Why are box office numbers easy to find but post-theatre revenue isn't?

[fantastic_four]

As fans of films, we're interested in box office totals and production budgets as a way of seeing whether or not future sequels are likely to happen. However, a significant part of predicting that is income after a film has left the theatres. I have long heard that certain films end up having a rebirth in these markets, although I never know how much of one because exact numbers never publicly surface. Does anyone know why box office revenue, production budgets, and even sometimes marketing budgets are so easy to find on sites like boxofficemojo.com, but box-office revenues from markets such as streaming, network leasing (HBO, Showtime, TNT, ABC/CBS/NBC, etc), discs, on-demand, etc are generally unavailable?

[Bosco685]

There are certain situations where studio economics doesn't want the post-release numbers revealed. Especially when profit-sharing is involved, and the studio accountants want to control what factors tally into the grand total before any sharing occurs.

 

There's been a few specials on NPR and articles from other sites on how difficult it is to get real numbers on all productions.

 

Here are some articles I saved from a few years back that touched on Hollywood economics, and how you can't always trust in what a studio publicizes as expenses versus profits.

 

How Hollywood Accounting Can Make a $450 Million Movie 'Unprofitable'

 

Here is an amazing glimpse into the dark side of the force that is Hollywood economics. The actor who played Darth Vader still has not received residuals from the 1983 film "Return of the Jedi" because the movie, which ranks 15th in U.S. box office history, still has no technical profits to distribute.

 

How can a movie that grossed $475 million on a $32 million budget not turn a profit? It comes down to Tinseltown accounting. As Planet Money explained in an interview with Edward Jay Epstein in 2010, studios typically set up a separate "corporation" for each movie they produce. Like any company, it calculates profits by subtracting expenses from revenues. Erase any possible profit, the studio charges this "movie corporation" a big fee that overshadows the film's revenue. For accounting purposes, the movie is a money "loser" and there are no profits to distribute.

 

Hollywood Accounting: How A $19 Million Movie Makes $150 Million... And Still Isn't Profitable

 

We've written about the wonders of Hollywood accounting before. It's a series of tricks pulled by Hollywood studios to make most of their movies look unprofitable, even when they're making a ton of money. The details can be complex, but a simplified version is that every studio sets up a new "shell" company for each movie -- and that company is specifically designed to lose money. The studio gives that company the production budget (the number you usually see) and then also agrees to pay for marketing and related expenses above and beyond that. Both of those numbers represent (mostly) actual cash outlays from the studio and are reasonable to count as expenses. Then comes the sneaky part: on top of all that, the studios charge the "movie company" a series of fees for other questionable things. Many of these fees involve no real direct expense for the studio, but basically pile a huge expense onto the income statement and ensure that the studio keeps getting all of the movie income -- rather than having to share the profits with key participants -- long after the movie would be considered profitable under regular accounting rules.

 

NPR: We See Angelina's Bottom Line

 

As a case study, he walks us through the numbers for "Gone In 60 Seconds." (It starred Angelina Jolie and Nicolas Cage. They stole cars. Don't pretend like you don't remember it.)

 

The movie grossed $240 million at the box office. And, after you take out all the costs and fees and everything associated with the movie, it lost $212 million.

 

This is the part of Hollywood accounting that is, essentially, fiction. Disney, which produced the movie, did not lose that money.

 

Hollywood economics has enough inconsistencies and half-truths rolled into the approach at times, trying to get down to what a film finally made in the way of true profit isn't always a straightforward path.

[fantastic_four]

There are certain situations where studio economics doesn't want the post-release numbers revealed.

 

You'd think the exact same thing would be true of box office results. So why are those ALWAYS public, but all the subsequent income levels NEVER are? You'd think that if the studios wanted to hide anything it would be the box office totals since a theatre bomb being all over the press could affect sales on all the other channels later on.

[Boboset]

I remember listening to the NPR broadcast when it first aired, Bosco. It blew my mind. What a dirty business.

 

I believe The Empire Strikes Back was one of the films they mentioned. Apparently that movie has yet to make a dime.

[fantastic_four]

Have you guys heard of films that supposedly did better on DVD and television leasing than at the theatre? I've heard that was true of Office Space, which only made $10 million at the theatre but has been played non-stop on cable since it came out and is rather iconic now. You'd think studios would WANT to publicize the post-theatre numbers on a movie like that.

[Boboset]

I remember listening to the NPR broadcast when it first aired, Bosco. It blew my mind. What a dirty business.

 

I believe The Empire Strikes Back was one of the films they mentioned. Apparently that movie has yet to make a dime.

 

My mistake. It was Return of The Jedi.

 

Here's an interesting article with some great examples and additional reading.

 

10 films that you would think showed a huge profit, but according to the Hollywood accountants, they all either lost millions of dollars, or never made a profit (meaning those owed back-end profits didn’t receive a dime).

 

 

[Boboset]

Have you guys heard of films that supposedly did better on DVD and television leasing than at the theatre? I've heard that was true of Office Space, which only made $10 million at the theatre but has been played non-stop on cable since it came out and is rather iconic now. You'd think studios would WANT to publicize the post-theatre numbers on a movie like that.

Lots of movies actually. It's not just those that under perform on the big screen and later obtain cult status like Office Space, Mallrats and Donnie Darko. Big time performers like The Lord of the Rings: Fellowship of the Ring and many Disney animated movies have earned more post box office.

 

 

[Bosco685]

There are certain situations where studio economics doesn't want the post-release numbers revealed.

 

You'd think the exact same thing would be true of box office results. So why are those ALWAYS public, but all the subsequent income levels NEVER are? You'd think that if the studios wanted to hide anything it would be the box office totals since a theatre bomb being all over the press could affect sales on all the other channels later on.

 

When it comes to clear domestic market numbers, it would be tough for the studios to hide the economics since much of the bigger theater operators are publicly traded companies.

 

- Regal Entertainment Group (RGC)

- AMC Entertainment Holdings Inc (AMC)

- Carmike Cinemas, Inc. (CKEC)

- Cinemark Holdings, Inc. (CNK)

 

It's the overseas market where they can hide how much was spent versus how much was made due to the variance that is probably involved based on local market box office potential, studio bargaining power (or lack thereof) in the area and other influencers. So they would love for everyone to believe in general movie studios only make 15% outside of the domestic market. Then, when they publish the final movie balance sheet, they can repeat the same assumptions (e.g. 'and we only made 15% of the total China box office, because - you know - that's all studios ever make over there anyway').

[Bosco685]

I remember listening to the NPR broadcast when it first aired, Bosco. It blew my mind. What a dirty business.

 

I believe The Empire Strikes Back was one of the films they mentioned. Apparently that movie has yet to make a dime.

 

My mistake. It was Return of The Jedi.

 

Here's an interesting article with some great examples and additional reading.

 

10 films that you would think showed a huge profit, but according to the Hollywood accountants, they all either lost millions of dollars, or never made a profit (meaning those owed back-end profits didn’t receive a dime).

 

It is incredible how tricky studio balance sheets are with these movies. And especially when there is one or more parties counting on profit shares as their take from these movies. That NPR article was eye-opening how challenging it can be to determine the final numbers.

[fantastic_four]

There are certain situations where studio economics doesn't want the post-release numbers revealed.

 

You'd think the exact same thing would be true of box office results. So why are those ALWAYS public, but all the subsequent income levels NEVER are? You'd think that if the studios wanted to hide anything it would be the box office totals since a theatre bomb being all over the press could affect sales on all the other channels later on.

 

When it comes to clear domestic market numbers, it would be tough for the studios to hide the economics since much of the bigger theater operators are publicly traded companies.

 

- Regal Entertainment Group (RGC)

- AMC Entertainment Holdings Inc (AMC)

- Carmike Cinemas, Inc. (CKEC)

- Cinemark Holdings, Inc. (CNK)

 

Why would the theatre owners want box office totals to be public knowledge? Even if they have reason to demand to know what they are, they could still get them privately from the studio.

 

I get that big box office numbers draw more people and that's a reason they like them being public, but the exact same applies to DVD numbers. I'm always surprised books all hype themselves as being "New York Times bestsellers," but popular DVDs like "Office Space" don't brag about their sales in a similar way.

[Bosco685]

Have you guys heard of films that supposedly did better on DVD and television leasing than at the theatre? I've heard that was true of Office Space, which only made $10 million at the theatre but has been played non-stop on cable since it came out and is rather iconic now. You'd think studios would WANT to publicize the post-theatre numbers on a movie like that.

Lots of movies actually. It's not just those that under perform on the big screen and later obtain cult status like Office Space, Mallrats and Donnie Darko. Big time performers like The Lord of the Rings: Fellowship of the Ring and many Disney animated movies have earned more post box office.

 

Exactly! There have been a number of films where they did horrible to mediocre at the box office, yet killed it with four-walling/VHS/DVD/Blu-Ray sales.

 

 

[Bosco685]

Why would the theatre owners want box office totals to be public knowledge? Even if they have reason to demand to know what they are, they could still get them privately from the studio.

 

I get that big box office numbers draw more people and that's a reason they like them being public, but the exact same applies to DVD numbers. I'm always surprised books all hype themselves as being "New York Times bestsellers," but popular DVDs like "Office Space" don't brag about their sales in a similar way.

 

If they are a publicly traded company, such agreements are forced out into the open through regulator demands about transparency and validating the financials of a company. Look at the recession the world went through a few years back, and all the demands that came out of the banking industry that bled into other industries concerning CEO's having to sign certificates to confirm all balance sheet details and financial soundness.

 

That's why some big companies pray to go private against (e.g. look at Toys R Us/Babies R Us being bought by KKR, and how part of the benefits internally was not having to be driven by investor demands backed by regulator mandates). Being public leads to many more eyes tracking your financials. So it gets tough for these companies to hide such details.

[fantastic_four]

Why would the theatre owners want box office totals to be public knowledge? Even if they have reason to demand to know what they are, they could still get them privately from the studio.

 

I get that big box office numbers draw more people and that's a reason they like them being public, but the exact same applies to DVD numbers. I'm always surprised books all hype themselves as being "New York Times bestsellers," but popular DVDs like "Office Space" don't brag about their sales in a similar way.

 

If they are a publicly traded company, such agreements are forced out into the open through regulator demands about transparency and validating the financials of a company. Look at the recession the world went through a few years back, and all the demands that came out of the banking industry that bled into other industries concerning CEO's having to sign certificates to confirm all balance sheet details and financial soundness.

 

That's why some big companies pray to go private against (e.g. look at Toys R Us/Babies R Us being bought by KKR, and how part of the benefits internally was not having to be driven by investor demands backed by regulator mandates). Being public leads to many more eyes tracking your financials. So it gets tough for these companies to hide such details.

 

Why would regulators or investors demand that box office totals to be public and not demand the same thing from all other markets (DVD, television, etc)?

[fantastic_four]

Here's a site that does some tracking of DVD sales:

 

http://www.the-numbers.com/home-market/dvd-sales/2014

 

Most of it seems to require you pay for a subscription to the site to see it for specific movies though. I linked the page above because the number of DVDs that Disney sold of "Frozen" in 2014 is mind-boggling.

[Bosco685]

Why would regulators or investors demand that box office totals to be public and not demand the same thing from all other markets (DVD, television, etc)?

 

What's the primary way a theater makes money, other than the huge profits realized at the overpriced concession stands?

[Bosco685]

Here's a site that does some tracking of DVD sales:

 

http://www.the-numbers.com/home-market/dvd-sales/2014

 

Most of it seems to require you pay for a subscription to the site to see it for specific movies though. I linked the page above because the number of DVDs that Disney sold of "Frozen" in 2014 is mind-boggling.

 

Thenumbers is THE site to reference when wanting to track DVD/Blu-Ray sales. But their tracking only goes back so far, and doesn't always account for historical sales back in the day of four-walling and VHS sales. I know, as at one point I was going to include those figures in my hobbyist tracking sheet for superhero movies.

 

When I contacted them about older movies, they informed me for $15K they could find whatever I desired. Including how much did DC's Swamp Thing movies really make in the theaters and via video and four-walling.

[Boboset]

I remember listening to the NPR broadcast when it first aired, Bosco. It blew my mind. What a dirty business.

 

I believe The Empire Strikes Back was one of the films they mentioned. Apparently that movie has yet to make a dime.

 

My mistake. It was Return of The Jedi.

 

Here's an interesting article with some great examples and additional reading.

 

10 films that you would think showed a huge profit, but according to the Hollywood accountants, they all either lost millions of dollars, or never made a profit (meaning those owed back-end profits didn’t receive a dime).

 

It is incredible how tricky studio balance sheets are with these movies. And especially when there is one or more parties counting on profit shares as their take from these movies. That NPR article was eye-opening how challenging it can be to determine the final numbers.

 

It all pretty much boils down to studios absorbing what should be back end profits. Keep the accounting in house, the profits stay in house.

 

A little side note. One of the movies on the list I shared was Forrest Gump. It earned $667 million but records show a $31 million loss. The author of Forrest Gump, Winston Groom, didn't receive proper compensation for the film rights as it was tied up in back end profit sharing.

 

That's why we will never see Gump & Co, the sequel to Forrest Gump on the big screen.

[fantastic_four]

Thenumbers is THE site to reference when wanting to track DVD/Blu-Ray sales. But their tracking only goes back so far, and doesn't always account for historical sales back in the day of four-walling and VHS sales. I know, as at one point I was going to include those figures in my hobbyist tracking sheet for superhero movies.

 

When I contacted them about older movies, they informed me for $15K they could find whatever I desired. Including how much did DC's Swamp Thing movies really make in the theaters and via video and four-walling.

 

Do you recall how far back their numbers go? If this site thinks they can get media sales figures on anything, it sounds like the numbers are out there somewhere, but nobody's compiled them.

 

Does anyone have any idea how much money is generated from television deals for a movie? I've NEVER heard numbers for how much the movie channels pay for a film, or later on how much the networks pay.

[Bosco685]

I remember listening to the NPR broadcast when it first aired, Bosco. It blew my mind. What a dirty business.

 

I believe The Empire Strikes Back was one of the films they mentioned. Apparently that movie has yet to make a dime.

 

My mistake. It was Return of The Jedi.

 

Here's an interesting article with some great examples and additional reading.

 

10 films that you would think showed a huge profit, but according to the Hollywood accountants, they all either lost millions of dollars, or never made a profit (meaning those owed back-end profits didn’t receive a dime).

 

It is incredible how tricky studio balance sheets are with these movies. And especially when there is one or more parties counting on profit shares as their take from these movies. That NPR article was eye-opening how challenging it can be to determine the final numbers.

 

It all pretty much boils down to studios absorbing what should be back end profits. Keep the accounting in house, the profits stay in house.

 

A little side note. One of the movies on the list I shared was Forrest Gump. It earned $667 million but records show a $31 million loss. The author of Forrest Gump, Winston Groom, didn't receive proper compensation for the film rights as it was tied up in back end profit sharing.

 

That's why we will never see Gump & Co, the sequel to Forrest Gump on the big screen.

 

That's right! I forgot about this story. And it came up again when rumors spread about 'Gump & Company' being considered for production. But then the author didn't want to have anything to do with it.

 

[Bosco685]

Do you recall how far back their numbers go? If this site thinks they can get media sales figures on anything, it sounds like the numbers are out there somewhere, but nobody's compiled them.

 

Does anyone have any idea how much money is generated from television deals for a movie? I've NEVER heard numbers for how much the movie channels pay for a film, or later on how much the networks pay.

 

It sounded like they had the access necessary to tally the results from Four-Walling, VHS, DVD and Blu-Ray sales going back many years. I think Four-Walling wasn't around until the 1960's.

 

Four-Walling Distribution Method