Tuesday, July 30, 2013

Why Do All Hollywood Movies Lose Money?

From Priceonomics:

Star Wars: Return of the Jedi. 
Forrest Gump
Harry Potter and the Order of the Phoenix. 

What do these three films have in common? Each was a blockbuster, among the first or second highest grossing films of the year. All three were also unprofitable.  

Two years after the re-release of Return of the Jedi in 1997, for example, David Prowse, the actor who played Darth Vader, told Equity Magazine that he still received letters informing him that Lucasfilm had no profits to share with him:
“I get these occasional letters from Lucasfilm saying that we regret to inform you that as Return of the Jedi has never gone into profit, we’ve got nothing to send you. Now here we’re talking about one of the biggest releases of all time. I don’t want to look like I’m bitching about it, but on the other hand, if there’s a pot of gold somewhere that I ought to be having a share of, I would like to see it.”
These films are not a cautionary tale about how wasteful spending can turn a commercial success into a net failure. They had perfectly average production budgets and expenses for movies of their scale. Their lack of profitability, in fact, is typical. Over 80% of Hollywood movies fail to turn a profit....MORE