10 Ways You're Thinking About The Movie Industry All Wrong

8. Box Office Gross Vs. Profit

What You Think: The box office is really easy to work out. A film costs X, it makes Y and therefore its profit is Y minus X. Hollywood should employ you as an accountant right away. With this logic, so many of the films described as cinema's biggest ever bombs - John Carter, The Lone Ranger and even Batman And Robin - actually made their money back. It's not that good a return from the hundreds of millions of dollars invested, but it's far from terrible. The Truth: In reality a film costs X, it makes Y and its profit is Z. And Z depends on many different factors. The production budget is just that; the cost of making the film. It doesn't include anything to do with the marketing of the film. The best estimation for Z is that it's actually Y minus two times X, although even that's a little off (studios are often very secretive about their finances). But using that as a base rule gives you an idea of how these films that just about made their budget at the box office are actually major money haemorrhages. Films like Pacific Rim, which cost $190 million and made $410 million, may initially look like they were runaway successes, but with this in mind they only just broke even.