Like if a movie cost $200 million to make, then the break even is 500 million.
I heard that the .5 accounts for marketing/ PR. But why does it need to make the remaining 2x to break even? If it cost 200 million. Then the .5 is 100 million. So it should only cost 300 million to break even.
Why would it need the additional 200 million and get to 500 million to breakeven?
In: 409
Because the studio doesn’t keep all the money charged by the movie theatres. Now making a huge amount of money during a film’s opening weekend is very important, because the contracts are back-loaded for the screeners, and front-loaded for the studio. But it’s not over. The distributor takes a cut, and so do any big-name talent who were able to negotiate a cut of the gross. For example, Sir Alec Guiness negotiated for two percent of the gross profit of Star Wars, which netted him an immediate $7 million.
But there’s more. Most money on a film production is *borrowed*, and therefore the payments back to whomever lent it are structured with interest. I won’t get into the incredibly complex world of film financing, except only to say that when you borrow $200 million, you have to pay back more than $200 million before you start showing profits, and the longer you wait between borrowing and repayment, the more interest you’ll have to pay.
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