-advertising are a large part of marketing expenses: the “prints” are costs to service theater playdates and the “advertising” is the huge expense for placing TV commercials, radio blurbs, magazine ads and the like aimed at consumers.
Thus, P&A excludes costs of making advertising, doesn’t cover trailers, audience testing, publicity and promotions with third parties. Since a half dozen marketing functions aren’t included, it’s easy to see why total marketing expenses top the cost of making films at major studios.
The No. 1 most profitable major studio release is Universal/Illumination animated “The Super Mario Bros. Movie” with a $559 million studio net operating profit. That’s from a $100 million production cost and $150 million in P&A marketing. Warner Bros. Pictures’ “Barbie” ranked No. 2 with a $145 million production cost and $175 million in P&A. Of interest because of the huge imbalance between cost and marketing is the concert tour “Taylor Swift: The Eras Tour” distributed by AMC Entertainment. “Swift Eras” ranked No. 7 with just $15 million in production cost and $55 million in P&A.
Though not in the Deadline analysis, major studio films range from $20 million to $250 million in production cost, with an average at around $120 million. It’s tricky to calculate because it’s not always clear what films are “major” releases; major studios have various independent-style releasing banners and film labels dedicated to lower-budget film content.
Deadline’s Most Valuable Blockbuster Tournament, which is an annual feature, provides 15 line-items of expense, revenue and profit for about two dozen cinema films in 2023. Deadline is owned by Penske Media, which also publishes Variety.
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