Do movies make money?
Within the film industry, one of the most widely used metrics is a movie's gross earnings. This figure represents the total revenue generated from ticket sales before any deductions, providing a quick snapshot of a film's financial performance.
"Studios often want to present their films in the best light possible, and gross earnings are a more straightforward metric to tout," explains film industry analyst David Cohen. The allure of high gross numbers can boost marketing, enhance a film’s reputation, and even impact sequel or franchise decisions.
For example, the blockbuster Avengers: Endgame (2019) grossed over $2.798 billion globally, making it the highest-grossing film ever. While this figure sounds impressive, it doesn't account for production costs, marketing expenses, or revenue sharing with theaters. A film like Endgame, which reportedly cost around $356 million to produce, still needs to exceed its expenses significantly to declare a profit.
Determining whether a film has turned a profit can be challenging. Studios often keep specific financial details private, making it difficult for outsiders to assess a film's success accurately. But several industry metrics can provide insights. Box office analysts often rely on rules of thumb: a film typically needs to earn two to three times its production budget to be considered profitable.
Additionally, factors such as streaming rights and merchandise can contribute to a film's financial performance long after its theatrical run. For instance, Frozen II (2019) grossed over $1.45 billion worldwide. But that's just ticket sales. The Frozen franchise's merchandise alone is estimated to be in the billions.
The Hollywood Reporter, Variety, Forbes, Box Office Mojo, The Guardian, Journal of Media Economics.
