This is a fascinating attempt to try and work out what Marvel and Disney’s actual profit is from the $1.5 billion take of Marvel’s The Avengers in theaters:
Well, the studio first has to recoup the cost of production. Given that The Avengers cost $220 million to make, movie’s profits come down to $530 million. Additionally, according to a Bloomberg Businessweek article by James Ellis about another $100 million was spent on marketing this movie; bringing the film’s earnings down to $430 million.
However, we’re not done yet. At this point, Disney needs to start paying Box Office-bonuses to people who get a cut of the movie’s gross profits. For instance, after Iron Man became a huge hit, Robert Downey Jr. had his contract re-negotiated so that he’d get a cut of the final profits. Few people will ever know how much money Downey Jr. has coming to him, but according to an article from The Hollywood Reporter by Matthew Belloni insiders have estimated that it could be as high as $50 million. Meaning, that Disney/Marvel will have about $370 million dollars of profits from The Avengers. This is less than 25% of the film’s total box office haul.
Much, much more at the link, but it’s worth remembering: $370 million may be less than 25% of Avengers‘ take, but it’s still an amazing amount of money.
September 24th, 2012 at 4:18 pm
I don’t claim to know alot about the movie business, but the opening of this story mentions $1.5 billion in sales. The studio had to recover its $220 million to make the movie. What I’m wondering is, how does one subtract 220,000,000 from 1,500,000,000 and get 530,000,000?
September 24th, 2012 at 4:37 pm
if you look at the link, he immediately halves the initial figure based on how much the movie theaters get:
“First, it’s important to know that every time you buy you a movie ticket, the theater obviously keeps a percentage of that money. Most theaters have a sliding scale of how much money they keep from tickets. As one study of theater contracts shows (“At the Movies: The Economics Exhibition Contracts” by Darren Filson, David Switzer, and Portia Besocke), studios keep about “perhaps 70% in the first week, 60% by the third week, and as low as 30% at the end of the run.”
Overall, some studios only earn a little under 50% of a film’s box office haul. For instance, according to Edward Jay Epstein in The Hollywood Economist: The Hidden Financial Reality Behind the Movies, theaters kept $139.8 million of the $237 million worldwide box office earned by Disney’s Gone in 60 Seconds. Meaning that Disney only kept a little over 40% of what this blockbuster movie generated.
However, when you factor in a theater’s sliding scale of profit, “a rule of thumb is that the studio will earn about 50% of a movie’s final US box-office take” – (this statistic is fully explained in this article from The Guardian by Gary Susman).”
September 24th, 2012 at 6:04 pm
In the end, will they claim it didn’t make a profit for tax reasons or in case of a lawsuit?
September 25th, 2012 at 4:46 am
What these box office figures don’t take into account is that the revenue generated by a film’s theatrical campaign is far, far from the total money it will make. Movies are expected to make more from Blu-ray/DVD sales (although, admittedly, the ratio tends to come down the better the film has done at the box office), with further revenue coming from TV deals (pay per view channels, subscription channels, and free to air channels) and even airline deals. But the big unknown at this stage is just how much money will be generated by the multitude of movie merchandise out there, bearing in mind that Marvel were issuing press releases about record-breaking sales of various licensed products around the time the film opened.
September 25th, 2012 at 8:47 am
“Merchandising! Merchandising! Where the real money from the movie is made!” – Yogurt
November 27th, 2012 at 6:40 am
This article probably needs to be looked at again. The figures went up significantly since the last time this was revised.
May 16th, 2013 at 10:18 am
it was fantastic I loved it especaily the hulk and thor was alright