Study says that Hollywood Movies Still Thrive during Tough Times

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Thu, 10/02/2008 - 20:00 -- Nick Dager

Theatrical box office revenues hit a gross record of $9.67 billion domestically in 2007 besting the previous mark of $9.29 billion set in 2002 a recent study shows. SNL Kagan’s “Economics of Motion Pictures” analyzes all films released on 1 000 or more screens from 2003 to 2007 providing 10-year pro forma models based on genre and budget range with varying distribution structures. Included are detailed costs for action animation comedy drama family horror romance sci-fi/fantasy and thriller films. Overall SNL Kagan found the most expensive films posted the largest revenues and average net profit. The nine films in the $90 million-$100 million range for negative costs posted an average net profit of $374.7 million under a major-studio distribution fee structure. The 80 films that cost more than $100 million to make generated an average net profit of $282.3 million. The 741 films in the study averaged $66.4 million in net profit. Within each negative cost range results varied by genre. The SNL Kagan study reveals that animated films performed best with an average net profit of $230.6 million under a major studio deal. Horror films had the best results in the $0-$10 million range with an average net profit of $40.3 million compared to $21.9 million across all negative cost ranges. “When the going gets tough consumers go to the movies ” says Derek Baine senior analyst at SNL Kagan. “Historically theatres have been fairly recession proof and this year looks to be no exception.” SNL Kagan