For example- I looked at The Mummy (2017) on Wikipedia, which had a budget of $125-195 million, and grossed $410 million worldwide at the box office, yet it also says the studio lost $95 million. How is that possible?
In: 99
I’ve heard that movie accounting is the most creative writing of all.
Pro tip – get points of the gross, not the net!
If an actor has a profit share say 10% the company can do stuff like overcharge for hire of assets from other companies they own, Hugh management fee, loads of other tricks to try to stop said actor recieving maybe 100,000,000s in profit share if the film.
its a tax scam. a lot of them are doing it. i think john oliver has an episode on it. they also hint about it in tropic thunder about how theyll deal with speedmans loss. and marketing budgets often equal the budget for the movie. for that movie especially they were marketing the hell out of it because they wanted a marvel style franchise to launch off of it.
Because the budget of the movie isn’t the total cost to the studio, and the box office isn’t the total revenue to the studio either.
The box office gross isn’t how much money the studio made on a movie, it’s the total of all the ticket sales. When you go to a movie theater and buy a ticket the theater keeps some of that money, generally somewhere between 40% and 50%, though it can vary from film to film. So if The Mummy made $410 million at the box office the studio probably made somewhere around $200 million and theaters made somewhere around $200 million. So the amount of money that a studio makes on a movie is very roughly half the box office gross.
The other aspect is that budget of a movie is just the production budget to actually make the movie, it doesn’t include the costs of things like advertising and distribution. So on top of the costs of making the movie you need to pay people to design the posters, and pay for ads, press availability, and things like that. For a major blockbuster those costs can be really big. For example according to [Deadline](https://deadline.com/2017/06/the-mummy-tom-cruise-box-office-bomb-loss-1202114482/) The Mummy reportedly had marketing costs of around $150 million. So the studio needed to make that money back *in addition* to the budget. So the budget of the film was somewhere between $125 to $195 million, but the total cost to the studio was between $275 to $345 million.
As a result of these two factors a major Hollywood film generally needs to make around twice or three times its production budget to turn a profit.
like all companies there is a projected profit. they say “we will make 500 million off this movie.” when the sales come in and are at 400 million profit they have lost 100 million because it did not meet the projected income.
this is why companies like netflix, amazon and others claim a loss.
They do what is now called Hollywood Accounting: [https://en.wikipedia.org/wiki/Hollywood_accounting](https://en.wikipedia.org/wiki/Hollywood_accounting)
You basically keep increasing your expenditures post-factum as you make more profit, so in the end you only just break even or lose money.
A movie costs $100 million to make and then they spend another $100 million advertising it.
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