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Report says doom and gloom of movie biz means make more movies!

July 17, 2009 |  2:51 pm

Money's tight. Financing is nowhere to be found. DVD sales are slumping. What's a big studio to do?

Make more movies.

That contrarian thinking is the word from industry research firm SNL Kagan, which just released a report suggesting that cutting back on production is exactly the wrong thing to do right now.

Kagan looked at the 611 major studio releases between 2004 and 2008 and then broke them down by genre (comedy, drama, action, etc.) and year to create imaginary slates of five,10, and 15 films. Then the firm ran three versions of each slate with a mix of movies with high probabilities of success (action) and low probabilities of a big box office take (adult drama).

Without getting caught up in the nitty-gritty of the analysis (which is available for a fee here), the end result of their study was that the bigger the slate, the better the odds for profit. The five-film slate had a net loss of $94 million. The 10-film slate had almost $140 million in profit, while the 15-film slate had $466.4 million in profit. The study, which used a time frame of 12 years to determine the results, assumed 8% in distribution costs and 10% profit-participation and also included video and television revenues.

Kagan analyst Wade Holden says if the studios cut back too much, they are "putting themselves in harm's way."

-- Joe Flint


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