8

I am writing a research article involving movies, and I want to prove my point that the movie industry is a very risky business. For this, I would like to quote a reliable source indicating the percentage of movies that make a net loss during their theatrical run. Let's restrict it to the American movie industry for the sake of traceability, and also only to movies that get a theatrical run in the first place.

I will assume that a net loss means that the production budget + advertising budget have not been retrieved in revenues (in theaters; DVD sales etc. make things more complicated again).

I remember having read somewhere on the internet, about two years ago that this number is 75%, but I cannot find this information anymore. It is not easy to find on the websites of MPAA, box office mojo, the-numbers dot com, imdb or rotten tomatoes, though I only had time for superficial searches.

I am aware that it is hard to say exactly. Any similar type of figure demonstrating the volatility of investments in the movie industry would also do, as long as it is from a reliable source (e.g. MPAA).

  • 1
    So, the American film industry specifically? – Napoleon Wilson Nov 13 '15 at 18:54
  • 1
    ... are you only talking about large studio projects? The average film never gets a theatrical run. – Catija Nov 13 '15 at 18:54
  • 1
    It's also particularly difficult to know whether a film made money or is at a loss simply because studios simply don't release the cost of making their films. Film price tags are almost always estimates. – Catija Nov 13 '15 at 19:05
  • 1
    @Catija: And that's not even considering Hollywood accounting, wherein various high-grossing movies such as Return of the Jedi made a "loss" on paper. – Kevin Nov 13 '15 at 22:31
  • 1
    Hollywood Accounting explained – user7812 Nov 14 '15 at 21:57
6

It took some years, but I found the source.

Edit: Thanks to @user7812's comment, I found this page giving a much more detailed and recent answer (based on insider information) than the one given below. The author makes a convincing case that about 50% of Hollywood releases makes a net loss for films between 1990 and 2015.

For a scientifically citable but likely less precise answer (because not based on insider information) see De Vany & Walls (1999):

A film had to reach all the way up into the 78th percentile of the gross profit distribution before it broke even in its theatrical run.

In other words, close to 78% of the movies earns a net loss during their theatrical run.

Regarding their sample, they say:

The data include 2,015 movies that were released in the closed interval 1984–1996. Information on each movie’s box-office revenue, production cost, screen counts by week, genre, rating, and artists were obtained from ACNielson EDI Inc.’s historical database. The box-office revenue data include weekly and weekend box-office revenues for the United States and Canada compiled from distributor-reported figures.

So this is reliable but old data, from North America. It becomes clear in their article that the sample is not restricted to "large" projects, although it does seem to be limited to movies that get a run in the first place.

Reference:
De Vany, A., & Walls, W. D. (1999). Uncertainty in the movie industry: Does star power reduce the terror of the box office?. Journal of cultural economics, 23(4), 285-318.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .