That’s what I thought, but apparently the industry uses the “2.5x” rule which I never really understood and everyone just goes with it. And yes, a movie doesn’t need to break even theatrically in order to eventually be profitable, but that would be the ideal scenario
RedHeadedSicilian52 on
Everything else aside, Affleck consistently strikes me as one of the smartest A-list actors working, at least when he’s talking about the business of making movies. Always very articulate.
Damon, too, which is fitting.
LackingStory on
This is rough back-of-the-napkin math to explain it to laymen, he’s not telling you multiply every budget by 4 or marketing + production by 2, that’s just roughly where things are. He’s also telling you he’s not accounting for ancillary revenues.
bigelangstonz on
Yup physical media being dead essentially makes movies harder to get over now because as matt damon said a movie could have tanked at the BO but broke even and turn profit from home media sales like watchmen for example its a clear bomb at the BO but apparently its in the clear because the home media revenue was that strong
Call555JackChop on
I love he’s dissecting movie income projections with Matt Barnes and Stephen Jackson lol
kingofstormandfire on
I’m honestly surprised how many people still miss this. The 2.5x rule is not about pure theatrical profitability. It exists because ancillary revenue streams like streaming, VOD, and TV licensing are expected to offset marketing costs. People not clued into box office also forget that that theatre takes a cut of the revenue. Studios don’t keep all the revenue. How the hell would theatres even exist if that was the case? Theatres aren’t a charity. In the US, the studios keep more of the cut (the percentage depends on the deals they have, and usually the take is higher for studios on OW), but overseas it’s usually less. In China, we know studios get 25% of the revenue but that increases if it was co-produced by a Chinese film studio.
Plenty of films do not break even theatrically when you combine production and marketing spend, but they still recoup and turn a profit once those ancillary revenues come in.
I remember getting downvoted on this sub – probably when the DCU/Gunn fanboys were infesting it, God that fanboy clash between Snyder cultists and Gunn cultists was a weird period – when Superman 2025 came out for pointing out that it didn’t break even theatrically. That was objectively true if you actually run the numbers (the marketing budget was reported). But it was also clear that the film would break even and move into profit once ancillaries were factored in (it reached and exceeded the 2.5x of the budget), which is exactly what the 2.5x benchmark is meant to reflect.
BillRuddickJrPhd on
Isn’t this old?
dispose135 on
25 million in advertising isn’t just about getting word of mouth and tv spots etc or YouTube
Its about gaining access to good seats and positioning in movie theatres, gaining access to Android game tie ins and supermarket food advertising
And also marketing strategy, trailer strategy, there are big agencies that cover this
Still with movies costing so much it makes sense to go with social media Savoy stars to get word of mouth
However advertising doesn’t mean it will perform
TheFrixin on
4x if you aren’t counting ancillary revenues and are assuming theaters take 50%.
2.5x is when you assume that theaters take 60% on average WW (more for international-heavy films, less for dom heavy) and assume that marketing + ancillary costs = ancillary revenues (licensing for streaming/home video etc.), so you take anything but production out of the equation.
2.5x isn’t a bad guesstimate based on Deadline numbers, but high performing movies probably make a bit more than you’d think and stinkers probably lose a bit more than you’d think. But also DOM-heavy movies make more and streaming-friendly movies make more (think kids movies), so you can end up with pretty wild swings in certain conditions.
badassj00 on
Honest question: what was the last mainstream movie that grossed 4x both DOM and INTL?
shibby182 on
Yeah Producing 101 in Film School will teach a general rule of thumb that is this:
Profitability is 2.5x Production Budget
This covers both Marketing Expenditure as well as exhibitioners cut
Old Business model could sustain loss on theatrical release to make up money in “ancillary” markets (merchandise, VOD, rental, licensing (airplanes) and home video)
New Business (of the times) model puts more weight on theatrical as those ancillary markets have dried up or disappeared in the age of streaming
CantAffordzUsername on
His friend Matt Damon also explained that to release a DVD was like a second release of the film making back losses or extra gains on a film but with DVD sales being dead thanks to streaming studios will no longer fund mid-lower budget films due to the not turning a profit and in some case would be a massive loss
Vegetable_Hearing477 on
The amount of people who believe that movie with 100 million budget breaks even at 100 million box office is disturbing
reachisown on
Bro you cut this clip way too short
[deleted] on
[removed]
reciprocal_space on
But why does the marketing budget match the production budget? How can advertising the movie cost the same as all the costs of making it? I never see TV, radio or billboard advertisements anymore. It’s YouTube and social media trailers. How much does that cost?
Dulcolax on
Yeah, it’s quite complex. Producers keep 50% of domestic grosses, 25 % from China and 40% from the rest of the world. So, movies usually must perform really well.
100_Flatout on
Did he dye his beard?…. Kinda obvious in the video 🤣🤣
AmusingMusing7 on
Regarding this “rule” about the marketing budget needing to be the same amount as the budget…
Does it really???
Or is this just a bad habit that Hollywood has fallen into, and doesn’t want to change because of all the people in the marketing departments wanting to keep getting paid?
Like, did Avatar 3 really need to spend another $400 million on advertising just because the movie’s budget was $400 million? Everybody knew about the movie already, and I’m not even sure I saw much of the advertising. Yet apparently, the money was spent and people are claiming Avatar 3 didn’t break even until at least $800 million at the global box office. Some people thinking it’s still not broken even at $1.3 billion.
I don’t think they actually needed to spend that much money advertising a movie that people already knew if they wanted to see or not. Just release some trailers on youtube…. that’s about all you need to do these days to advertise a movie. That’s the only marketing I need. Seeing a poster at a bus stop doesn’t do it for me. Not once have I seen a public displayed movie poster and that’s been what made me decide to see the movie. I’d wager most people are the same.
I think Hollywood really needs to change its approach to budgets… especially for marketing.
AcctAlreadyTaken on
Sounds to me it’s a mix of Hollywood accounting for the “advertising budget”. If they are spending much of it on social media marketing and it’s not working then they should pull back and put the money into something else.
PatternPlenty1107 on
And that applies only to the domestic box office…, Hollywood recieves even less money from the international box office!
balthazar_edison on
Okay but you spend that money anyways to put it on streaming and get people to watch on streaming … might as well put it in theatres to recoup some of the cost, right?
HumbleBeginning3151 on
At some point, scaling the marketing 1:1 with the movie budget stops making sense, right?
pillkrush on
dude’s giving an estimate for the masses to better understand and the people in the comments arguing about what the real numbers are🤦♂️
terrence1972 on
That means A3 has to cross over $1.6b to make a profit..
fangdangfang on
I feel like these days a lot of smaller movies (sub 50 million) skimp on the advertising because they know it’s wasted money. No point spending a dollar to make 50 cents. They are more likely to use social media or other gorilla marketing tactics to try make the film go viral and or try get a cult following that will give you good word of mouth.
tentekbala on
I always wondered how does “Hollywood accounting” play into this equation. Does it mean a 100m budget is actually 80m, so in reality needs 320m BO instead of 400m?
moneycity_maniac on
For the theoretical $25M movie with the equivalent in marketing costs and average 50% take from theaters, the math checks out. For the $150M+ blockbuster they are unlikely to also spend $150M+ on marketing. That’s why x2.5 is only useful for blockbusters imo. Lower budget movies will have to triple or quadruple their production budgets in box office to make money from theatrical alone.
Sad_Conclusion1235 on
Well but also maybe don’t spend so much on making these movies. The budgets are excessive. They should not have to cost that much, usually. Example, the last Indiana Jones movie. No way that should have cost over $300 million to make. That’s excessive.
29 Comments
That’s what I thought, but apparently the industry uses the “2.5x” rule which I never really understood and everyone just goes with it. And yes, a movie doesn’t need to break even theatrically in order to eventually be profitable, but that would be the ideal scenario
Everything else aside, Affleck consistently strikes me as one of the smartest A-list actors working, at least when he’s talking about the business of making movies. Always very articulate.
Damon, too, which is fitting.
This is rough back-of-the-napkin math to explain it to laymen, he’s not telling you multiply every budget by 4 or marketing + production by 2, that’s just roughly where things are. He’s also telling you he’s not accounting for ancillary revenues.
Yup physical media being dead essentially makes movies harder to get over now because as matt damon said a movie could have tanked at the BO but broke even and turn profit from home media sales like watchmen for example its a clear bomb at the BO but apparently its in the clear because the home media revenue was that strong
I love he’s dissecting movie income projections with Matt Barnes and Stephen Jackson lol
I’m honestly surprised how many people still miss this. The 2.5x rule is not about pure theatrical profitability. It exists because ancillary revenue streams like streaming, VOD, and TV licensing are expected to offset marketing costs. People not clued into box office also forget that that theatre takes a cut of the revenue. Studios don’t keep all the revenue. How the hell would theatres even exist if that was the case? Theatres aren’t a charity. In the US, the studios keep more of the cut (the percentage depends on the deals they have, and usually the take is higher for studios on OW), but overseas it’s usually less. In China, we know studios get 25% of the revenue but that increases if it was co-produced by a Chinese film studio.
Plenty of films do not break even theatrically when you combine production and marketing spend, but they still recoup and turn a profit once those ancillary revenues come in.
I remember getting downvoted on this sub – probably when the DCU/Gunn fanboys were infesting it, God that fanboy clash between Snyder cultists and Gunn cultists was a weird period – when Superman 2025 came out for pointing out that it didn’t break even theatrically. That was objectively true if you actually run the numbers (the marketing budget was reported). But it was also clear that the film would break even and move into profit once ancillaries were factored in (it reached and exceeded the 2.5x of the budget), which is exactly what the 2.5x benchmark is meant to reflect.
Isn’t this old?
25 million in advertising isn’t just about getting word of mouth and tv spots etc or YouTube
Its about gaining access to good seats and positioning in movie theatres, gaining access to Android game tie ins and supermarket food advertising
And also marketing strategy, trailer strategy, there are big agencies that cover this
Still with movies costing so much it makes sense to go with social media Savoy stars to get word of mouth
However advertising doesn’t mean it will perform
4x if you aren’t counting ancillary revenues and are assuming theaters take 50%.
2.5x is when you assume that theaters take 60% on average WW (more for international-heavy films, less for dom heavy) and assume that marketing + ancillary costs = ancillary revenues (licensing for streaming/home video etc.), so you take anything but production out of the equation.
2.5x isn’t a bad guesstimate based on Deadline numbers, but high performing movies probably make a bit more than you’d think and stinkers probably lose a bit more than you’d think. But also DOM-heavy movies make more and streaming-friendly movies make more (think kids movies), so you can end up with pretty wild swings in certain conditions.
Honest question: what was the last mainstream movie that grossed 4x both DOM and INTL?
Yeah Producing 101 in Film School will teach a general rule of thumb that is this:
Profitability is 2.5x Production Budget
This covers both Marketing Expenditure as well as exhibitioners cut
Old Business model could sustain loss on theatrical release to make up money in “ancillary” markets (merchandise, VOD, rental, licensing (airplanes) and home video)
New Business (of the times) model puts more weight on theatrical as those ancillary markets have dried up or disappeared in the age of streaming
His friend Matt Damon also explained that to release a DVD was like a second release of the film making back losses or extra gains on a film but with DVD sales being dead thanks to streaming studios will no longer fund mid-lower budget films due to the not turning a profit and in some case would be a massive loss
The amount of people who believe that movie with 100 million budget breaks even at 100 million box office is disturbing
Bro you cut this clip way too short
[removed]
But why does the marketing budget match the production budget? How can advertising the movie cost the same as all the costs of making it? I never see TV, radio or billboard advertisements anymore. It’s YouTube and social media trailers. How much does that cost?
Yeah, it’s quite complex. Producers keep 50% of domestic grosses, 25 % from China and 40% from the rest of the world. So, movies usually must perform really well.
Did he dye his beard?…. Kinda obvious in the video 🤣🤣
Regarding this “rule” about the marketing budget needing to be the same amount as the budget…
Does it really???
Or is this just a bad habit that Hollywood has fallen into, and doesn’t want to change because of all the people in the marketing departments wanting to keep getting paid?
Like, did Avatar 3 really need to spend another $400 million on advertising just because the movie’s budget was $400 million? Everybody knew about the movie already, and I’m not even sure I saw much of the advertising. Yet apparently, the money was spent and people are claiming Avatar 3 didn’t break even until at least $800 million at the global box office. Some people thinking it’s still not broken even at $1.3 billion.
I don’t think they actually needed to spend that much money advertising a movie that people already knew if they wanted to see or not. Just release some trailers on youtube…. that’s about all you need to do these days to advertise a movie. That’s the only marketing I need. Seeing a poster at a bus stop doesn’t do it for me. Not once have I seen a public displayed movie poster and that’s been what made me decide to see the movie. I’d wager most people are the same.
I think Hollywood really needs to change its approach to budgets… especially for marketing.
Sounds to me it’s a mix of Hollywood accounting for the “advertising budget”. If they are spending much of it on social media marketing and it’s not working then they should pull back and put the money into something else.
And that applies only to the domestic box office…, Hollywood recieves even less money from the international box office!
Okay but you spend that money anyways to put it on streaming and get people to watch on streaming … might as well put it in theatres to recoup some of the cost, right?
At some point, scaling the marketing 1:1 with the movie budget stops making sense, right?
dude’s giving an estimate for the masses to better understand and the people in the comments arguing about what the real numbers are🤦♂️
That means A3 has to cross over $1.6b to make a profit..
I feel like these days a lot of smaller movies (sub 50 million) skimp on the advertising because they know it’s wasted money. No point spending a dollar to make 50 cents. They are more likely to use social media or other gorilla marketing tactics to try make the film go viral and or try get a cult following that will give you good word of mouth.
I always wondered how does “Hollywood accounting” play into this equation. Does it mean a 100m budget is actually 80m, so in reality needs 320m BO instead of 400m?
For the theoretical $25M movie with the equivalent in marketing costs and average 50% take from theaters, the math checks out. For the $150M+ blockbuster they are unlikely to also spend $150M+ on marketing. That’s why x2.5 is only useful for blockbusters imo. Lower budget movies will have to triple or quadruple their production budgets in box office to make money from theatrical alone.
Well but also maybe don’t spend so much on making these movies. The budgets are excessive. They should not have to cost that much, usually. Example, the last Indiana Jones movie. No way that should have cost over $300 million to make. That’s excessive.