Wednesday, December 21, 2005, 10:08 PM EST.
Genre Key Factor in Film Profitability, Says Kagan Research
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A new study from Kagan Research estimates that animated films released between 2000 and 2004 averaged $194.5 mil. in gross profit and $166.3 mil. in net profit under a major studio distribution deal structure. The second and third most profitable genres were sci-fi/fantasy and family films.
Just published, Economics of Motion Pictures 2006 examines movies across a wide range of budgets and genres and provides 10-year film profitability models for major and indie studios, utilizing various distribution fee structures.
"The continuous shift of movie financing from the majors to off-balance-sheet transactions, assigning initial risk to outside investors, has made economic modeling a critical tool for anyone making or funding a movie," says Wade Holden, Kagan analyst. "Genre can be a key factor in film profitability, and financial models based on genre and negative cost range that chart the point of profitability can help investors evaluate their chances for financial success."
Drawing on the results of films released between 2000 and 2004, Economics of Motion Pictures 2006 charts profitability of movies for nine major genres, including action, animation, comedy, drama, family, horror, romance, sci-fi/fantasy and thriller. Genres are also broken down by negative cost range and by distributor revenue streams.
According to Kagan, the most profitable films tend to be the most expensive. Under the major studio and 15% independent distribution fee structures modeled in the study, the films that cost $100+ mil. to make posted the largest net profit. The films that cost $90 mil. to $99.9 mil. were second under these structures.
Going forward, Kagan projects total motion picture distributor revenue will reach $50.3 bil. in 2005 and grow to $72.9 bil. in 2014. Economics of Motion Pictures 2006 also estimates that by 2014:
- International home video will provide the top revenue stream, amounting to $17.7 bil.
- Domestic home video will drop to second with nearly $16 bil.
- International theatrical rentals will remain in third place at $8.5 bil.
Economics of Motion Pictures 2006 lays out the economic considerations and projects the potential profitability of films with exclusive 10-year forecasts, historical profitability models, negative cost models, film genre models, and three independent distribution fee structures. A comprehensive examination of revenue streams is designed to help motion picture investors, producers and distributors examine their economic options.
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