The Kragen report recently posted a very disparaging report. Deadline re-posted the article.
http://www.deadline.com/interstitial/?ref=http%3A%2F%2Fwww.deadline.com%2F2012%2F06%2Fdomestic-movie-revenues-arent-keeping-up-with-release-costs-kagan%2F
I've been waiting for the truth to be told about the state of the industry and confirms my not very optimistic predictions. This report shows that on average, the studios are recouping only 46% of their release costs. In English, they are not making enough to cover their expenses, from distribution. Albeit, the other divisions will hopefully pick up the slack (consumer products/merchandising, publishing, licensing, etc). But to me this does not make a profitable business model overall. Read the article:
"The mostly dreary new analysis from SNL Kagan reflects the continuing decline last year in domestic home video sales and rentals — and helps to explain why studios are so determined to expand overseas. The research firm says that the average film only recouped 46% of the release costs (negative costs plus domestic prints and advertising) from domestic box office sales and home video transactions. That’s down from 48% in 2010. Paramount’s 14 films delivered the best performance. Kagan figures the studio collected $895.5M from theaters and $242.9M in cash flow from video transactions, equal to 73% of its $1.55B in release costs. True Grit helped with domestic returns covering 134% of its $90.9M in release costs. The Weinstein Co followed with 11 films that generated $102.2M from theaters and $49.0M from home video, 70% of its $215.1M in release costs. Its top title was The King’s Speech, with a 216% return on $50.2M in release costs. Among other studios, Warner Bros also beat the industry average with a 67% return followed by DreamWorks Animation (61%) and Disney (58%). Low budget films dominate the top performing films. They include IFC Films’ Cave Of Forgotten Dreams (941% on $455,000 in release costs), Warner Bros’ Hubble 3D (754% on $2.8M), Fox Searchlight’s Another Earth (429% on $488,000), Producers Distribution’s Senna (258% on $557,000), and Rogue Pictures’ Catfish (258% on $1.6M). Top major releases included Universal’s Bridesmaids (243% on $73.9M) and Disney’s The Help (238% on $66.9M). Kagan says the annual study was based on an analysis of 450 films released on DVD/Blu-ray in 2011."
My mantra is still 'produce as inexpensively as possible, produce a product that can be distributed worldwide and carve out self-distribute rights from any contract'. In this digital age of online sales, self distribution is easily accomplished. Perhaps the studios should consider this as well.
