When it comes to box office, people tend to fixate on the wrong numbers, principally how a movie does on its opening weekend and its domestic gross. That’s a dated approach that ignores the growing importance of international markets and the tendency of some major releases to drop off precipitously after their first weekend in release.
Moreover, it is profitability that really matters to all of these studios – the subsidiaries of massive corporations. That’s why Disney only makes movies it can turn into a TV show, theme park ride and kid’s toy.
So how do we calculate the most profitable movies of summer? Studios’ immense gift for disguising cost and fudging numbers makes precision a challenge.
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For example, Sony and Universal said “After Earth” and “R.I.P.D.” each cost $130 million to produce when pretty much everyone else told TheWrap they cost at least $200 million. And that’s before marketing costs.
Yet it’s still possible to give a general sense of a movie’s profitability – a back of the envelope calculation if you will.
Investors are obsessed with return on investment (commonly known as ROI).
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To calculate ROI for a movie, you take how much it grossed, subtract how much it cost and then divide that figure by how much it cost.
For example, “The Purge” cost $3 million to make. It grossed $81.7 million. So here’s how we did it: $81.7M- $3M = $78.7M. $78.7M/$3M = 26.1. Without further ado, here’s our list of the summer’s biggest payoffs at the box office — and the biggest bombs.
(Economists, we look forward to your snarky comments about charts. Our response? Hey studios, show us the real numbers!)
Source: Box Office Mojo
Source: Box Office Mojo