Instead, that actress can work out a contingent compensation deal so that her total contract can be worth $10 million … even if $8 million of that is derived from profits that will never exist. So whether a big studio promises you 3%, 33%, or 100% of a film’s net profits as part of your compensation, it’s all rather meaningless: the outcome is likely to be $0.Īnd while this sounds like a raw deal for those on the receiving end of contingent compensation agreements, there’s actually a hidden benefit: It allows actors, directors, and others in the industry to lie about how much they’re making so they can appear more in-demand than they actually are.Īfter all, an actress who was paid $10 million for a film role last year wouldn’t want people knowing that she accepted a *mere* $2 million for a role this year. (since they promoted the film across their own properties).īy driving up costs and keeping films from becoming profitable, studios can both make money and save money by not having to pay out contingent compensation to writers, actors, directors, and anyone else they might’ve promised a share of the profits to. With Order of the Phoenix, for example, there was a $212 million distribution fee, which went back to Warner Bros., as well as a $131 million advertising and publicity expense, a lot of which also went back to Warner Bros. Those fees go primarily back to the studio that set up the company in the first place, hence the incentive for inflating costs. The whole point of that company’s existence is to lose money by paying out fees. Here’s how it works: A studio (e.g., Warner Bros.) sets up a separate company (e.g., Order of the Phoenix, Inc. “Hollywood’s lack of profits exists only on paper, the result of creative accounting practices … Instead of cooking the books to hide losses and inflate profits, Hollywood accountants inflate costs to ensure that even smash hits stay in the red.” Priceonomics writer Alex Mayyasi looked into this question in his 2013 post, “ Why Do All Hollywood Movies Lose Money?” His answer: lost $167 million on Order of the Phoenix (source: Deadline). One might reasonably assume that even with a reported production budget of $150 million, there’d still be plenty of room for that film to be profitable. (That’d be around $1.1 billion if we adjusted for inflation.) One of the most successful, no doubt, was director Christopher Nolan’s reboot of Warner Bros.’ Batman franchise, which started with 2005’s Batman Begins.Ģ007’s Harry Potter and the Order of the Phoenix, the fifth installment in the Harry Potter film franchise, made nearly $940 million at the box office.

That’s why in addition to all of the sequels and prequels that studios have been rolling out, we’ve been seeing a major uptick in reboots. Familiar characters and storylines are simply a safer bet.

So, given the choice of A) investing in a film with a completely original story that’s filled with characters no one’s heard of before, or B) investing in a film with familiar characters that have a proven track record of drawing people to the box office … the big studios tend to go with the latter option. “… every time you make a movie, you’re making a prototype product that you have no idea that anyone wants.” Why?īecause the big studios would rather bet on characters and storylines that moviegoers are already familiar with.Īs film producer and chair of the Peter Stark Producing Program at USC, Lawrence Turman, told U.S. This lets us approximate how much an older film would’ve earned if it were released in theaters today.Īnd while the adjusted top 10 list probably makes the cinephiles of the world feel a little bit better about humanity, the reality is that the big Hollywood studios are currently churning out sequels and franchise films at an unprecedented rate. A note on adjusting for ticket price inflation: It’s calculated by dividing a film’s box office haul by the average ticket price from the year of its release, and then multiplying that figure by today’s average ticket price (which Box Office Mojo currently estimates at $8.34).

Fast and furious movies in order