When does a movie “break-even” and why are some movies still considered a flop when they gain money?


The latest film to be considered flop in my eyes is Army of The Dead; gaining only about $1m from a budget of $70-90m. Another flop would be The Room, gaining less than $2,000 at the box office with a budget of $6m.

However when movies make more at the box office than what their budget was they are still considered flops. How much more money does it have to make for it to be considered a success?

In: Other

The movie has to earn over the budget in order to be considered a success. If it makes under budget then it’s considered a flop. If it makes roughly the same as the budget then it broke even.

A movie can make money and still be a flop because it is fundamentally an investment. The investors took a huge risk in paying for the production of the movie, and expect to be rewarded in a manner proportional to the risk, just like any other investment. So, breaking even or making a small amount is certainly better than losing money, but could still be considered a failure, since that money could have been used elsewhere and made a much larger return, or achieved the same return in a much safer way.

Movies are considered investments, it’s easy to find ones that cost tens of millions and not necessarily hard to find ones running into the hundreds of millions these days. That is a *toooon* of money. What execs usually seem to want is to double their money, so if it cost $50M they consider it a success if it brings in $100M. Though to be fair sometimes things can fail at the box office but make that money up later on as a cult hit with sales of discs etc.

Three reasons:

1. Marketing costs are generally counted separately from production costs and can be enormous. A movie may have “broken even” on its $100 million budget with $100 million in box office receipts, but that doesn’t cover the $50 million in ads they spent.
2. The theaters keep a portion of the box office. It’s obvious, once you think about it, but just because a movie made X dollars at the box office doesn’t mean the coming that made it gets X dollars, so they need to make substantially more to cover the theaters’ share.
3. Opportunity cost. This is a big one. Even if a movie does actually make a tiny profit, even after the other expenses I mentioned, there are only so many movies that can be put out a year. Money invested in a movie that ended up making only $5 million in profit is a waste when the same effort could have gotten $500 million. And this is why you see an endless series of sequels and franchise films: *reliably* large profits.

If a company is going to put x dollars into a project, and that movie makes less profit than, say, the average hollywood movie, the investors will most lilely feel that they could have made more money off their investment somewhere else. If investors wont give you money to make your next movie because they can make more money investibg in a different movie, it doesn’t matter much if your last movie made a small profit.

How much profit is needed for the industry to feel its worthwhile is constantly changing and based only on what other movies are making. Such is the strange capitalist economy we have.

They do this deliberately to avoid paying taxes or paying people for their work when “percentage of profits” is part/all of their fee. Whole books have been written on the ins and outs of “Hollywood Accounting”, but, at an ELI5 level, Wikipedia should suffice…

Edit: this is also a good (and slightly easier to read) take:

Because when you put 100m into a movie you are expecting some kind of relevant return on your money. Otherwise you’d be better off investing somewhere else. Unless you make at least 10-20% profit (numbers straight from my ass) the profit was not worth the risk.

The cost of making and distributing a film is not just the budget. The budget is just the filming and editing and whatnot. A large part of the costs of making a film is marketing and distribution and things like that which are not included in the budget. So if I make a movie with a budget of $40 million dollars and spend $10 million on marketing I need to make $50 million to break even, even though the budget is just $40 million.

In addition when you buy a ticket the studio doesn’t get all of that money, some of that ticket cost goes to the movie theater. So in order for me the studio to make $50 million (budget+marketing costs) the film needs to make more than $50 million in ticket costs.

There is a very general rule I’ve heard that, when you account for marketing and distribution, miscellaneous other costs, and the cut that the theater gets, a film has to make roughly twice it’s budget at the box office to break even.