SNL Kagan Study Proves that Movies with the Biggest Budgets Generate the Highest Revenues

Share Article

Creating tent-pole franchises is key to exploiting all sources of revenue.

Public tastes can shift quickly and a type of film that may have been popular three months ago may have fallen from favor with audiences. U.S. box office admissions have been on the decline since their peak in 2002. Exhibitors have managed to offset lower admissions with higher ticket prices, keeping the domestic box above the $9 billion mark.

Economics of Motion Pictures, a new study from SNL Kagan, reveals that success in today's movie business depends on choosing film properties with franchise potential. As the average cost to make and market a film grew to more than $100 million last year, the ancillary revenue streams — from toys to DVDs — generated by franchise films are becoming an increasingly vital aspect of movie economics.

Economics of Motion Pictures helps film investors reduce their risk by showing what has worked in the past. The report analyzes all films released on 1,000 or more screens from 2002 to 2006, providing 10-year pro forma models based on genre and budget range, with varying distribution structures. Included are detailed costs for action, animated, comedic, dramatic, family, horror, romance, sci-fi, fantasy and thriller films.

The bottom line: Movies that cost the most money also make the most money. This conclusion, supported by fresh data, reinforces the findings in SNL Kagan's three previous Economics of Motion Pictures studies: Films with budgets of more than $90 million typically produce the greatest total revenues.

"No matter how skilled an individual is at finding the right film, there is still risk involved in making it," said Wade Holden, analyst for SNL Kagan. "Public tastes can shift quickly and a type of film that may have been popular three months ago may have fallen from favor with audiences. U.S. box office admissions have been on the decline since their peak in 2002. Exhibitors have managed to offset lower admissions with higher ticket prices, keeping the domestic box above the $9 billion mark."

SNL Kagan's Economics of Motion Pictures is available exclusively as part of the SNL Kagan Information Service. For more information on this report and other data sets within the SNL Kagan Information Service, call 866-296-3743 or e-mail SNLKaganSales(@)snl.com.

About SNL Kagan
SNL Kagan is the ultimate resource for complete financial intelligence on the broad and dynamic media & communications sector, including the broadcasting, cable, entertainment, motion picture, telecom, wireless, satellite, publishing and new media industries. The SNL Kagan suite of products integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. SNL Kagan combines the 38-year heritage of Kagan Research with parent company SNL Financial's 20 years of experience in providing essential guidance to Wall Street and to America's top corporations. For more information, visit http://www.snl.com/kagan.

Contact
Lauren Keyson
Public Relations Manager
Tel. 212.341.7319
lkeyson(@)snl.com

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Lauren Keyson
Visit website