The movie business is a big business, with global box office revenue reaching a record $42.5 billion in 2019. But this huge figure doesn't mean that all movies are money makers; in fact, many movies end up being losing bets.
Indeed, although there are thousands of movies made every year, only a percentage of those become feature films with the big budgets we often associate with the Hollywood movie-making business. And though the occasional independent, low-budget film will break out and become a runaway hit, most blockbusters are on the high-budget end. ("Napoleon Dynamite," "Super Size Me" and "Paranormal Activity" are all low-budget examples.)
The average cost to produce a major studio movie has been around $65 million. But the production costs don't cover distribution and marketing, which adds another $35 million or so, on average, bringing the total cost to produce and market a major movie to right about $100 million. Those kinds of numbers are a long way from the lowly $400,000 it cost to make "Napoleon Dynamite."
Key Takeaways
- Hollywood is a big business, raking in billions of dollars a year in revenues and profits.
- Movie budgets can average around $100 million for a big budget film, meaning a lot of tickets have to be sold to break even.
- Major costs include paying cast and all staff their salaries, CGI and special effects, and marketing.
Mega Movie Budgets
And $100 million is just an average. "The Lord of the Rings: The Return of the King" (2003) cost just over $100 million and made over $1 billion worldwide. Back in 1993, "Jurassic Park" was on the lower end of the average movie budget, costing $63 million. Over 10 years later, in 2004, "Shrek 2" had a similar budget of over $70 million. Both "Jurassic Park" and "Shrek 2" grossed over $900 million worldwide.
Then you've got the higher end of the movie budget spectrum. "Avatar" (2009) is a great example, with a mind-blowing budget of $237 million. The high investment paid off, though, with the movie grossing well over $2 billion.
$378.5 million
"Pirates of the Caribbean: On Stranger Tides"officially holds the record with a budget of $378.5 million
Those are high-budget examples of movies that made enough to justify the expense, but not all movies do. Some costly flops include 2002's "The Adventures of Pluto Nash," which had a $100 million budget and managed to gross just a bit over $7 million. Then there was "How Do You Know?" in 2010, with a $120 million dollar price tag and a return of just under $50 million. Ouch.
Whether a movie makes or loses money, though, one question that seems to reappear often is just why it costs so much to make a movie. What magic potion must be acquired that brings the cost so high?
The Costs of Making a Movie
According to an article by The Guardian, movie costs can be broken down into some broad categories, including script and development (around 5% of the budget), licensing, and salaries of the big-name players, which usually include the producer, the director, and the big-name actors or actresses. Then there are the actual production costs, which include the ongoing salaries of all the people needed to make production happen; production costs eat up a big chunk of the budget, easily taking 25% of the total.
And production isn't the end of the story. Special effects, depending on the type of movie, can be an enormous cost, and music has to be composed and performed as well. Then, when the whole movie is made and ready to go, it's time to start in on the work of marketing and distributing.
After all that money invested, you can be sure that marketing is not an overlooked part of the process. There's no point in making a $100 or $200 million dollar movie if no one knows about it. "Spiderman 2," which had a production cost of $200 million, racked up another $75 million in expenses for marketing.
The fact that marketing expense is not included in production cost figures is why studios may claim to have lost money on a movie that grossed more than its negative, or production, cost. If a movie cost $100 million to produce and grossed $130 million, then they've got a $30 million profit—unless there was also a $50 million dollar outlay in marketing and distribution, in which case the profit turns to a $20 million negative on the balance sheet.
The Bottom Line
Even with all those big numbers—and the potential for huge losses—the movies keep coming. There must be some sense in it, though. The average cost of a movie ticket in the United States shooting up to almost $15 in 2022. The demand seems to cool off due to the alternative streaming services and sometimes the simultaneous launch of the movie in the movie theaters and in streaming.
After Covid-19 numbers declined, people started to go out again to watch movies in movie theaters but this could be only temporary due to the excitement to be out after a long period of lockdown. The film production industry will go on whether it will be mainly consumed in movie theaters or streaming. It is the delivery channels that are under disruption and shift now and might decide the cost of a movie depending on the price to pay to watch.
FAQs
Hollywood is a big business, raking in billions of dollars a year in revenues and profits. Movie budgets can average around $100 million for a big budget film, meaning a lot of tickets have to be sold to break even. Major costs include paying cast and all staff their salaries, CGI and special effects, and marketing.
What movies cost more to make? ›
Here are the most expensive Hollywood movies ever made
- Avatar: The Way of Water (2023)
- Pirates of the Caribbean: On Stranger Tides (2011); Pirates of the Caribbean: At World's End (2007) ...
- Avengers: Age of Ultron (2015); Avengers: Endgame (2019); Avengers: Infinity War (2018) ...
- Titanic (1997) ...
- Spider-Man 3 (2007) ...
In the film and media industry, if a film released in theatres fails to break even by a large amount, it is considered a box-office bomb (or box-office flop), thus losing money for the distributor, studio, and/or production company that invested in it.
Do most movies make or lose money? ›
Most films lose money. Indeed, 80% do. The fundamental reason for this phenomenon is simple. If you were trying to impress someone at a co*cktail party, what would you rather say: “I make movies” or “I make widgets”?
Are movies really profitable? ›
The Movie Industry
Filmmaking is also a very risky investment, since most movies, even those small, intimate dramas, take several million dollars to make. Still, it's definitely a hugely profitable business—if you hit the jackpot (aka the target audience).
Do you need a lot of money to make a movie? ›
Many producers investing a plethora of money on movies to be a big hit. But, it is not necessary for a film to be successful merely if it's a high budget movie. Movies which are low budget can also be big film.
What is the cheapest movie to make? ›
The Blair Witch Project (1999)
Writers, directors and editors Daniel Myrick and Eduardo Sánchez spent between $35,000 and $60,000 shooting “The Blair Witch Project,” making it arguably the cheapest movie ever made.
What movie lost the most money? ›
As of June 2022, the four biggest movie flops of all time were Disney productions. "Turning Red" (2022), "Jungle Cruise" (2021), "Mars Needs Moms" (2011), and "Mulan" (2020) recorded losses of more than 140 million U.S. dollars at the global box office.
What movie cost the least to make but made the most? ›
The Blair Witch Project would go on to earn an astounding $248 million and is widely regarded as the most profitable, widely seen low budget film of all time.
How exactly do movies make money? ›
The film industry is in flux, and ticket sales alone don't drive revenue. There's merchandising, VOD, streaming video, foreign sales, and a plethora of other distribution channels that can help filmmakers, producers, and studios turn a profit.
Negative cost is the net expense to produce and shoot a film, excluding such expenditures as distribution and promotion. Low-budget movies, for example The Blair Witch Project, can have promotional expenses that are much larger than the negative cost.
What makes a movie financially successful? ›
A general rule of thumb for qualifying a movie as a “financial success” is to compare its gross revenue to twice its reported budget - in other words, an ROI of at least 1. A movie “doubly” is successful if it performs well both financial and critically while deem it a “total” failure if it loses money and is panned.
Who makes the most money from a movie? ›
Top of the list is the executive producer – the person who controls the entire project. Most producers start as film production assistants or script readers. Some might start making small movies and build up to bigger ones, although that requires having some budget.
What movie made the most money every? ›
As of June 2022, "Avatar" (2009) was the most commercially successful movie of all time, grossing about 2.85 billion U.S. dollars at box offices across the globe. "Avengers: Endgame" (2019) and "Titanic" (1997) followed, with revenues of around 2.8 billion and 2.2 billion dollars, respectively.
Whats the biggest profit on a movie? ›
Top Lifetime Grosses
| Rank | Title | Lifetime Gross |
|---|
| 1 | Avatar | $2,923,706,026 |
| 2 | Avengers: Endgame | $2,799,439,100 |
| 3 | Avatar: The Way of Water | $2,284,417,227 |
| 4 | Titanic | $2,255,734,210 |
117 more rowsThe average recoupment period for movies
Over this fifteen-year period, just over a third of all the money came in during the first year of recoupment, with 89% being received within the first four years.
Is the film industry worth it? ›
How much is the movie industry worth in the U.S.? The U.S. movie industry is worth $95.45 billion as of 2022.
Do actors get a cut of movie profits? ›
As a general rule, most actors do not get a percentage of box office however what is known as 'residuals' can sometimes be factored into a contract. This is often accompanied by a reduction in up front payment.
What is the longest movie ever? ›
Guinness World Records says the longest film ever made is "The Cure for Insomnia" released in 1987. The 85-hour experimental film was directed by John Henry Timmis IV.
Which is the most expensive movie even made? ›
1. Pirates of the Caribbean: On Stranger Tides, 2011, $379 million.
What is the number 1 most successful movie of all time? ›
Gone with the Wind—first released in 1939—is generally considered to be the most successful film, with Guinness World Records in 2014 estimating its adjusted global gross at $3.4 billion.
What is the biggest flop in movie history? ›
10 Biggest Box Office Bombs of All Time, Ranked
- 1 John Carter ($133-236 million)
- 2 The Lone Ranger ($186-221 million) ...
- 3 The 13th Warrior ($112-210 million) ...
- 4 Mortal Engines ($189 million) ...
- 5 Cutthroat Island ($187 million) ...
- 6 Sinbad: Legend of the Seven Seas ($184 million) ...
- 7 Battleship ($177 million) ...
Joker was a critical and commercial success, with Phoenix's performance receiving widespread acclaim. Not only it is the least expensive movie to have made more than a billion dollars, but it is also the first-ever R-rated movie to reach this milestone.
Who puts up the money to make a movie? ›
Producers are involved in the financial decisions of movies, television shows and theatrical productions. Producers raise money for a production by finding film investment companies to finance the production, or by funding it themselves. The funding goes to hire the director, cast and crew.
How do actors get paid? ›
Generally speaking, for screen work, actors are paid a day rate. If they are needed for more than five days, they are paid a weekly rate. Rates vary if actors are needed for the entirety of the film shoot or the entirety of a television season. Television actors can also be paid per episode.
How do actors make money between movies? ›
Popular choices include the restaurant, fashion, and homewares industries. Some actors go into producing and directing which gives them another string in their bow. Professional actors will also likely be earning a residual income from past movie appearances.
Will movies ever get cheaper? ›
Look, film is not going to get any cheaper to manufacture and distribute. In fact, during our lifetimes, film will likely only get more expensive and potentially more difficult to purchase. Not because of some grand stockholder conspiracy at Kodak and Fuji.
Do movies go over budget? ›
It's not uncommon for a film to go over budget by a few dollars, but in the case of some films, they can go so far over budget that they can range in the millions of dollars. There are a few films that have spent almost hundreds of millions well over the original budget during development.
What are the disadvantages of the movie? ›
Cons:
- MOV files work specifically on QuickTime Media Player. If the computer or mobile device you are using does not have this specific platform, you have to convert the file to a different format.
- Since MOV compresses files to more compact sizes, the overall quality of the end product might be lowered in the process.
The classical factors include producer, production house, director, cast, runtime of the movie, the genre, the script, time of release and last but not the least the marketing. All these factors play a very vital role in determining whether a film will be successful.
How do actors survive financially? ›
Popular choices include the restaurant, fashion, and homewares industries. Some actors go into producing and directing which gives them another string in their bow. Professional actors will also likely be earning a residual income from past movie appearances.
Who is No 1 highest paid actor in the world? ›
What is the easiest job on a film set? ›
9 jobs in the film industry for beginners
- Camera tester.
- Intern.
- Assistant camera operator.
- Production assistant.
- Script supervisor.
- Assistant director.
- Assistant location manager.
- Assistant film editor.
Top 10 Actors of All Time, According to the American Film...
- 8 James Cagney.
- 7 Clark Gable.
- 6 Henry Fonda.
- 5 Fred Astaire.
- 4 Marlon Brando.
- 3 James Stewart.
- 2 Cary Grant.
- 1 Humphrey Bogart.
Fastest to $1 billion
Titanic became the first movie to gross over $1 billion worldwide on March 1, 1998, in 74 days of release. The list below is restricted to the 10 movies that reached the milestone the fastest.
Do actors get paid if a movie flops? ›
Do actors still get paid if a movie flops? Yes, unless they agree to a percentage of the box office receipts instead of a paycheck up front.
How much do actors get paid per movie? ›
Actors make a wide range of different amounts of money per movie, depending on whether they are considered an A-list star and several other factors. A-list movie stars average between $15 million to $20 million per movie, and some are paid even more.
Where do movies get their budget? ›
Film financing can be acquired from a private investor, sponsor, product placement, film studio, entertainment company, and/or out-of-pocket funds.
