Study says that Hollywood Movies Still Thrive during Tough Times

Submitted by Nick Dager on Fri, 10/03/2008 - 13:01.

Theatrical box office revenues hit a gross record of $9.67 billion domestically in 2007, besting the previous mark of $9.29 billion set in 2002, a recent study shows.

SNL Kagan's "Economics of Motion Pictures" analyzes all films released on 1,000 or more screens from 2003 to 2007, providing 10-year pro forma models based on genre and budget range, with varying distribution structures. Included are detailed costs for action, animation, comedy, drama, family, horror, romance, sci-fi/fantasy and thriller films.

Overall, SNL Kagan found the most expensive films posted the largest revenues and average net profit. The nine films in the $90 million-$100 million range for negative costs posted an average net profit of $374.7 million under a major-studio distribution fee structure. The 80 films that cost more than $100 million to make generated an average net profit of $282.3 million. The 741 films in the study averaged $66.4 million in net profit.

Within each negative cost range, results varied by genre. The SNL Kagan study reveals that animated films performed best, with an average net profit of $230.6 million under a major studio deal. Horror films had the best results in the $0-$10 million range with an average net profit of $40.3 million, compared to $21.9 million across all negative cost ranges.

"When the going gets tough, consumers go to the movies," says Derek Baine, senior analyst at SNL Kagan. "Historically, theatres have been fairly recession proof, and this year looks to be no exception."

SNL Kagan www.SNLKagan.com