Motion picture production costs have soared to astronomical heights.
At least that’s the picture that emerges from a quick review of the trade papers’ reports on movie budgets through the years.
However, making any overview of these costs somewhat problematic is the tradition of secrecy among Hollywood filmmakers when it comes to sharing accurate numbers with the filmgoing public.
Some Older Films Costly Too
While the general trend line for movie production budgets seems to be moving ever higher, some older films boast pretty staggering price tags when their reported budgets are adjusted for inflation.
In a late 2012 review of big-budget films, BusinessInsider, an online business news source, said the title for the most costly film went to 2007’s “Pirates of the Caribbean: At World’s End” with an estimated budget of $334.5 million.
Coming in second was 1963’s ill-fated “Cleopatra,” with an estimated budget — in today’s dollars — of $325 million. In third place was James Cameron’s 1997 production of “Titantic,” which cost $288.2 million, adjusted for inflation. “Spider-Man 3,” released in 2007, came in fourth with an estimated budget of $287.8 million.
MPAA No Longer Reporting Film Costs
Testifying to the questionable accuracy of production cost estimates from the filmmakers was a 2009 decision by the Motion Picture Association of America to stop reporting movie production and marketing costs.
Dan Glickman, who was then the chief executive of MPAA, told The New York Times that its decision to scrap this part of its annual state-of-the-business report was based on the problems involved in collecting accurate data. He said he’d been concerned “about the validity of those number for years.”
Budgets Climb Ever Higher
Even without verifiable figures for today’s average movie budgets, there is little question that they are high and climbing higher.
Although an occasional “little-film-that-could” gets put together on an unbelievably low budget but goes on to make big box office, most average films cost plenty. All of which begs this question:
How much revenue must a big-budget film generate to pay back its producers and other backers?
Movie Profits Elusive
Movie industry insiders estimate that a film needs to make at least twice its production costs to achieve a profit.
Here too, we enter the realm of fuzzy math, because there are other costs to consider in the determination of a film’s profitability.
The biggest of these expenses, of course, is marketing. No matter how much you spend on a film, it’s doubtful people will be lining up to see it if they don’t know about it. So advertising is key.
For films with a relatively modest budget — say, $20 million or so — the marketing budget may run nearly as high as production costs.
What a Movie’s Budget Covers
Movie production budgets encompass all costs from such pre-production expenses as buying the film rights to a script or a novel through the post-production period during which the finishing touches are put on the film. The production budget must cover the salaries of actors — from stars to extras — as well as members of the production staff, the behind-the-scenes people.
Other budget items include costumes, set construction, animal training (if applicable), feeding the production team, renting location sites, craft services and much, much more. Each of these items can vary widely in cost.
A major actor may hold out for a king’s ransom before he signs to appear in one film but may forgo his salary altogether to appear in a project that is close to his heart.
Action and sci-fi films sometimes have staggering budgets for special effects, while the special effects expenses of a contemporary drama may be limited to snow machines for a wintertime scene.
Another big-ticket item for filmmakers is insurance, a cost that can skyrocket if questions arise about the dependability of one of the film’s stars or if the project itself involves exposure to extraordinary risks.
As the cost of filmmaking has increased, so too have the distribution outlets for films.
Although most successful American films made over the last half-century have been distributed abroad, both the size and profitability of the worldwide market have exploded in recent years. Foreign moviegoers have more money and are willing to spend it to see what Hollywood has to offer.
New Markets Emerge
Films also can recoup some of their production costs in ancillary markets, such as the home video market or secondary distribution deals for cable TV rights.
Even with additional markets for films, the motion picture industry remains a risky proposition.
No matter how sure-fire a film idea may seem to be in the talking stage, there can be no guarantee that it will translate to box-office success. Yet for all these risks, movies continue to be made, many with sky-high budgets.
Just as movies are sometimes said to be the stuff of dreams, movie makers continue to follow their dreams of bringing their personal visions to the big screen.
About the Author: Don Amerman is a freelance author who writes extensively about digital media, corporate strategy, snow machines and the film industry.