But…

There are repeated patterns and signals we see often among the films that make money versus those that fail.

This gets to the heart of the complexity of making a sustainable business model in film. Film sits at the intersection of art and business, two quite different worlds:

• Business thrives on control, on repetition, on figuring something out and then doing that exact thing a million times. Invent, patent, repeat.

• Conversely, Art depends on destruction, on reinvention, on finding new ideas and fresh ways of working which rip up the rule book. Bold, fresh, and different.

Therefore, the Business of Art is about trying to hold both ideas at once. Film businesses thrive by protecting what works for audiences while simultaneously finding a new way to delight them. That tension is the job.

To help with this, I have spent the last few months crunching the data to discover repeated pattens we see among profitable films. It draws on data on the estimated profitability of over 10,000 films, matched with more than four million audience responses.

This tells us what ordinary viewers say and feel about the films they watch, and how those conversations align with financial outcomes. The full Greenlight Signals report goes deeper, but this article highlights some of the most useful signals.

What signals are true across every genre?

Most of the profitable signals are genre-specific, and I’ll go through some later in the article. But first I wanted to share some that were almost universal. These are patterns which audiences respond to in the same way, almost no matter the genre or scale of the movie.

1. Make sure people know what’s going on. Films that establish a clear central idea early and communicate it consistently perform better than those that leave audiences confused or misled.

2. The marketing needs to match the movie. Viewers reward films that deliver what was promised in the trailer and poster, even if the execution is modest, and punish those that shift tone or premise halfway through.

3. Don’t make the film too long. Runtimes under two hours tend to correlate with stronger audience response and profitability, except in large-scale adventure or fantasy.

4. Give characters clear wants and visible stakes. Stories with legible motivation and emotional tension hold attention and travel better across markets.

5. End on a clear emotional note. Whether tragic or uplifting, films that leave audiences with a resolved feeling tend to get stronger word-of-mouth and rewatching.

6. Keep rhythm and sound tight. Strong pacing and careful sound design protect immersion across all genres.

7. Stick to one tone. Films that maintain a consistent mood and emotional contract with the audience perform better than those that jump between styles.

8. Reward repeat viewing. Detail-rich worlds, quotable lines, or emotional comfort make audiences want to return, which extends a film’s lifespan.

There will be exceptions to every signal. What we’re talking about things which are frequently shown to matter across many movies. So take these as advice, rather than unbreakable rules.

Now let’s dig into the patterns on a per-genre-basis. The Greenlight Signals report goes into much more detail, and covers more genres, but here are some of the strongest patterns.

Thriller

Lay fair clues and make every thread come together in the end

Thrillers rely on precision. Every clue, cut and reveal has to line up so that when the ending lands it feels both shocking and inevitable. The audience needs to believe they could have seen it coming if they’d looked harder.

Examples include:

• Se7en seeds a ruleset and breadcrumb trail that lines up perfectly with the final reveal.

• Throughout Gone Girl it pays off planted cues with reveals that reframe earlier scenes while staying fair to the setup.

• Prisoners threads clues and motifs across intersecting searches so the last act clicks into place.

Drama

Drama is about characters showing who they are through the choices they make

Among dramas, audiences discussing the depth of the characters was one of the strongest profitability signals l saw.

Audiences reward dramas in which the characters want something clear and act on their own inner logic. The depth comes from contradictions they can’t resolve, choices that cost them something, and small behaviours that hint at their past.

Some dramas I think do this well include:

• A Separation maps competing principles and pressures so every decision feels inevitable yet costly.

• Whiplash reveals character through escalating choices in pursuit of excellence, not through speeches.

• The Father uses behaviour, framing and routine disruption to expose an inner world without over-explaining.

• Call Me by Your Name builds depth through small habits, glances and a final choice that reframes the story.

Action

Make the danger feel immediate and the stakes personal

Read more

I identified 186 movies which made at least a 200% in profit, despite receiving very poor reviews from critics.

These breakout successes fall into five clear categories:

1. Genre movies which really deliver. Films that stick tightly to genre conventions and satisfy core genre fans.

2. Famous brands or stars. Films where well-known franchises or celebrity names pull in audiences.

3. Films for underserved or mobilised audiences. Movies made for specific groups who rarely see themselves on screen, like faith-based or LGBTQ+ audiences.

4. Shocking and controversial films for the curious. Titles that use notoriety, controversy or shock value to drive curiosity and word of mouth.

5. Feel-good, lowbrow escapism. Simple, broad comedies and romances made for those wanting easy, light entertainment.

I’m going to look at each group in turn and then draw some wider lessons that producers and filmmakers can learn from the patterns.

1. Genre movies which really deliver

The first group is made up of films that stick closely to genre expectations, delivering an undiluted dose of what genre fans crave.

This cohort has a lot of low budget horror movies, including Saw, Paranormal Activity 4, The Purge: Anarchy, Dashcam and Annabelle. It’s not a surprise that horror title over-index here as critics don’t traditionally like them, and because horror is a genre which thrives on low budgets.

Writing in Variety, Dennis Harvey called Saw “A crude concoction sewn together from the severed parts of prior horror/serial killer pics”.

In the same review he called the movie “convoluted”, “desperate”, “wholly derivative”, “shamelessness”, “unoriginal”, and stated that “building atmosphere and suspense is well beyond [the filmmakers]. Ditto handling actors”

Another popular genre are the action-thrillers. They tend to be written off as “dumb” by critics but attract thrill-seeking audiences around the world. Examples include Taken 2, Revolver and Smokin’ Aces.

But it’s not all blood, guts and guns. Broad comedies show up (Ride Along, Next Friday) as do music-based films (Step Up, Stomp the Yard), both categories in which the primary audience is clear.

The overall message with this group is not about any particular genre but more that movies don’t need glowing reviews if they can really deliver a familiar ride which audiences crave.

2. Famous brands or stars

The second group covers films that draw a crowd because of their connection to an established brand or a recognisable star.

This includes sequels, adaptations, spin-offs and movies built around major pop culture figures. The marketing does not need to work very hard to explain what you’re getting as audiences already know from the title or the poster.

Book adaptations like Fifty Shades of Grey, blockbuster sequels such as The Twilight Saga: New Moon, and star-driven vehicles such as Bohemian Rhapsody and The Greatest Showman, both of which used the fame of the central act or performer to fill seats regardless of critical reaction.

Mick Lasalle, San Francisco Chronicle said of The Twilight Saga: New Moon “Expect this film to satisfy its fans. Everybody else, get ready for a bizarre soap opera/pageant, consisting of a succession of static scenes with characters loping into the frame to announce exactly what they're thinking."

Family franchises perform strongly here too. Ice Age: Dawn of the Dinosaurs, Ice Age: Continental Drift and Night at the Museum all used audience familiarity and loyalty to ensure a solid box office even as the reviews dipped.

The main point with this group is that brand recognition or famous names trump everything else. If people already feel connected to the property or talent, they are very likely to show up, no matter what critics say.

3. Films for underserved or mobilised audiences

The third group includes films that target audiences who rarely see themselves reflected in mainstream cinema.

Rather than chase general approval, these movies speak directly to faith-based communities, certain subcultures, or niche groups that will rally behind a film when it speaks their language.

Read more

In the 1940s, musicals provided a colourful escape from war, stories of rebellion in the 1970s gave hope to audiences losing faith in political systems and modern-day superhero movies provide easy delineation between good and evil in murky times. So what will be the escapism of the 2020s?

Regular readers will know that I subscribe to MGM co-founder Samuel Goldwyn's belief that "It is difficult to make forecasts, especially about the future". Therefore, I won't pretend to know what the next decade holds for on-screen stories. But I do want to share something I found while playing around with a few of my movie datasets which I think may be relevant.

I studied the financial performance of 4,271 movies which were released in the past two decades and looked for patterns with their levels of positivity. Although positivity and positive messages are slightly nebulous concepts, we can track signals from a number of sources. For example, sites such as Common Sense Media provide breakdowns of the contents of movies to help parents make informed choices about what movies to let their children watch. There's much more detail on my data and methodology in the Notes at the end of the article.

Do films with positive messages make more money than those without?

Let's start with the overall result and then break it down by genre.

I used a mix of real-world data and algorithmic estimation of financial performance to look at the likelihood each movie was profitable. This calculates whether each film's total income from all sources is likely to have outstripped its total expenditure associated with making and distributing the movie. This method results in a degree of uncertainty so in the charts below I have added a colour gradation between the two ends of the spectrum (i.e. "Profitable" or "Unprofitable").

The charts below show the headline result. Across movies of all types, those with higher levels of positive messages are more likely to be profitable than those with less or no positive messages.

Which genres have the strongest link between positivity and profitability?

I have picked out three genres which seem to have the strongest connection between the two factors, namely Sci-fi, Adventure and Comedy.

It's worth remembering that some genres are more frequently made than others, and also that the more we subdivide our categories, the greater chance we have of extreme results. For example, in the chart above, the Sci-Fi data relates to 492 movies but there are only a handful of "Sci-fi movies with an abundance of positive messages." Therefore, if many more extremely positive sci-fi movies were made, I doubt it would maintain its "100% profitable" result.

Which genres have the weakest link between positivity and profitability?

I could not find any genres in which the headline result was reversed, not even horror. That said, some genres seem to have a much more mixed result. The least likely to follow the "positivity equals profits" rule of thumb were drama, romance and fantasy.

If you would like to read more above movie profitability then you may enjoy these past pieces of research:

• How movies make money: $100m+ Hollywood blockbusters

• Do Hollywood movies make a profit?

• What percentage of independent films are profitable?

• How is a cinema’s box office income distributed?

Notes

The data for today’s research came from Common Sense Media, Dove, MPAA, BBFC, IMDb, OpusData and Wikipedia. It includes all feature films released in US cinemas between 2000 and 2019 for which a budget and box office data was available.

It’s worth stating the obvious that measuring the amount of positivity in a movie is subjective. It’s not possible to truly track an exact, unbiased level of content in a movie without many reviewers watching the same movie and having an objective standard for scoring.  That said, the sources I used have clear guidelines as well as experienced reviewers who justified their scores and based them on a shared criteria.  In the absence of a better measure of a movie’s content, this works well enough for the function needed in today’s research.

Profitability is also something which is hard to research, but for a different reason. While there is an objective truth to the costs and income of a movie, we have a hard time finding it out. Today's research uses a mix of real-world data and calculations, based on standard industry practice. This is getting harder to do as more of a film's value chain comes from the hidden worlds of VOD and digital sales, compared to the relatively transparent world of cinema admissions.

We’re measuring correlation, not causation.  This means that we don't know to what extent the positive messages are leading to the financial outcome or if there are other linked forces at play.

Epilogue

Today's article sprung from a research dead-end. I thought I'd share the original idea to see if readers could help suggest next steps...

My wife and I have been re-watching various movies we remember from our teenage years and after a particularly explosive double bill (Demolition Man and The Running Man) I started to think about utopian versus dystopian Sci-fi movies.

I formed a couple of theories to test:

1. That there are many more dystopian sci-fi movies than utopian ones. I'm reasonably sure this is the case, but of course, we can never know until we crunch the numbers.

2. Utopian sci-fi movies are more successful than dystopian ones. This is more of a reach and might just be something I want to be true, rather than the actual truth!

However, in trying to conduct this research, I ran into two major problems:

• Who's asking? The term 'utopian' refers to a world in which everything is perfect; a world beyond hardship, prejudice, injustice, etc. These are somewhat subjective terms and so utopia is in the eye of the beholder. The vast majority of people in Brave New World would consider their world to be utopian. However, as the book is told from the perspective of dissidents, we view it as oppressive and controlling. Likewise, the Wakandans in Black Panther, the Eloi in The Time Machine and the Borg in Star Trek may regard themselves as living in a utopian world/civilisation (certainly when compared to dystopian visions such as that shown in Blade Runner).

• What's happening? Movies are about conflict - things need to happen, people need to overcome adversity and have something to strive for/against. Therefore, a story in a truly utopian world would be 90 minutes of people eating grapes. There must be trouble in paradise, and given the tropes of movie hero/ines, it's likely that our main protagonists will reveal some nature of the utopia to be illusionary.

So I couldn't think of a path forward for the research. If any of you can help, please do get in touch.

Analysing return in the film industry is always tricky, due to the fragmented and secretive nature of deals.  However, there are a few places we can look to gain an insight into otherwise opaque areas.

In this case, we can study the returns of films backed by the British Film Institute (BFI). As a quasi-public body, the BFI is required to report the status of investments it has made each year in its full annual accounts.  This means we can see how much the BFI put into a film and how much they earned back.

The average recoupment period for movies

I studied 328 feature films which received funding awards from the BFI (or its predecessor the UK Film Council).  By piecing together the annual accounts we are able to get a picture of when money flowed back to the BFI.

Over this fifteen-year period, just over a third of all the money came in during the first year of recoupment, with 89% being received within the first four years.

Examples of recoupment schedules

Each film will have a slightly different recoupment pattern.  For example

• Slow burns - An independent film can take time to get noticed and to gain worldwide income.  For example, The King's Speech was unusual in that it took a couple of years to hit its peak as it was released internationally and eventually went on to win the Best Picture Oscar.

• Up-front deals - A distribution deal could include a Minimum Guarantee (MG) which is deducted from future income.  This can result in no income for a number of years while that MG is repaid.  Most films never repay their MG but those that do will see a small trickle of income after that period.  For example, 28 Days Later saw a large income in years 1 and 2, then nothing for a further five years, after which time money started coming in again.

Below are four examples from the BFI dataset.  In each case, we're only seeing the BFI's share of income so sadly we cannot use them to calculate the total income each film received.  That said, with the BFI earning over nine times its original investment on The King's Speech, we're able to conclude that the other investors must be pretty happy right now!

What this means for filmmakers and investors

In a 2004 Wired article entitled The Long Tail, Chris Anderson described a scenario whereby companies can make more money from selling a large number of low-volume products than by just stocking a few high-demand items.  I have heard many new or inexperienced filmmakers refer to 'the long tail' as a key part of their recoupment plan.  They envisage a world wherein even if their film does not make much in its first few years, it will go on to succeed by selling for a number of years.

As we have seen above, sadly this is extremely rare for film recoupment. In almost all cases, the money you generate in the first few years will represent the vast majority of lifetime income.

The exceptions to this rule are:

• Films which spawn other products which live on, such as popular video games, live shows, albums etc.

• The value generated from remakes, sequels, spin-offs etc.

• If the topic or star gains greater fame or relevance long after the film's initial release (a case in point is any movie which featured pandemics right now!)

As you can imagine, these are fringe cases which rarely apply to indie films.

Further reading

Here are some past articles which will allow you to read deeper into the topics touched on today:

• How movies make money: $100m+ Hollywood blockbusters

• The scale of BFI development and production funding

• Which BFI funded films returned the most money?

• Do BFI backed films make a profit?

• Do Hollywood movies make a profit?

• What percentage of independent films are profitable?

Data

The raw data for today's study came from the BFI's annual accounts. This means that it is historic data and refers to a particular type of movie.  That said, the overall pattern does match the recoupment schedules I've seen for all manner of movies, from studio blockbusters down to micro-budget breakouts.  Each film will have its own unique division of returns between years but overall the average pattern is likely to be as shown above.

In order to conduct today's study I built upon previous research I had conducted into BFI (and previously UK Film Council) funding.  There are a number of notes and caveats mentioned in those projects which are worth considering.  For brevity's sake, I will not repeat them here but they can be read at the BFI-related links above.

As this is annualised data, we do not get the kind of granular detail which would be more useful for cashflow purposes.  For example, if a sales agent is paying money quarterly, is slow to make transactions and pays on the first day of a new financial year, then this will show up in the figure long after it was actually earned.  However, I hope that the volume of films studied here minimises the effect of such fringe cases, and readers are reminded to take into account this kind of lag when discussing payments.

I updated this article soon after publication as I discovered that a small number of my figures for the year 2003 were wrong.  I have now fixed them.

Epilogue

The BFI data was not in the easiest format to read or analyse, which one can only assume is deliberate, given how easily other information is made available by them. Given that the BFI hold all the data, it would be fairly straightforward to link this returns data and present it as neatly as they present their funding awards.

I suspect that one factor which is depressing action on this front is that BFI films rarely pay back their full award. Put another way, the vast majority of BFI-backed films do not breakeven.  When I previously studied BFI returns, I spoke to many members of BFI staff at all levels and the consensus was that this was a PR concern and something the BFI doesn't want to highlight. PR is not my area so I can't say to what extent this fear is justified, or if the potential fallout is worth frustrating industry research.

What I can say is that not only is the lack of profitability no black mark against the BFI, it could even be read as evidence that they're performing their role correctly.  A few things to bear in mind:

1. They are not designed to be a profit centre.  They spend government and National Lottery money to improve and strengthen the UK film industry.  They are part arts body, part trade body and part force for social good (i.e. improving access, diversity, education and opportunity).  Their missions are hard enough already without also adding "make money" on!

2. They are filmmaker-friendly.  One route to larger returns would be to toughen up the deal terms for the money they provide.  By demanding an exclusive and/or early recoupment position they would no doubt increase their chances of breakeven, but at the cost of making any other investment in the movies much harder.  Another project the BFI have is their Locked Box scheme, which means that a significant share of profits is returned to the filmmakers to make future films, further reducing the BFI's income but increasing the advantage to filmmakers.

3. The kinds of films the BFI fund are not the most profitable type.  Due to its arts and diversity remit, the BFI is carefully choosing which films to make.  They disproportionately fund period dramas and rarely support horror - the complete inverse of an investment strategy chasing a return.

4. Most indie films lose money.  Across the whole sector, only around a third of theatrically released movies turn a profit and for the lowest budget range, it's fewer than one in twenty-five.

So from my perspective, I would hope that the BFI further open up their data in a format researchers can easily use.  The collation and re-formatting of this return data took many, many hours of work, just to recreate what the BFI already hold in a structured format.

The indie film sector is:

• Decentralised. It relies on a constantly shifting chain of third parties across the world, with no requirement to report to a centralised body, no third party verification and lacks even agreed reporting standards.

• Opaque. Some revenue streams withhold all data (such as VOD subscription platforms like Netflix and Amazon) while even the most transparent streams come with levels of uncertainty (i.e. theatrical gross is clear but the costs it took to earn that gross is not).  But it's not just the sources of income; distributors, sales agents and producers keep their figures extremely close to their chest, often not even sharing full data with those who have made the films they represent.

• Sometimes shady. A minority of parties are dishonest, or at very least, deliberately misleading.  Over-representing revenues can make you look more successful, under-representing may reduce the need to payout profit shares and few choose to be frank about the money they have spent to make or distribute a movie.

I can't think of any other industry which requires so much money to be spent while offering so little public data on what works.

This leaves independent filmmakers in a tricky position.  An essential document for anyone trying to raise film finance is a business plan but the lack of even basic top-level information makes this an extremely hard document to write credibly.

There are two ways to tackle this information drought:

• Find a few comparisons.  Many filmmakers find a few recent films similar to their own (known as 'comps) and do all they can to track down data on how those comparisons performed.

• Understand the market.  Look at how the whole market works and the kinds of films which make money.  Use this data to improve your film and prove that it has a much better than average chance of succeeding.

And it's on that second point I can help today.

Over the past year or so I have been working on an investigation of profitability within the independent film sector, covering all films made worldwide over the past two decades.  Using real-world data (public and private) together with modelling likely outcomes from common practices, I have been able to find patterns in the dark noise of film financial data.

I'm going to share a few of the headline findings here to help frame expectations for filmmakers and investors looking to put their money into the independent film sector.

I am also going to start doing some training events around the world to share the details with filmmakers in a live environment.  I have thought hard about the best way to share the findings and decided that it needed to be live courses.  No amount of blog posts can contain all the data, no book can stay up to date and no online course can adapt to the audience's unique needs.

I'll be in New York on Saturday 19th October 2019 and in London on Saturday 23rd November 2019.   Next year I'll be travelling far further to reach more filmmakers (contact me if your organisation can host a course)

In the meantime, here is a sense of the profitability of independent films. I warn you now - it's not pretty...

How many independent films recoup their investment?

The level of specificity we can bring to this question depends on how narrow we make our inclusion criteria. If we want to know about all films ever made then a large degree of modelling and projection is required, whereas picking a single movie lets us get to a much more specific answer.

Let's focus on films made in the United States, as we can then use whether or not they reached US cinemas as a strong indicator of their performance. Mix that in with other data, and we can produce a fairly reliable picture of sector profitability.

Note: This is looking at films intended for theatrical release, thereby excluding TV movies and straight-to-video productions, such as gems like Little Mermaid 2 and Transmorphers. The data on these films is much harder to assess at scale and they wouldn't fall into many people's idea of a "film" (more on this at the end of the article).

Over the past two decades (1999-2018) I found 37,472 feature films made in the US. Only 5.7% were made or released by one of the six five major Hollywood Studios, meaning that 94.3% were independent films.

Nine out of ten didn't get a theatrical release (i.e. were shown in commercial cinemas) and are therefore statistically very unlikely to be profitable. It is possible that one or two had other significant sources of income (See Notes for more details) but for the vast majority of films, it's extremely likely that they were loss-making.

Of those which did reach cinemas, the majority did not earn enough to recoup the costs of making, marketing and distributing the movie.

If we were to randomly select an independent film made in the US over the past twenty years, there is a 3.4% chance it was a profitable investment for its backers.  Just slightly better than one in thirty.

However, this is an artificial situation as that assumes true random selection.  In the real world, there are all sorts of data points an investor can take into account when weighing up an investment.

How do independent films compare to films from Hollywood Studios?

Let's take a closer look at the profitability rates of those released in cinemas. In that select group, we can be confident that just under a third were profitable, almost 60% did not recoup their costs and the rest sit somewhere in the middle.

Unsurprisingly, Studio films have a much better rate of profitability. And yet, with all their money, power, contacts, experience, distribution channels and famous names, we could be forgiven for expecting that they would fare better than 50:50. The film world is indeed a strange one!

What types of independent films make money?

Finally, let's sub-divide this group again, this time by genre.

Independent horror films which reached cinemas ever-so-slightly outperform Hollywood movies in profitability, although still with just under 50% breaking even.

The poorest performing genres are sports movies and historical films with recoupment rates of around 16% and 20% respectively.

Learn more

These are just the headlines of a huge research project I have been conducting.  The truth is that there is a lot filmmakers can do to increase their chances of reaching profitability, and there are signals investors can spot to help them maximise their chance of recouping.

It's not as simple as a five-point plan (otherwise I'd have included it here!) but I have built a day-long course to go over what I have found.

If you're in either New York (19 October) or London (23 November), come join me at one of my upcoming live courses. It's an intensive day exploring what data can reveal about how the independent film world works, what types of film succeed and what you can do to improve your film's chances of profitability.

If you've got this far in the article and want a discount code, email me and I'll send you one.

Further reading

In the meantime, here are some past research projects which can continue the journey right now:

• How movies make money: $100m+ Hollywood blockbusters

• How films make money pt2: $30m-$100m movies

• How is a cinema’s box office income distributed?

• There's much more about horror films in my 200+ page Horror Report

• What types of low-budget films make the most money?

• Patterns among the most profitable movies budgeted $3m to $10m

• Patterns among the most profitable movies budgeted $10m to $20m

• Patterns among the most profitable movies budgeted $20m to $50m

• Do BFI backed films make a profit?

• Full costs and income of a $1m independent feature film

Notes

The data in today's article covers live-action fiction films (i.e. not documentaries or animations) which were first released to the public between 1st January 1999 and 31st December 2018. The raw data came from a large number of sources, mostly public but a few from industry friends. I'm very grateful to everyone who has helped me with this, whether they've given me data, advice or just support.

I've defined 'independent' as meaning not made or released by a major Hollywood studio. This includes a small number of big-budgeted films, which some filmmakers may not feel represent their experience. In any broad criteria, there will be subjective lines drawn over what to include and this feels the least egregious of the available options.  I have defined "theatrical release" as at least $1 of reported gross in Domestic (i.e. USA and Canada) cinemas.  This is a slightly tougher measure than just saying it was "in cinemas" as it removes the vanity release for awards etc at which no-one shows.

A film being "profitable" and its investors receiving all their money back are (sadly) not synonymous. My calculations estimate the likely net profit to the producer after all income and all costs are taken into account. However, if the film has struck an unfavourable deal with any of the third parties, or if the investors are not repaid pari passu from first dollar producers net profit, they could still be left out of pocket. Conversely, an investor who has their investment first in the recoupment waterfall could be quids in before others have been made whole.

Any model which looks at a whole sector will involve some generalities. For the vast majority of films, I do not have a final figure on the exact amount of money the producers made and so have applied formulae and rules of thumb to the data I do have. This is going to be harder to do in the future, as VOD becomes an ever-bigger part of the film value chain and if Netflix et al don't suddenly start releasing more financial data (don't hold your breath!). This is bad news for filmmakers as it makes it harder to predict how much a film might recoup and harder to know your film's true market value when presented with an offer.

This also undercounts those movies which get significant income from non-traditional sources. These could include:

• Crowdfunding the initial budget, meaning there is far less (or maybe nothing) to repay.

• Private communities, such as religious organisations, online groups or hobbyists.

• Films which earn large amounts from VOD platforms despite not getting a theatrical release (i.e. films funded by Netflix).

• Income from merchandising, music sales and spin-offs.  These are extremely rare among independent films.  An example would be the micro-budget film Once, which spawned successful albums and even a Broadway show.

My research into the sector suggests that the above comprise a very small number of titles and do not shift the big picture shown today.

Studios do make films which are not for cinemas (a.k.a. "straight-to-video") but they were not included in today's research as I am only looking at films intended for theatrical release. I am using the same rough criteria as the British Film Institute (BFI) which defines a feature film as a film 'intended for theatrical release' and does not look to assess the likelihood of such a release. Unlike the BFI, I have added a length criterion, including only films which run at 70 minutes or longer.

In the first version of this article, I mischaracterised the Opus Data film catalog due to a misunderstanding my part.   I've been happy to correct the topic and many apologies to those involved for the error.

Epilogue

My research into the film industry has never really been guided. I've investigated topics as they've occurred to me, as they've been requested by readers and as I learned new methods of data gathering and crunching

Over the past couple of years, however, I have started to feel that my research is building towards a bigger project: to zoom out and assess the whole film sector. I'm far from finished, but this profitability project is a big milestone for me in trying to fully understand how the film world works.

I'm really excited to be able to share it with filmmakers - both here on the blog and at live events around the world. I will be taking to the road to run training events whenever there are filmmakers who need help.

If you feel your town or community could benefit from this, drop me a line, especially if you run an organisation that can help with logistics and promotion in your area.

I thought it was a great topic for an article, so I agreed to take a look.

The BFI is a public body which, among other things, awards money raised from the National Lottery to people, projects and productions which will help the British film industry.  In the past, the BFI was primarily a cultural and heritage organisation but in 2011 its remit grew when it was given Lottery funding responsibilities from the newly-shut UK Film Council (UKFC).

How significant is the BFI's financial support to UK films?

It's hard to understate just how much of a significant role this money plays in the UK film industry.  In the seven years between April 2011 and April 2018, the BFI handed out £222,604,086 - almost a quarter of a billion pounds.

Of that, the largest category by far was Production funding.  This is money to be spent on the film's budget and amounts to 45% of the money the BFI has awarded.  They also support projects before they are ready to be shot, covering development and pre-production costs.  These account for 8% of their awarded funding.

Interestingly, it seems that in the last few years, the BFI is moving away from some of the project-specific programs filmmakers seek out, and instead are increasing awards to events and programs focused on film audiences. This change in focus is most likely connected to their goal of increasing the geographic diversity of BFI-backed activities, pushing back against the industry's London-bias.

It's worth noting that the amount the BFI awards has been increasing in recent years.  In the tax year ending April 2018, it awarded just over £31 million - way above the £21.5 million it awarded in 2015.

Let's focus on the development and production funding aspect which sparked this article.

BFI development funding

Filmmakers are able to apply for money to aid the development of their film project to cover activities such as:

• Pay screenwriter(s) to write drafts of the script.

• Fees to secure the underlying rights to the existing material, such as a book.

• Research costs associated with the project.

• Paying the film's director for their work during development.

• A contribution towards the producer’s overhead and fees.

• Legal costs linked to gaining the rights needed to secure the script or underlying rights.

• If the script is nearly ready then the BFI could also fund work related to casting, scheduling, budgets, location recces or even the production of a trailer or pilot.

The average BFI development award last year was £19,434 - much less than the UKFC's high of £35,896.  As well as diminishing amounts, the number of development awards has also fallen considerably.

BFI production funding

Filmmakers can also apply for money to go towards their production budget (i.e. the costs involved with shooting and completing the film).

In recent years, the BFI has been providing fewer production awards but putting more money into each film, on average. Recent large investments include Early Man (£2,000,000), The Girl with all the Gifts (£1,780,000), Under the Skin (£1,673,744), An as-yet-untitled Chris Morris Project (£1,500,000), Peterloo (£1,461,000), Swallows & Amazons (£1,451,975), Country Music (£1,400,000), and Where Hands Touch (£1,400,000).

Although the recent investment averages look similar to that of the UKFC in the early 2000s, I feel that it's unlikely the BFI will return to the nakedly commercial investment model the UKFC followed.  Partly because the tastes of those in charge appear to be less commercial and also partly because the business imperative is different.  The UKFC had to make money to pay their (in some cases very large) salaries whereas the BFI is not as dependent on investment profits.

The biggest UKFC / BFI project-specific investments to date were all made in the early 2000s, the largest of which were Sunshine (£6,661,423),  Notes on a Scandal (£4,587,768), Bright Young Things (£3,000,000), The Magic Roundabout (£3,000,000), Five Children and It (£2,671,500), Valiant (£2,580,645) and Sylvia (£2,497,643).

Note: These figures include all UKFC awards to these productions, not just for production.

Double dipping

It's an oft-repeated belief among producers that if you want production funding from a public body then it makes sense to initially apply for a small amount of development funding.  If you're successful, then by the time it comes to applying for the large amount you need for production, you'll have got to know the body and they will be invested in the success of your project, both financially and emotionally.

While the data doesn't reveal how much getting this initial development funding helped, it does show that there is a lot of overlap between the projects the BFI backs in development and then again in production.  Almost two-thirds of recent production funding awards went to projects which the BFI provided development funds for - a very different picture to ten years ago when it was only one in ten.

The genre of BFI-back films

It's hard to know the genre of all the projects receiving development funding as there is often little-to-no information released about the contents of the film (plus, as it's at a very early stage the genre could change throughout development).

However, we can look at the films receiving production funding.  Perhaps unsurprisingly, dramas make up over two-thirds of the films supported by the BFI.

When we compare this to the genre of all films made in the UK we can see that the BFI is looking to support particular types of films.

Do BFI-backed films make a profit?

The BFI is far less concerned with its investments making a profit than the UKFC used to be.  As discussed above, the BFI does not need returns to ensure its survival.  In addition, they have created schemes such as the BFI Locked Box which mean that some of the money the BFI makes on its investments doesn't go into its own coffers.  Instead, it's held back to be accessed only by the writer(s), producer(s) and director(s) of the profitable film, to be spent on the development and production of future film projects.  This is a fantastic scheme which works towards making the UK film industry a little bit more sustainable and allows the creatives of good projects to turn their success into a longer-term advantage.

By piecing together information that the BFI releases in various places, we can see how much each BFI-backed film has repaid of their funding award.

Of the 249 films I found that received UKFC / BFI production funding between 2003 and 2017 and who have already generated some income, just 36 have repaid their investment in full (i.e. 14.5%).

The BFI's most profitable investment by far is The King's Speech, which has returned a whopping 895% of the £1,021,080 it was awarded.  In the tax year ending in April 2017, the BFI received £77,718 from The King's Speech, which brings the current total to £9,135,707 .

Below are the recoupment figures for a selection of top-performing BFI-backed projects.  As you can see, even hugely successful films recoup the vast majority of their eventual income in the first few years of release.

Sadly, we don't know the deal terms for each BFI award investment.  In most cases, it appears that the BFI took an equity stake in the film, meaning that they get a share of the returns in perpetuity.  This can be seen in the huge returns the BFI is making on its King's Speech investment.  However, for some older films, it seems as though the UKFC was repaid just the sum they invested and no more.  For example. The Last King of Scotland was awarded £1,396,791 and repaid £1,396,792.  While it's possible that this is a coincidence, it is much more likely that the UKFC only agreed to be repaid their initial sum, with no profits, no premium and even no interest on the money.

Notes

For readability, I have used a few shorthands in this article, including:

• I refer to 'BFI-backed films' when some of these movies would have been backed by the UK Film Council.  The BFI took over the UK Film Council's responsibilities with regard to lottery funding in 2011 when the UKFC was hastily shut.

• When reporting financial data, the years refer to tax years.  Therefore, "2007" means the period between (and including) 6th April 2006 and 5th April 2007.

The raw data in this project is far from clean or consistent.  I've done my best to ensure that my numbers are right but it's possible that the odd error may have crept in.  Therefore, if you're going to use these figures for something important (i.e. complaining that you're owed money) then please go back to the BFI source documents first.  If you need help navigating them, just drop me a line.

I created my own classifications for how the BFI spends its money.  I found that some of the official categories the BFI uses are very broad, and in many cases don't reflect the money's actual application.  For example, Film Fund money has been used to fund projects related to the following types of activities:

• Audiences & Events

• Development & Pre-production

• Distribution (International)

• Distribution (UK)

• Documentary

• Education & Training

• Post-production & Completion

• Production

• Promoting Britain

• Short film

• Slate funding

Therefore, I re-classified each Lottery Award with categories which better reflect their use.

Films were assigned up to three genres each, hence why the totals on the genre charts add up to more than 100%.

Epilogue

One frustrating part of this topic is how hard it is to assemble recoupment figures.  In theory, all the information is public, but it is spread across so many documents, in unhelpful and changing formats.  It feels like the BFI know they have to publish the data but they don't want it to be easy to access in any practical sense.  It would be extremely simple for them to share this information in a usable way (as they do with the amounts they award) but instead, they have chosen not to.  Add to that, a couple of years ago the BFI changed the way they report this data, doubling the number of places you need to look for each film in each year and reducing the overall amount of information they release about each film.

The lack of a single place to view this data in its totality, the awkward documents and the changes in reporting all reflect poorly on the BFI's commitment to "openness, transparency and accountability".

It's a tricky ask, as the film industry is normally a closed shop and withholds numbers even when there is no obvious reason to do so.

However, every now and then I meet filmmakers who are committed to helping the film community by sharing their journey.

Today's article covers the film financing of a new feature called Alleycats. The film's director Ian Bonhôte and its producer Andee Ryder have been kind enough to share with me how they raised two-thirds of a million pounds.

Alleycats is an action/thriller set in the cut-throat world of illegal bike racing (you can read the full synopsis at the end of this article) and it stars Eleanor Tomlinson (Jack the Giant Slayer, The White Queen, Poldark), John Hannah (Sliding doors, The Mummy trilogy and Four Weddings and a Funeral) and Camilla Rutherford (Gosford Park).

It was released in the UK this summer (iTunes, DVD & Blu-Ray) and in the last few days in America (via the US iTunes store).  It's also secured distribution deals in Australia, Benelux, France, Greece, Germany, New Zealand, Nordics, South Africa, Spain, Switzerland, Thailand, Taiwan and Brazil, with more in the works.

For both Ian and Andee, Alleycats is a first feature, so the scale and distribution of the film is an impressive feat in an industry which regards having even one first-timer as a liability.

This article shares some of the data points and you can also hear them describe their experiences below:

The origins of Alleycats

The journey began eight years ago when Ian directed a music video featuring Alleycat races, urban cycling street races.  The Alleycat community is largely made up of bike messengers and has strong punk influences in their attitude and aesthetics.  

Ian is an avid cyclist and had spotted that the races lend themselves to an exciting city-based action film but on a manageable budget, unlike your average Hollywood action film.

The idea of creating a feature film around Alleycats was firmly in Ian's mind but the technology wasn't quite ready.  Cameras were too big, too heavy and many didn't produce cinema-quality footage.  (I can attest to this myself as I shot a short film featuring Parkour in 2005 and we had to strap a 16mm camera with heavy lenses to the poor performer.  Sorry, Dane!)  This speaks to just how important timing is in making a feature film.

The final Alleycats film was part-funded via Kickstarter and part-shot on mobile / mounted cameras - both of which didn't exist in the early 2000s.

Not put off by the technical challenges, Ian worked on a draft of the script with co-writer Max Kinnings.  Ian submitted an early draft to Film London's Microwave scheme and, despite getting right the way through to the final stage, it was ultimately not selected.  

In hindsight, perhaps this was for the best as the budget for Microwave projects are capped at £100,000 and the film's rejection led to the script improving, the budget growing and the team gaining valuable new members.

Tiny victories led to bigger successes

One such vital member of the Alleycats team is Andee Ryder.  Andee had been working as a freelance producer for Ian's company Pulse Films at the time, making short films and music promos.  Ian shared his idea for an Alleycats feature and Andee agreed to produce.

The pair started to shop their script around town but were met with every filmmakers' most hated reaction - complete indifference.  A common reaction was that people didn't believe they could pull off the film's action pieces on the modest budget they were seeking.  

After a number of months of trying and failing to secure funding, the pair decided they needed to take another route.  They used elements of the feature film script to craft an Alleycats short film (co-written by Max Kinnings). The plan was to prove that Alleycats races were the perfect subject for a thrilling urban action film and that it could be achieved on the budget they were seeking.  

The pair put in £15,000 of their own money to make the short film.  A high price to pay, but the short proved to be an incredibly smart move.  It supplied all the proof their wavering backers were after and taught the pair a great deal about how to actually shoot Alleycat races.  

In addition, the short film provided them with powerful footage and photo stills for their eventual crowdfunding campaign. Few campaigns have the luxury of being able to visually prove the look and feel of their eventual film. Ian and Andee had boiled their feature film script down to a ten-minute short but for some investors, even this was too long.  

So they cut a two-minute teaser trailer which they could show in meetings.

This proved to be the vital link in piquing the interest of possible backers.  If they liked the two-minute teaser, Andee would send over the short film and the feature film script.  If they liked the short, then Andee would seek a commitment for the feature.

Finding the right partner and more development

With the teaser in hand, Andee was in a much stronger position as he went round the industry seeking partners.  

The project got the attention of Wayne Marc Godfrey and Robert Jones at The Fyzz Facility, who came on board as Executive Producers.  The Fyzz were looking for a project like Alleycats to diversify their slate, which includes BAFTA-nominated The Survivalist and The Foreigner starring Jackie Chan and Pierce Brosnan. As a financier they have also part-funded big productions with the likes of Scorsese, Schwarzenegger and De Niro.

As the production picked up partners, it became clear that the script could do with a further round of development.  Andee was speaking with regional funding body Creative England and their Exec (and long-time producer) Richard Homles provided feedback on the script.  

In the end, the project couldn't receive Creative England funding as the film was too London-centric for CE's regional remit, but the notes proved invaluable. The Fyzz's Development Producer Emma Lamont led the development process, and screenwriters Anthea Anka and Simon Uttley joined the team to craft a whole new draft from the original treatment.  

With an updated script, an industry partner and teaser trailer, Ian and Andee were in a much stronger position.

The film financing model of Alleycats

To those outside of the film industry, the question "How much will your film cost to make?" sounds like a reasonable, simple question.  

However, the truth is that there are so many variables.  What the script contains, how it'll be shot, different cast costs, favours, deals - even the time of year will affect the final cost.  

At various times in its production process, the budget of Alleycats was £350k, £400k, £500k, back down to £450k and finally came to a total of £660k. As with most feature films, the financing came from a range of sources, and it was Andee's job to ensure that all of the deals worked in harmony.  

This includes ensuring that you're not promising more than 100% of the profits, but also more complex matters such as the order of repayment and level of control over the film. The film financing of Alleycats came from seven routes:

1. Private investors using the SEIS scheme

2. Private investors using the EIS scheme

3. UK Film Tax Relief

4. A post-production deal

5. Gap financing

6. A crowdfunding campaign

7. Completion funding

The commercial money: Investors, Loans and Deals

The first money in was via SEIS investors. The Seed Enterprises Investment Scheme is a UK government scheme which gives significant tax breaks to private investors who put money into early-stage companies. It is designed to support investors and entrepreneurs by reducing the risk to investors and offering big deductions off the investor's personal tax bill. Under the right circumstances, this can amount to over three-quarters of their original investment. SEIS is widely used by low- and micro-budget filmmakers in the UK, for obvious reasons!

SEIS has a number of drawbacks, including limiting how the new companies can operate, who can own them, forcing the investors to wait three years before cashing out and, most crucially, it's capped at £150,000. This means that Ian and Andee couldn't use it for more than about a quarter of the money they needed to raise.

The big brother to SEIS is the Enterprises Investment Scheme (EIS), which offers a much lower level of protection for investors (typically just under half their money) but comes with a much higher cap (£10 million). Together, the SEIS and EIS investors made up 35% of Alleycat's film financing.

Another third of the money came from Gap Financing. These are short-term loans created specifically for films and managed by experts in film finance. Normally, gap financiers are among the last people to come on board a project and their name is derived from the fact they fill the gap between what's already been raised and what's needed to shoot the film. The money tends to be relatively expensive and the investor(s) will want to be repaid fully before anyone else sees returns.

The final commercial form of film financing was completion funding, which came from normal private investors who provided money right at the end of the production to get it ready for release. The exact terms of each investor's deal are different, which reflects the different realities each faced when they joined the project. For example, early investors were able to get the best tax advantages while the final set of investors were able to see more of the finished film before committing.

It's rarely possible to fund a feature film from just one source, so the challenge becomes matching investors to which risk profile they would prefer. Do they want high risk with possible high returns? Do the tax breaks help their particular private tax situation? Do they want it to be a loan or investment? These types of questions help dictate who comes on board the project and what they get in return for their money.

The "free" money: UK Tax Relief and Crowdfunding

In addition to the commercial investments Ian and Andee gathered, they also received money from two sources which they didn't need to repay: the UK tax relief and crowdfunding.

The UK Tax Relief scheme rewards British films by giving them a rebate worth just under a fifth of the money they spend in the UK. This is quite a generous scheme and therefore a must for all UK filmmakers. Although productions can claim around a fifth of their budget, the small print of the tax relief means that some costs are excluded. The "eligible spend" only covers pre-production, production and post-production and ignores goods or services given 'in kind'.

In addition, the tax credit is paid after the film is complete, months after the production typically needs to actually spend the money. Therefore, most filmmakers use a specialist investor to cashflow the tax credit, via a short-term loan. This means that in practice, Alleycats received 13% of their £660,000 budget from Tax Relief. I've covered this topic in a number of other articles so I won't go into any more detail. If you want to read more about UK Film Tax Relief, check out these (How much has the UK government paid in film tax breaks? and UK Tax Credit for Short Films).

As the team were getting close to the main shoot, they realised they were short of some of the money they needed for a big action set piece. They needed more kit, crew and permission to close a road, so they turned to Kickstarter to help them raise the much-needed money.

They offered a range of rewards, including a copy of the short film for people giving £5, a DVD of the feature film once complete for £35, right up to an Associate producer credit for anyone giving £5,000.

The project lasted for 36 days and took a lot of time from the whole team.  You can hear more about what they did to increase donations in the audio interview at the top of this article. As the chart below shows, money was slow to come in at first. In the first fortnight they had only reached £10,000 of their £50,000 goal but the campaign soon picked up momentum and by the final deadline they had raised 110% of their original goal.

Once the Kickstarter campaign had reached its deadline, the team had raised £55,115.  That's a tidy sum, but is gross so there were a number of deductions which came off the figure before Ian and Andee could put it into the film.  These included:

• Kickstarter fee @ 5% = £2,756

• Credit card processing fees = £1,766

• Campaign creation and management costs £7,500

• Creating and supplying rewards to backers = £5,093

• Total = £17,115

This left the production with around £38,000 to go towards the additional scenes.  With the financing complete, filming could begin. In this article I have focused on the film financing aspect, but the production itself was fascinating and Andy and Ian talk more about that in the audio interview.

To end this written journey, I want to give you a sense of how they approached the challenge of making an action film on a fraction of a normal action budget. Most films in this genre use a myriad of different film lenses and this can end up being quite pricey for the production to hire.  

But Ian found a way to save the production money, while also turning a limitation to their advantage:

The lens, we shot most of the film on a 40mm lens, which is a normal lens, almost the closest to our Human POV.

So the idea was that we did not want to trick the audience with clever use of lenses but almost put the camera always right in the middle of the action. It is odd to do that for a Genre film, which is obviously all about creating a maximum effect of emotions. But in our case we really wanted to keep the whole film as realistic as possible, mixing the Documentary/ Drama genre with Action/ Thriller.

The other aspect is that we had to build quite a few sets: the Warehouse/ squat, Hotel/ Motel Rooms, Police station…. Daniel Newton the production designer always made sure we could move the walls, to get better shots or angles… But I refused to move anything. If the camera could not fit with a 40mm so we could not shoot there.

Epilogue

It took Ian and Andee seven years to turn their idea into a finished film.  Their journey was far from direct, however their hard work and dogged determination has meant that 'Alleycats' has already secured distribution deals in fifteen countries (no mean feat for an indie British film) and looks like it's on its way to being a big success for the pair.

I'm hugely grateful to both Ian and Andee for the time and trust they gave me.  We met a few times, they let me interview them on mic for a couple of hours and we exchanged countless emails as I tried to understand every part of the film financing of their production.  

They were always open, honest and forthcoming for which I am indebted to them. If you want to say thank you to them then please buy a copy of Alleycats today.  It's on sale in the UK right now (iTunes, DVD & Blu-Ray) and available to order in the US right now (US iTunes).

I want to do more pieces like this as I think new filmmakers should be better informed about what their first feature may involve.  If you have a production which would be willing to help other filmmakers, then please drop me a line.

Alleycats synopsis and trailer

When bike courier CHRIS stumbles across the brutal murder of a young woman whilst delivering a package, he finds himself in danger. Realising that the perpetrator of the crime, YATES, is a well-known Member of Parliament, Chris sets out to blackmail him.

But when Chris takes part in an Alleycat Race, an illegal bike race through the city, he is knocked down and killed in a hit-and-run accident – the driver, RIVES, is Yates’ fixer. Chris has been silenced, but there was a witness...

His sister, and fellow racer, DANNI sees Chris get hit and refuses to believe it was a simple accident. Her forceful and impulsive nature aggravates the police, who are slow to investigate and increasingly untrustworthy. So Danni takes matters into her own hands, uncovering bribery and corruption within the courier community and further afield.

As she begins to piece the puzzle together, Danni joins forces with the murdered young woman’s father, REDMAN, and the unlikely pair threaten to uncover the sinister truth behind Chris’s death and the secret his murderers had hoped would die with him.

As she becomes increasingly mixed up in a dangerous and violent world, and the body count rises, Danni must push herself to her mental and physical limits in order to find justice for her brother and come through this alive.

This week I have teamed up with Bruce Nash from The Numbers for a research project originally commissioned by the American Film Market.  They asked us to look into what types of low-budget films "break out" (i.e. make far more profit than is typical for films of their scale) and if there were any lessons for independent low-budget film producers.

What types of low-budget films make the most money?

To discover the commonalities amongst low-budget breakout hits, we began with a list of over 3,000 films from The Numbers' financial database, investigating full financial details, including North American (i.e. "domestic") and international box office, video sales and rentals, TV and ancillary revenue. We narrowed our focus to study feature films released between 2000 and 2015, budgeted between $500k and $3 million, which generated at least $10 million in Producer’s Net Profit, using a standard distribution model where the distributor charges a 30% fee.

This produced a list of 63 films in total: roughly four films a year over the 15 years under consideration. Almost all of the movies will be familiar to followers of independent film, from small films that became Oscar hopefuls, like Beasts of the Southern Wild and Winter's Bone to horror movies like Insidious and The Purge that got picked up by the major studios and became box office sensations. With the list in hand, we looked for common themes and found (with a small number of exceptions) that the breakout hits broke down naturally into four types.

Model one: Extreme, clear-concept horror films

It will come as no surprise to most producers that horror films feature prominently on the list of top low-budget breakout successes.

• Most profitable films: Insidious, Monsters, The Devil Inside, Paranormal Activity 2, Dead Snow

• MPAA Rating: 82% are rated 'R', 12% PG-13 and 6% not rated.

• Running time: Relatively short, with an average of 94 minutes and no film ran over two hours.

• Critical reviews: Average to poor.  Highest rated film in this category is "Buried", which has a Metascore of just 65 out of 100.  The average Metascore across the dataset was just 49 out of 100.

• Audience reviews: More supportive than the critics but still not above most films, at an average of 6.2 out of 10 on IMDb.

• Release patterns:  Two very distinct release patterns:  half played in fewer than 100 theatres while the other half played in over 1,500 theatres.

• Income streams: 28% from theatrical, 60% from home video and 11% from TV and other ancillary income.

• Income location: 46% of income was from the US & Canada and 54% international.

Model two: Documentaries with built-in audiences and/or powerful stories

The second group of films that stood out were documentaries.

• Most profitable films: Exit Through the Gift Shop, An Inconvenient Truth, Marley, Tyson, Bowling for Columbine

• MPAA Rating: A healthy spread across all ratings, with the most common being PG-13

• Running time: Average of 102, although a wide range from 80 minutes up to 144 minutes

• Critical reviews: Very high, with a Metascore average of 79 out of 100.

• Audience reviews: Very high, an average IMDb rating of 7.8 out of 10.

• Release pattern: Small number of theatres, with most playing in under 250 theatres and the widest release being An Inconvenient Truth in 587 theatres.

• Income streams: 70% of income comes from home video, 17% theatrical and 12% via other sources.

• Income location: 58% international and 42% domestic.

Critical reviews seem vital for this type of film to break out and it’s interesting to note that the documentaries with the lowest scoring critical ratings (The September Issue at 69 and Religulous at 56) each had strong inbuilt audiences (‘Vogue / fashion’ and ‘Bill Maher / religious scepticism’).

In fact, only a handful of the documentaries on the list don't have an obvious audience: Man on Wire, Anvil: The Story of Anvil, and Searching for Sugar Man are the only ones that needed to find a crowd. The others were either about someone already very famous (Marley, Tyson, Senna, Amy… note the one-name titles!) or played very directly to a receptive audience (Inside Job, Blackfish, An Inconvenient Truth etc).

Model three: Validating, feel-good religious films

Speaking of receptive audiences, the third group of films we found were faith-based films.

• Most profitable films: Fireproof, God's Not Dead, To Save a Life, War Room, Courageous

• MPAA Rating: Two-thirds were rated PG and the remaining third were PG-13

• Running time: Fairly long, all were over 110 minutes and the average was two hours.

• Critical reviews: Incredibly poor, with an average Metascore of just 26 out of 100.

• Audience reviews: Similar to the horror pool, with an average IMDb rating of 6.3 out of 10.

• Type of release: An average of 1,273 theatres with the widest being War Room at 1,945 theatres.

• Income streams: 55% from home video, 29% from theatrical and 16% from television and other ancillary streams.

• Income location: 90% of income came from North American sources with just 10% coming from outside the US and Canada

Two things stand out with these films. First, they make virtually all of their money in the United States. Second, they get very bad reviews from mainstream movie reviewers. The strength of these movies isn't necessarily their quality so much as the message; they deliver to an audience that is interested in what they have to say.

Model four: Very high quality dramas

At the other end of the spectrum, at least in the eyes of professional film reviewers, come very high quality dramas. Almost half of these films were American productions, with the rest coming from a wide variety of countries including Germany, Argentina, Mexico, the UK, France and Poland.

• Most profitable US dramas: Half Nelson, Waitress, Blue Valentine, Fruitvale Station

• Most profitable foreign dramas: The Lives of Others, The Motorcycle Diaries, Amores Perros, Sin Nombre

• MPAA Rating: The vast majority are R-rated, with just a third being rated PG-13

• Runtime: A wide range, from 81 minutes up to 154 minutes long.

• Critical reviews: Extremely high, with an average Metascore of 81 out of 100.

• Audience reviews: Similarly high, with an average IMDb rating of 7.5 out of 10.

• Type of release: Small release, with all but four playing to fewer than 300 theatres.

• Income streams: 63% from home video, 25% from theatrical and 12% from other sources.

• Income location: 66% of income for US dramas came from the US and Canada, whereas the reverse was true with non-US dramas, with 64% of income coming from international sources.

The lowest rated film in this category received a Metascore of 68 out of 100, which was higher than all of the films within the Horror breakout success category.

A common thread among these films is awards attention. While they might not be big enough to win a lot of main-category Oscars, these are the films that have picked up a bunch of Independent Spirit Awards, Best Foreign Language Film at the Academy Awards, and got some screenwriting and/or acting Oscar nominations.

Do the films have to be any good?

An interesting finding from this research is that the quality of the film is only relevant for certain types of films.

• Religious films received extremely low ratings from critics but had mixed ratings from audiences.

• Horror films showed a range: some were disliked by both audiences and critics (such as The Devil Inside), while others had middling support from both camps (such as Monsters) and then there were films which audiences enjoyed but critics were lukewarm towards (such as Dead Man's Shoes).

• Documentaries and Dramas were all popular with audiences and the vast majority also received extremely high ratings from critics.

If we plot this on a graph, we can see just how distinct these three sub-categories are.

What's missing?

Many of the films in the list come as no surprise, but what's interesting is what's missing from the list. We found...

• Virtually no comedies (Waiting... is the only out-and-out comedy on the list, and it was made at the peak of the DVD sales boom)

• No action movies

• No thrillers

• No musicals

• Virtually nothing directed at kids — Dr. Dolittle 3 was the only family movie that made our list — although we believe some animated franchises, such as Barbie and Tinker Bell are very profitable but their budgets aren't quite in our range.

Aside from the missing genres, the other notable absence is any major star involvement. Of course, this is largely a function of the budget—it's hard to get Tom Cruise for a $3 million film—but it's remarkable that none of these films attracted anybody who would even be called a B-list star at the time the film was made.

Lessons for filmmakers and producers from this research

So we think there are a few lessons for independent film-makers who are hoping to make breakout hits:

1. Some “niche” audiences are large enough to make for a very profitable market, if you can reach them. The “faith-based” film audience stands out, but there are also receptive audiences for certain types of documentaries. Having a very clear idea of your audience is the first step to making a financially successful film.

2. If you're aiming for a more general audience, quality matters. A lot. Honing your screenplay to what you think is perfection and then having it ripped apart at a workshop may be hard work, but it's almost certainly what it takes to get a dramatic film to ultimately work with audiences, and to make back its investment.

3. Look for good actors, not big stars, and do the same with all of the technical crew on a film. Fun fact: Affonso Goncalves, who edited list member Beasts of the Southern Wild also edited fellow list member Winter's Bone and 2016 Oscar nominee Carol. Finding a good editor, cinematographer, production designer and other key members of the crew is more important for a low-budget film than blowing a big chunk of your budget on a famous (or, just as likely, previously-famous) actor or actress.

Notes on which low-budget films make the most money

• This analysis looked at feature films released between 2000 and 2015 budgeted between $500k and $3 million and which we estimate generated at least $10 million in Producer’s Net Profit.

• The financial figures come from a variety of sources, including people directly connected to the films, verified third-party data and computation models based on partial data and industry norms.  It is possible that one or two of the individual figures are different to our predictions, though en mass we are confident of the larger picture.

• The number of theatres relates to the widest point of the film's North American release.

This week we're sliding down the budget range and looking at how films make money on a smaller scale, with a focus on movies budgeted between $30m and $100m.

Like last week, all of the recoupment data I'm discussing today comes from real financial figures gleaned from genuine Hollywood movies.  You can read more about the data sources in last week's Epilogue.

How films make money: Movies budgeted $30m to $100m

Before we look at the financial data, we have to talk about the types of movies I'm referring to in today's article.  Last week, I was able to treat all $100m+ movies as one category because once movies get to that scale their surface differences (genre, etc) become less important than their commonalities (i.e. saturation marketing, being the biggest film in the first week of release, star power etc).  This allowed me to treat them as one type of product.

However, as we start to look at smaller movies we need to subdivide by genre, which presents an extra layer of complexity. I have addressed this problem in the past but, in short, when you use genre to group movies it adds a large degree of subjectivity.  A case in point is The Wolf of Wall Street, which has the following genres assigned to it...

• The Numbers calls it a Black Comedy

• Rotten Tomatoes and Box Office Mojo call it a Drama

• Amazon lists it in both Comedy and Drama

• IMDb assigns three genres: Biography, Comedy and Crime

• Metacritic hedges its bets with Biography, Drama, Comedy, Crime

This means that it's hard to compare statistics generated from different sources, as each will be referring to a slightly different group of movies when they say, for example, "Drama".  Unless otherwise stated, I have used the IMDb genre classification in the research for this article.

Which genres are most commonly budgeted between $30m and $100m?

Let's start by looking at what types of movies are typically in the $30m to $100m budget range.  The chart below uses data from The Numbers to show all movies released in North American cinemas between 2001-15 for which there are publicly-available budgets.  The genres have been sorted so that the ones on the left have the greatest percentage of $30m - $100m movies.

Overall average of costs and income

Last week I went through what costs are involved in making a Hollywood movie, so I won't repeat myself here.  Instead, I'm going to focus on how the numbers differ between genres across the $30m - $100m budget range.  By analysing financial data from 82 Hollywood movies budgeted between $30m and $100m, I am able to provide a rough average of the costs involved in making and releasing such movies.

The costs total an average of $174,267,000 while the income comes to $179,498,000, leaving a profit of $5,230,000 (or just 3% of the total spent).

It's worth noting that the variety of movies in the $30m-$100m range, along with the complexities of genre, mean that the figures above should not be treated as "The Single Formula" for all movies budgeted $30m-$100m.  Rather, they show an average across all genres for the movies I was able to get inside data on.

The cost of releasing a $30m - $100m movie

I want to focus on a few of the interesting details from the averages presented above.  First up - marketing. Promotional budgets for Hollywood films budgeted $30m-$100m are fairly consistent across genres, costing on average between 100% and 120% of the production budget.

Differences in revenue streams

As the revenue journey for most Hollywood films is the same, we are not going to see wildly different income streams between different genres.  Instead, we need to look at the small advantages certain genres have in particular release windows.

Based on my data,  I found that Horror and Family films rely on the theatrical window (38% and 34% of total revenue, respectively) to a greater degree than Action films and Thrillers do (31% and 30%, respectively).

This raises the question - why would the kinds of movies that appear to be the least cinematic (i.e. horror, family and romantic films) be the ones that rely most on income from their cinema release, whereas the movies which harness big screen spectacles for their appeal (i.e. action and sci-fi) rely on the theatrical window to a lesser degree?

The answer is not in the theatrical window, but in the value the movie is perceived to have once it reaches the Home Entertainment window (DVD, Blu-ray, etc).   Consumers are more willing to pay money to take home a 'big screen movie' than they are to pay for television-style content. 

The chart below conveys the money earnt by my 82 Hollywood movies (budgeted $30m-$100m) as a percentage of their production budget.   We can see that Sci-fi, Animation and Action films proportionally earn the most from Home Entertainment, while Thrillers and Romantic movies earn the most from the television window.

Other revenue streams - Merchandising

Genre also plays a big role in the money earned in other revenue streams.  Merchandising can be very lucrative but only for animation, family films and certain comedies (i.e. those with clear, brandable characters).

Other revenue streams - Airline and Music

Airlines and Music is a relatively small income stream but in the huge numbers of Hollywood economics, this can still mean millions of dollars.  Many of my films combine the two elements (i.e. income from screening the movies on airlines and the income from a cut of sales of music related to the movie) but overall, the Airline component accounts for 83% of the total "Airline and Music" income.

Films which perform best in this revenue stream are similar to those which perform well on television, namely Thriller, Drama and Romance.  Perhaps unsurprisingly, Horror films don't seem to play well on aeroplanes.

A quick note on reliable budget data

Producers and studios often try to hide the true cost of their movies from the public and so only some movies have publicly available budget figures online.  Using data from The Numbers, I looked at what percentage of movies had a public budget figure, splitting the results by the domestic theatrical box office gross (i.e. cinemas in US and Canada).

As you can see above, the films with the smallest grosses have the most opaque data online, with 89% of films grossing under $1 million managing to keep their budget a secret.  However, once films get a certain profile it becomes hard to prevent some informed source leaking the info, meaning that only 9% of films which grossed over $10 million managed to keep their budget scale private.

Last week, I noted that the true budget for many of my Hollywood blockbusters was higher than the publicly-available budget figure listed on Wikipedia by 12.5%.  Analysis of $30m - $100m found a similar but smaller result, with the true budget of my films being 6.2% higher than that stated on Wikipedia.

Epilogue

The box office and publicly-available budget data for today's work came from The Numbers and Box Office Mojo.  The private data which underlies the revenue calculations comes from a variety of industry sources.  See last week's Epilogue for more details about this.

Next week I'm going to look at profitability and the week after that I will turn to movies budgeted under $30 million.

Every six months or so, someone on my Facebook feed will share a list of "The Most Profitable Movies of All Time".  These lists normally use the budget of the movie and the amount of money it collected in cinemas worldwide to conclude how much "profit" the movies made.  For example, "Paranormal Activity cost $15,000, grossed $193 million and so made a profit 1,286,566%".  Another popular fallacy is that when a movie with a $100 million budget crosses $100 million at the box office it is considered to have "recouped".

While I understand why people fall for such over-simplifications, they have no real connection with how movies actually make money. Therefore, in an effort to demystify the film recoupment process I'm going to write a few articles looking at how movies make a profit.  In the coming weeks, I'll look at movies with smaller budgets but let's start with the big ones - Hollywood blockbusters.

"We're going to need a bigger boat"

Almost as long as there have been movies, Hollywood has relied on huge-scale productions to bring in the big bucks.  Movies like Gone With The Wind, Ben-Hur and Cleopatra attracted large cinema audiences with a promise of cinematic spectacle. However, the first 'blockbuster' in the modern sense was Jaws (1975).  The film broke box office records and created the modern summer blockbuster as we know it today.  Its wide national release supported by blitz advertising created the first 'event movie' and became the template for later blockbusters including Star Wars (1977), Raiders of the Lost Ark (1981) and E.T. The Extra-Terrestrial (1982).

In the past few decades, Hollywood studios have sought to perfect the model, and in so doing have massively increased the cost of making and promoting such movies. Modern blockbusters are often referred to as 'tentpole movies' as they represent the most important products in a studio's release calendar.  As the films have grown, so too have the spoils on offer.  Last year, Jurassic World earned a whopping $1.67 billion in cinemas worldwide; quite a haul for a movie which cost $150 million to make.  But after they recouped the original budget, how much of the remaining $1.52 billion turns into profit?

For today's data, I am using a dataset of 29 Hollywood blockbusters, all of which cost over $100 million to make.  The financial figures come from a few different sources within Hollywood studios, which I discuss in the Epilogue section at the end of this article.  For now, just know that these figures are real-world, correct and relate to Hollywood movies released in the past ten years which cost over $100 million to make.  (Note: The images and posters used in this article do not relate to the movies in my dataset - I've picked them because they're nice images which seem to fit in well with the text). 

What's the average cost of making and selling a Hollywood blockbuster?

Before we can get to the numbers, here are some key phrases you'll need to know to understand Hollywood economics...

• Domestic - The release of the film in America and Canada, also known as "North America".

• International - The release of the film in the rest of the world combined.  In some cases, studios will only have the rights to release a movie domestically, with another company picking up the international rights (or vice versa).  For example, Paramount have the rights to distribute The Adventures of Tintin domestically while Sony controls the international rights.

• Theatrical - Relating to the cinema release (i.e. in movie theatres).

• Home Entertainment (or "Home Video" or "Home Ent") - The release of the film on DVD, Blu-Ray, previously VHS and online streaming services.

• Pay TV - Subscription television channels. In the UK this includes Sky Cinema and in the US cable networks such as HBO.

• Free TV - Free to air television, typically either public service broadcasting or ad supported. In the UK this includes the BBC and in the US ABC.

• Video on Demand (VOD) - Online streaming services (such as iTunes, Netflix and Amazon Prime).

• Pay Per View (PPV) - An old form of VOD which is still active in some places involving the viewer paying to watch an encrypted, scheduled transmission of the movie.

Ok, enough terminology - let's start our journey into what Hollywood blockbusters cost and what they make back.

The first huge cost - The budget

The starting point for working out the final costs of releasing a movie is to look at how much it cost the studio to shoot the film (i.e. the film's budget).  In the industry, this is often called the 'Negative Cost' as it's the cost of producing the very first version of the film (which used to be a film negative). This includes...

• Development - Getting to a final script

• Pre-production - Building a team and planning the shoot

• Production - Shooting the movie

• Post-production - Editing, visual effects, sound design and music.

It will include most of the cast and crew's wages but probably not the full amount paid to key personnel, such as the director or lead actors.  These people may get additional money based on how well the film performs (known as "Contingent Compensation") or a share of the money leftover once all the bills are paid (known as "Profit Participation").

Budgets have been rising in recent decades, well above inflation.  In the ten years between 1995 and 2004, there were 60 Hollywood movies released which cost over $100 million.  In the following ten years (2005-14) this rose to 197.

The studios found themselves in an ever-increasing spiral whereby blockbusters were getting more expensive to make, meaning that they needed to spend more on marketing to offset the risk, which meant they needed to ensure their films are the biggest of the season, which inflated the budgets and the circle continues to turn.

Many feel that this cycle is not sustainable and a few years ago some industry watchers felt that a huge crash was imminent (Steven Spielberg and George Lucas both predicted an industry 'implosion').  In the end, it seems that Hollywood has just reigned in spending with 2014 and 2015 having just 21 movies apiece, far below 2011's high of 34.

Discovering the size of a film's budget

Although technically a secret, a film's total budget often leaks out and they are easy to find online (for example, Googling the phrase "Jurassic World budget" reveals that it reportedly cost $150 million to make).  The information available online is normally a mix of true figures which have leaked and educated guesses by industry experts.

The studios often try to hide the true cost of a movie, in order to make themselves seem thriftier, smarter or more in control than they actually are.  I performed a quick check for the 29 blockbusters I have inside data on compared with their budgets listed on Wikipedia. 90% of the films cost more than their Wikipedia budget with only three costing less than is declared on Wikipedia.

So the average $100m+ Hollywood blockbuster actually cost $19 million more than is stated on Wikipedia (i.e. 12.5% more).

For reference, the average budget for the blockbusters in my dataset was $150,567,000.

Other costs of making a movie

Releasing a Hollywood blockbuster involves far more than just creating 90 to 120 minutes of footage.  Some of the other costs involved in making and releasing a film include...

• Marketing - It could be argued that success in the business of Hollywood blockbusters is more dependent on the art of marketing than the art of filmmaking. This is the biggest category of costs for a movie, outside of the budget.  Most Hollywood blockbusters only have one or two weeks when they are 'The Big Movie' in cinemas, so studios need to build and channel the awareness / excitement for a movie to ensure that everyone goes to see it during this period.

• Prints - The physical copies of the films which are given to cinemas.  Historically, they were on 35mm celluloid film but today most countries use a hard drive with a specially encoded digital video file called a Digital Cinema Print (DCP).  This hard drive has a huge copy of the film (10s or 100s of Gigabytes) and a tiny file which controls the permissions to the large video file.  This means that hard drives can be shipped to cinemas in advance, without worry that the film will be viewed ahead of its official release.  Complex permissions can be set, permitting screenings only at certain times or on certain digital projectors.  Also, copies of the film in other formats will need to be created to give to third parties distributors and exhibitors, such as TV stations who broadcast the film.

• Residuals - Unions for the cast and crew have agreed deals with Hollywood studios which ensure that their members receive additional payments from the income the film generates.

• Financing costs - These can include costs involved with borrowing money to make the film (interests and brokerage fees) and currency conversions (for overseas shoots).

• Overhead - Studios charge their own productions an overhead fee which covers the time studio staff spend on the project, the costs of deals which apply to all films the studios make and the benefit a production is regarded as receiving from operating under the studio brand.  It may seem strange to charge oneself money but these costs come off before "profit" is calculated, meaning that productions which pay an overhead have smaller official profits, meaning that the studio has smaller cheques to cut to people with profit participation deals.  The old joke in Hollywood is that the studios charge overhead on interest and interest on overhead (and if you find that funny you really are down the rabbit hole of Hollywood economics!)

Looking at my dataset we can see the average costs breakdown below...

To give you a little more detail and context, below are some notes on each of the main cost areas...

Marketing costs

Is it often claimed that marketing a Hollywood movie can cost up to twice of the cost of the film's budget, however from the numbers above we can see that this is untrue. Across my dataset of $100m+ movies, the average budget was $150.6 million and the average combined marketing spend was $121.1 million (i.e. 81% of the budget).

When expressed as a percentage of the total costs involved with making and selling a movie, marketing accounts for an average of 29% of costs.  Across my dataset, the largest proportion of total costs going towards marketing was 40% and the lowest was 24%.  It seems that the larger a movie's budget, the smaller a percentage marketing makes of the total cost.  While this may at first seem strange (we normally associate bigger movies with having bigger marketing budgets), consider that even films on the lower end of my dataset have budgets over $100 million and so their marketing efforts will be pulling no punches.  In short, once you make a movie over $100 million you're already using saturation marketing tactics so if you double a movie's budget you can't really double the marketing spend.

Physical delivery costs

The physical costs of creating and shipping prints to cinemas and of creating and shipping physical media to stores account for an average of $67.8 million. Judging the correct number of prints and units to manufacture is a key part of the planning done by the studios.  If they order too few then cinemas and stores will have to turn away customers in the all-important first few weeks of release.  If they over-order then their costs increase and they are left with annoyed cinema owners and large quantities of unsold units.  Most units are sold on a 'Sale or Return' basis meaning that if studios over order then it's their problem, not the stores.

In 2005, Dreamworks overestimated the number of Shrek 2 DVDs they would sell in the US by 5 million units.  This caused the studio to missing their quarterly earnings target by 25% and their shares fell as a result.

Profit participation

The average $100m+ Hollywood blockbuster will spend $36.6 million on contingent compensation and profit participation. This typically goes to the key 'creatives' involved in making the film - namely the director, producer(s), writer(s) and key cast.

Giving these people a share of the income is a good way for the studio to hedge against poor box office performance and it also defers the moment they have to pay up.  Key talent often seek 'participation points' as a way of increasing their income and to share the spoils if a film performs much better than expected.

On the flipside, studios have got rather good at using creative accounting techniques to show that they made a loss on paper in order to get out of paying such fees.  In 2010, a leaked profit participation report from the fifth Harry Potter film showed that two years after the film's release, Warner Brothers was claiming that the picture had lost $167 million. Other movies hit with such claims are the three Lord of the Rings films (which combined grossed almost $3 billion in cinemas worldwide), My Big Fat Greek Wedding, Spider-Man, Return of the Jedi, Coming To America, JFK, Fahrenheit 9/11 and Forest Gump, to name but a few.

The movie in my dataset which gave the largest share of income to participants gave 18%.  It's worth noting that participation isn't always dependent on there being profits.  As people get wise to the studios' game of creative accounting they are asking for more than just "a share of the profits".  The biggest names will demand 'First Dollar Gross' deals, which give them a share of every dollar earned, calculated before costs are taken off.  On average, the films which lost money in my dataset still paid out 5% of their income to participants (profitable films spent an average of 9% of their income on participants).

How do Hollywood blockbusters earn money?

With each "$100m+" Hollywood blockbuster costing an average of $417 million to make, there had better be some serious income to reach profitability.  Fortunately, Hollywood is rather good at squeezing every penny out of a movie, ensuring that the target customer is given many chances to pay to see it. Before we look at the financial figures, let's talk briefly about the journey a movie goes on to earn its money.

Movies may start in cinemas but they are far from the only place they earn money.  Each stage at which a movie reaches a new type of platform (i.e. DVD, TV, etc) is called a "Release Window".  In recent years release windows have shifted around (including the elimination of a previously-profitable exclusive window called "Video Rental" - remember renting a VHS at Blockbusters, anyone?) but most Hollywood movies follow the same path.

How much money do Hollywood blockbusters make?

Using my dataset of $100 million+ movies, I can share how much each of the sources of income contribute towards the bottom line.

Do Hollywood movies make money?

Of the 29 Hollywood blockbuster movies I studied, 14 generated a profit and 15 lost money.  It's impossible to know if these stats hold true for mega-movies in all of Hollywood but I suspect they do, due to the way my dataset was created (see Epilogue).

Note: The following discussion of profit uses this formula: all revenue received by the studios from a particular movie minus all costs they internally attribute to that production.  This is an important distinction as a movie which has only officially broken even could still have provided a large amount of income for the studio via the charging of distribution fees, overhead and financing costs (see above for the section on Hollywood's creative accounting).

The smallest movies within my dataset (i.e. those budgeted between $100m and £125m) had the poorest record of profitability, with just a third making money.  Conversely, three-quarters of the movies with the biggest budgets ($200m upward) generated a profit.

So rather than looking at individual films, let's look at the big picture. Imagine you are an investor who put in 1% to all the films in my dataset in return for 1% of the profits. For ease, we'll assume that you're contributing towards all costs, you receive a share of all income and that the studios have taken pity on you and (for some unknown reason) decided to be honest with you about the numbers. Would you have made a smart investment?

Here are the combined financial figures for all 29 Hollywood blockbusters (budgeted over $100m)...

• Total combined budgets: $4.37 billion

• Total combined costs (including budgets, marketing and all other costs): $11.52 billion

• Total combined income (from all revenue streams): $11.95 billion

• Profit across all movies: $428.9 million

• An average profit of $14.8 million per movie

That means for your 1% investment you would have spent $115.2 million, received $119.5 million back and made a profit of $4.3 million (i.e. a profit margin of just 3.7%).  Considering that there is a delay between when you put the money in and when all revenue has been recouped, I think it's certainly possible to imagine that you would lose this 'profit' to inflation.

If instead of playing with Hollywood you invested that same money in a standard high street bank paying 3% annually, over ten years your $115 million would become $156 million (an increase of 35%).  And I am sure this is a fairly low return for that kind of cash.

Maybe instead of taking 1% of all the movies combined, you could try and spot the winners ahead of time.  Let's have a look at how the profit splits between the individual films...

So if you managed to put all of your money into 'Movie 1', then you would have a return of 122% (i.e. a $265.3 million return on an $119.5 million investment).  The only problem is - how do you spot the hits?  Hollywood currently employs the smartest, best informed and most profit-focused people in an effort to exclusively make profitable movies and yet half of their movies lose money. In fact, their combined best efforts only produce a 3.7% profit margin.

Correlations and curiosities

Before we leave the mad, mad economics of Hollywood blockbusters, let's have a look at some interesting questions.  (If you have a question not listed below, leave it in the comments at the bottom of the page and I'll do my best to answer it from the data).

Q1: Are the films that make money better than those that lose money?

Yes, but only by a very small margin.  The average Metacritic score (i.e. average of film critics out of 100) for profitable films was 55 and for unprofitable movies it was 49.  Similarly, IMDb audiences rated the profitable films an average of 6.5 out of ten and the loss-making films an average of 6.1.

So it doesn't seem as though the Hollywood studios have any financial incentive to make their films better.  Shame.

Q2: Does the amount they spend on marketing correlate with financial success?

In answering this question we have to be careful not to fall foul of the Statisticians' Mantra that 'Correlation is not causation'. Studios don't have to lock in their marketing commitments until they get close to the movie's release date and so it could be that they choose to double down on the marketing when they know they have a film which is likely to perform well.  Likewise, if they think they have a real turkey on their hands they could dial back the marketing spend so as not to throw good money after bad.  From this data, we can't tell why the correlation exists.

However, we can say that, yes, movies with the biggest marketing budgets do seem to gross the highest amounts at the box office.

Q3: How important is the international market, compared to North America?

Hollywood makes blockbusters for global consumption and in recent decades the share of the money the studios have received from countries outside the US and Canada has grown considerably. In theory, increased international business comes with increased charges as much of the international film business is conducted through third parties, which adds cost and complexity.  Added to this, studios are less likely to make missteps on their home turf as they can be on-hand to scrutinise everything to a greater extent.  So, does this 'home advantage' make the domestic market more lucrative?

Well, it depends on which part of the process you look at.  Below you can see the origin of revenue and costs for the blockbusters in my dataset.

As you can see, the majority of the money collected at the box office does indeed come from countries outside of the US and Canada.  However, studios spend a higher proportion of their marketing money in North America.  This could be for a number of reasons including the higher cost of advertising in America, the temptation to spend more in the country which studio execs actually live in and because the US is often the first place a movie is released and the media enjoy reporting on huge opening weekends (and decrying massive flops).

What's fascinating is that once you deduct the release and marketing costs (known as the "Prints and Advertising" or "P&A") almost all (i.e. 99.1%) of the theatrical margin left over comes from outside North America. This is the result of high fixed costs involved in releasing and marketing a movie in North America, the paper thin margins in the business (as we saw above, it's under 4% across all these movies) and the more reliable nature of international returns.  Together, they mean that only 12 of my 29 movies made money at the domestic box office, whereas 20 made money at the international box office.  Alongside this, the losses at the domestic theatrical market were much worse than internationally.  The poorest performing movie at the domestic theatrical market lost $49.3 million whereas the poorest performing film at the international theatrical market only lost $14.8 million.

So Hollywood looks to the international market with glee because...

1. It's cheaper to market movies internationally, with the average movie in my dataset costing $55 million to market in the US and Canada and $44 million for every other country the film was released in combined.  For a sense of scale, IMDb lists release dates for Avatar in 69 countries, and I suspect the real number is slightly higher.

2. The margin is more reliable and less prone to huge theatrical losses.  As we saw above, the risk associated with releasing a big movie in North America is far greater than that associated with its international release.

3. It has the most potential for growth in the near future as the North American market is saturated with cinemas and movies. For example, between 2009 and 2013, cinema admissions in China rose by 239%, whereas in the US over the same period they shrunk by 5%.  You can read more about the enormous growth in the movie business in China here stephenfollows.com/film-business-in-china

Q4: Is there a rule of thumb for guessing which Hollywood blockbusters are in profit?

In the UK, the BFI developed a rule of thumb which stated that a movie was reasonably likely to be 'profitable' if it generated twice its budget at the global box office. They reached this conclusion by studying the full financial records of the movies they were involved with and also checking their hypothesis with independent professional film financiers.  But their dataset would have included few (if any) films budgeted over $100 million, and so it's interesting to see if it also applies to my dataset of Hollywood blockbusters.

So the question is... If we only had two pieces of information - the global box office gross (as reported on Box Office Mojo) and the production budget (as reported on Wikipedia) - how accurately could we guess how many $100m+ movies made money?

Well, you'd be right 83% of the time.  Using this rule, I was able to correctly identify all of the profit-making films and correctly identify ten as loss-making, however, this system incorrectly marked five loss-making movies as being profitable.  (I also tested the theory against the true budget figures due to the fact that Wikipedia budgets are mostly inflated, as previously discussed, but this only improved accuracy to 86%). In short, the rule works in around four out of five cases.  Not as reliable as one might have liked (and way below the accuracy the BFI found when the rule is applied to smaller films) but certainly interesting.

So far, I've been using a dataset of 29 movies in my investigations.  But what happens if we apply this BFI rule to all $100m+ Hollywood blockbusters?  I used just the published budget and box office gross to look at the 263 $100m+ movies released between 2000 and 2015.

This rule suggests that 70% of Hollywood blockbusters budgeted over $100m and released between 2000-15 were profitable.  Since 2004, the percentage of movies in profit has been slowly increasing, from 46% in 2004 to 76% of those released in 2015.  Most interestingly, it doesn't seem that the huge number of releases in 2011 hurt profitability.

Epilogue

So there you have it - a rather long (sorry!) look at how movies make money and why when a $100 million movie makes $100 million in cinemas it's not automatically in profit.  I hope this has helped shed light on how Hollywood works and why the media's traditional view of movie profitability is frustratingly wrong.

The biggest question some readers may have at this stage is - how did he get this data?  Most of the raw data for today's research is already publicly available via releases and leaks from major Hollywood studios, it's just that I have spent the time to piece it together.  I was also helped by a few well-placed friends in the industry who were able to fill in the blanks and confirm the veracity of some of the data points.  I also used data from IMDb, Box Office Mojo, The Numbers, Metacritic and Wikipedia.

I am completely confident that the information in this article is a true representation of how these Hollywood blockbusters make money.  The reason I am being a bit cagey about exactly where the data is from is partly to protect sources/ friends but also to avoid inviting lawsuits. The purpose of this site is educational and my sole intention is to help explain how our industry works.  In the past, I have been contacted by lawyers for various companies, trying to prevent the sharing of key data points relating to their business.  So far, I have managed to avoid lawsuits and also to avoid having to take any articles down, but if I were to offer the full figures as a download (or details of how to do the same piecing together I have) then I suspect I would get the wrong kind of attention.

So, if you want to know any more about these movies, please add your question in the comments below.  I'll do my best to answer them all, including going back to the dataset if needed.

Next week I will look at movies costing under $100 million.

In summary...

• Across all BFI funded films between 2002-14, the UKFC / BFI has received 37.6% of its money back

• 29.4% of UKFC/ BFI funded films have returned at least £1

• Only 5.8% have returned the full amount they were awarded

• The highest returning funding scheme was the Franchise Funds, which returned 71% of its investments

• The average development award was for £62,291

• Half of development funding awards were under £25,000.

• Of those feature films awarded development funding, 24% returned at least £1 to the UKFC / BFI.

Topline figures on BFI funded films

Over the past 12 years, the BFI (and the UKFC before it) have awarded £274,742,816 directly to the development, production and promotion of film projects. (They also spent far more on training, education and other events - see here for details).

These BFI funded films have generated an income of £103,211,671 for the BFI, which is a 37.6% return. That’s fairly impressive, seeing as their aim is not to make entirely commercial investments. I wrote last week about the BFI’s aims.

Out of the 1,182 feature films the UKFC / BFI awarded money to, 29.4% have returned at least £1 to the BFI to date. 68 films have returned the full amount they were awarded, just 5.8% of the feature films backed by the BFI.

Only one film has ever returned more than twice what it received, namely The King's Speech, which has so far repaid 838% of its £1million award.

The four biggest funds

Over the years, the UKFC / BFI have had a number of award funds which filmmakers could apply for. Currently there are only a small number, the largest of which is called the ‘Film Fund’. The Film Fund hasn’t been going for long enough to truly assess how its BFI funded films will perform. However, some of the UKFC’s old funds have been around long enough to look at the recoupment stats.

The stats below relate to all funding given to BFI funded films which have benefited from the stated fund. This means that if a film received development funding then these figures will include all of the funding the UKFC/ BFI spent on that film, not just the development funding. So these results do not tell us how each fund fared, but rather, how the films that each fund affected have fared.

New Cinema Fund

The NCF supported “emerging talent and established filmmakers working outside the mainstream, focusing on innovative writing and gifted directors”.

• Awarded to 152 feature films

• Largest single awards: Chatroom, Mrs Radcliffe's Revolution, Sex & Drugs & Rock & Roll, Submarine and We Need To Talk About Kevin (each received £700,000)

• Highest repaying film: Intermission (£791,803 repaid)

• £31,321,561 = total spent on films benefiting at some point from the New Cinema Fund

• £6,717,551 repaid to UKFC / BFI by those films

• 21.4% repaid

Franchise Awards

These agreements were established by the Arts Council England in 1997 and were managed by the UK Film Council between April 2000 and 2011 and the BFI after that. They awarded money to a small number of big production companies (inc DNA Films, Pathe and The Film Consortium).

• Awarded to 82 feature films

• Largest single award: Sunshine (£6,528,090 awarded)

• Highest repaying film: 28 Days Later (£3,528,990 repaid)

• £45,586,295 = total spent on films benefiting at some point from franchise awards

• £32,500,452 repaid to UKFC / BFI by those films

• 71.3% repaid

Development funding

Small funding awards to “broaden the quality, range and ambition of film projects being developed in the UK”.

• Awarded to at least 631 feature films

• Largest award: The Peculiar Memories (£250,000 awarded)*

• Highest repaying film: The King’s Speech (£8,552,244 repaid)

• £39,557,793 = total spent on films benefiting at some point from development funding

• £11,344,509 repaid to UKFC / BFI by those films

• 28.7% repaid

Note: The 2011-12 accounts did not split by fund so the true figures will be slightly higher - see notes at the bottom of this article for details.  This does not affect the other funds as they closed prior to 2012.

*Interestingly, I can’t find any mention online of the film which was awarded the highest amount of development funding, save for in the UKFC accounts of the time. The UKFC information states that “Pundit Best” were awarded £250,000 for the film “The Peculiar Memories” in the tax year 2007-08. There is a company called Punditbest Limited, of which one company director is Bruce Robinson. Bruce Robinson wrote a book which was adapted into a 1999 TV movie called “The Peculiar Memories of Bruce Robinson”. I presume that the quarter of a million pounds award was to turn the book into another film, but from there the scent goes cold. If anyone knows any more, please can they let me know.

Premiere Fund

Aimed at supporting “mainstream, commercially-driven films encouraging the involvement of British creative talent in a range of films to attract international audiences”

• Awarded to 75 feature films

• Largest award: Stormbreaker (£2,300,000 awarded)

• Highest repaying film: The King’s Speech (£8,552,244 repaid)

• £52,864,837 = total spent on films benefiting at some point from the Premiere Fund

• £26,677,413 repaid to UKFC / BFI by those films

• 50.5% repaid

Notes and caveats

Many of the notes and caveats I mentioned last week still apply.  In addition...

• Dates studied - The data today come from the complete UK Film Council and BFI financial statements currently available. This covers the 12 year period between 1st April 2002 and 31 March 2014.

• BFI Typo - On page 103 of the 2005/06 UKFC financial accounts, the value of the film rights on 31st March 2006 for the ‘Slate Funding’ given to Darlow Smithson Productions Limited is listed as “375,00”. As you can see, there is either a missing zero or the comma is in the wrong place. I have presumed than the zero is missing because a) The new commitments made that year were £375,000 and b) by placing the zero the final subtotals and totals add up to match the totals given in the financial accounts.

• Missing metadata - In the 2011-12 and some of the 2013-14 accounts the BFI did not indicate which funds an award was made under (i.e. development, production, etc). Therefore these have been left out of the fund breakdowns.

• Volume and complexity of data - It’s worth noting that the volume of data, and lack of standardisation in its presentation may mean that some of these results are slightly out. A large amount of subjective manual work was needed in order to turn the financial reporting data into a useable database. This includes matching up projects despite title changes, determining which projects are features (as opposed to shorts or other projects) and coping with changing reporting standards across different years. Therefore, I suggest readers do not treat the data as accurate to the penny, but more indicative of the trends and overall patterns.

Epilogue

This will be my final post of BFI recoupment as I think I have pulled out all the interesting nuggets.  However, I plan to return to the topic later on this year when the new figures are released.

I also have a long-term aim to provide an easier way for everyone to access the data as the current format is difficult to read.  More soon.

1. 39% of UK films have drama as one of their genres

1. One in five of UK films have some UK public funding

1. 55% of the films the BFI / UKFC backed 2009-13 were dramas

1. The BBC are half as likely as the BFI to back a thriller

1. Almost a third of all films backed by the BBC were documentaries

1. Over a five year period, the BBC only backed two horror films

1. Since 1980, only 4% of BBC-backed films have been horror films

1. The BFI fund a disproportionately large number of dramas, biopics and period dramas

1. The BFI fund a disproportionately small number of horror, documentary and fantasy films

1. 45% of period dramas made in the UK received some kind of UK public funding

1. No fantasy or spy films made in the UK 2009-13 received UK public funding

1. Other genres with low levels of public support were mystery, mock-documentary, action and horror

What genres do we make in the UK?

In a few previous articles I've looked in detail at the genres favoured by British filmmakers so today I shall be brief. Of the films shot in the UK between 2009 and 2013, 38.7% had drama as one of their genres.

The figures add up to more than 100% as films tend to have more than one genre.  For today's research I allowed films to have up to three genres, in line with most industry classifications (the average was 1.9 genres per film).  In their annual Statistical Yearbook, the BFI assigns each film a single "primary genre", and between 2011-13 18.5% of UK films had 'Drama' as their primary genre.  More about that here.

What genres receive UK public funding?

Within the 1,698 films made in the UK between 2009-13, 340 were backed financially by a UK-based public funder (20.1% of all films made).

What genres do the BFI and BBC fund?

During 2009-13, the BFI backed 141 films (8.3% of all films made).  This classification includes all films which received funding for development, pre-production, production and post-production directly from the BFI or its predecessor the UK Film Council.  Of those, 54.6% were dramas.

During the same period, the BBC funded 112 films, through one of their many operations (including BBC Films, BBC Scotland, BBC Northern Ireland, BBC Alba and BBC Worldwide).  Only 11.6% of BBC-backed films were thrillers, way below the 20.6% of films backed by the BFI. However, they funded a large number of documentaries, meaning that almost one in every three films backed by the BBC was a documentary.  Only 2 of the films the BBC backed were horror films (1.8% of their total).

In fact, I could only find eleven horror films which the BBC has ever been involved with.  IMDb lists 354 films made since 1980 which were produced or co-produced by a BBC-based production companies, of which 3.1% were horror films.  The eleven BBC-backed horror films are The Reflecting Skin (1990), The Relic (1997), Virus (1999), Shadow of the Vampire (2000), Close Your Eyes (2002), Trauma (2004), The Children (2008), The Daisy Chain (2008), Salvage (2009), Tormented (2009) and The Awakening (2011). For any pedants out there, I also ran the numbers exclusively on films produced or co-produced by BBC Films; nine horror films out of 219 films to date (183 already released and an additional 36 in development or production), meaning that horror represents 4.1% of their output.

The winners and the losers of UK public funding

There's no automatic reason why the BFI or BBC's funding slate should match the overall landscape of films being made in the UK.  That said, I feel there will be a number of "genre" filmmakers who may feel that their projects are being overlooked.

Genres disproportionately favoured by the BFI

1. Drama - 15.9% difference (38.7% of films made and 54.6% of films BFI backed)

1. Biopic - 6.8% difference (5.3% of films made and 12.1% of films BFI backed)

1. Period drama - 3.2% difference (1.7% of films made and 5.0% of films BFI backed)

Genres disproportionately unloved by the BFI

1. Horror - 8.1% difference (13.7% of films made and 5.7% of films BFI backed)

1. Documentary - 3.3% difference (20.4% of films made and 17.0% of films BFI backed)

1. Fantasy - 3.1% difference (3.1% of films made and 0% of films BFI backed)

So what are your odds of being supported?

So far I have been looking at what genres public-backed films fall into.  Another way to think about the same data is to look at what percentage of all the films made in a particular genre received UK public funding. For example, during the period 2009-13, there were 29 period dramas shot in the UK, and of those 7 received funding through a BFI / UKFC scheme.  So, although overall period dramas only made up 5% of the films the BFI backed (29 out of 141 films), 24% of all the period dramas received BFI money (7 out of 29 period dramas). I am using this as a very rough guide to your chances of getting public support if you're planning to make a film in a particular genre.  It's worth noting of course that getting funding is down to much more than just luck, but it does reveal the types of films that public funders are looking for and whether your funding application will face an easy or icy reception. 44.8% of period dramas made in the UK 2009-13 received some UK public funding.  The genres with the next highest level of support are biopics (36%), documentaries (28.8%) and gay interest films (28%). I can't find a single fantasy or spy film made in the UK in the five years between 2009 and 2013 which received any UK public funding.  The other genres will low levels of support were mystery (4.7% of mystery films received public support), mock-documentary (5.6%), action (10.4%) and horror (11.2%).

Notes on UK public funding

The funders I included in the "UK-based public funding' category are....

1. BFI / UKFC funding for development, production, completion, distribution and exhibition.

1. BBC including BBC Films, BBC Scotland, BBC Northern Ireland, BBC Alba and BBC Worldwide

1. Irish Film Board

1. Creative Scotland

1. Scottish Screen

1. Scotland South West Screen Commission

1. Scottish Development Fund

1. Northern Ireland Screen

1. Northern Ireland Film & Television Commission

1. Northern Ireland Lottery Fund

1. Northern Film & Media

1. NW Vision EM Media

1. Screen Yorkshire

1. Film Agency for Wales

1. Wales Creative IP Fund

1. The Welsh Assembly

1. Film London

1. Creative England

1. Screen South

1. Arts Council England

1. BritDoc

1. NFTS

1. South West Screen

1. Wellcome Trust

1. Screen East

1. Screen West Midlands

1. Isle of Man Film

Throughout this article, whenever I use the phrase 'BFI' I am referring to both the current BFI and their predecessor, the UK Film Council. My database of films is based on raw material supplied by the BFI and I have then built upon it, cross-referenced with other public data sources. To read more of my work on genre in UK film , you may like to check out these articles...

1. Which genre offers the best chance of a career?

1. Genre Statistics in the UK Film Industry

1. Are British filmmakers a load of drama queens?

1. How I Compiled the Genre Statistics

Epilogue

I am rather enjoying this journey into the world of public funding for films.  I have a couple of other angles to explore but always welcome questions from readers, so feel free to drop me a line if there's anything you want to know about publicly backed UK films.

1. The single most important factor in the success of a low budget film is the script

1. The track record of the director and producer don't seem to matter much

1. Everyone thinks that horror is the most profitable genre for low budget films

1. Only 17% of industry professionals think that the traditional distribution model is most appropriate for low budget films

1. Low budget films are great for training and showcasing talent...

1. ... but not so great for investors seeking a profit

Which elements make a low budget films sell?

The script is everything.  Interestingly, the track record of the director and producer is of little interest, suggesting that low budget films are judged mostly on the merit of the finished film, rather than "who you know".

These results are consistent throughout the industry, however those in Sales and Distribution rate the artwork/poster above the abilities of the cast.

Which genres are best suited to low budgets?

This question provides proof of the industry-wide belief that horror rules on low budget.

It does not, however, reveal that horror actually provides the best profit margin, only that everyone thinks it does. Interestingly, those in Exhibition are more supportive of Action films than everyone else.

Which distribution model is best for low budget films?

The "traditional" distribution model (i.e a film's rights being sold via a single sales agent at a film market to distributors purchasing 'all media' in their territory) has been under threat in recent years.  Digital cinema distribution, audience power, piracy, the globalised world, new distribution platforms and a massive increase in the numbers of films being made have all played a part in the unraveling of this model. Because of these changes, I was keen to canvass opinions on how low budget filmmakers should approach distribution in 2014.  The overall feeling was that the "traditional" model is not really appropriate for low budget films.

When we split by sector we can see a divide between two broad camps.  Those working in Sales, Distribution and Exhibition are considerably less keen on hybrid distribution models that the rest of the industry.  These numbers don't reveal why this is, although two reasons which spring to mind are that either...

1. Those closest to the distribution chain see the process as more straightforward ('the curse of knowledge'), or...

1. They are unwilling to create new hybrid models, wanting filmmakers to comply within the existing system or to do it all themselves.

What is a low budget film good for?

I asked my audience to rate (out of 5) how much they agreed with a variety of statements. In the questions I defined a "low budget film" as a feature film budgeted at under US $500,000. The overall feeling was that low budget films are very useful to filmmakers (as training and showreels) but not really to investors seeking a profit.

And those same results split by sector show a rough consensus, save for the fact that those in Exhibition seem less keen on directors making features as showreel pieces.

Epilogue

Just to state the obvious for a moment, this survey is measuring people's stated opinions - not facts.  It could well be that some of these results reveal a blindness or shared delusions on the part of some or all of the industry.  In the longer term I hope to uncover potential bias by comparing these opinions with objective data.  Until then, we can but wonder...

1. In the past three years, the BFI has received 2,505 applications for funding.

1. Of those, 720 were successful, equating to 29% of applications.

1. Almost half of all applications to the BFI for development funding in 2012/13 were successful.

1. In an average year, the BFI receives 353 applications for development funding, 403 for production funding and 79 seeking support for distribution.

Development BFI funding

In the graph above, the numbers for 'applications received' include the few which were later withdrawn. The figures for development applications cover film development, pilots, pre-production, supplementary funding applications and awards. Between 2012/13 and 2013/14 the number of applications fell by 16%, leading to a higher overall success rate for the remaining applications.

Production BFI funding

These figures are inclusive of production, first time directors, completion, documentary, enhancement applications and awards.

The steep rise in applications in 2013/14 led to just 13% of applications being successful.

Distribution and promotion BFI funding

Many filmmakers are familiar with the BFI's development and production funding schemes but not many are aware of their long-running support of distribution, helping independent films reach cinemas and audiences.

Epilogue

I'm grateful to the BFI for releasing these figures as I'm sure they will be of use to many filmmakers considering making an application. Before its demise, the UK Film Council was subject to the Freedom of Information Act, but the BFI isn't.  Which means that even though the BFI took over all of the UKFC's activities it has no legal obligation to share information on its work.  Despite this, the BFI (in their words) "voluntarily comply with Freedom of Information Act principles in respect of those of our activities which are of a public nature". In practice this means that they are remarkably open with their data and statistics.

In summary...

• Since 2011, the BFI has awarded over a million pounds to 29 short film projects

• The largest amount of funding for one film was £58,500

• Warp Films received over 10% of the total amount awarded

BFI short film funding by year

The total amount awarded since January 2011 was £1,084,961 and splits up as follows...

• 2011 = £123,818

• 2012 = £887,651

• 2013 = £72,792

• 2014 = £700

• Total Jan 2011 to Feb 2014 = £1,084,961

In 2011 there was no new shorts scheme, whereas in 2012 The Lighthouse managed the BFI's allocation of £1 million. The short film awards are now handled by Net.Work.

The Films

The one million pounds was split across 29 different short film projects and most projects were only awarded one grant. Eight were awarded two lump sums and two projects were given three different sets of money. The largest amount given to a single short film was £58,500 to Mohammed from Pico Pictures and the smallest was £2,800 to Pitch Black Heist from DMC Film. The average amount awarded was £37,412 per film. [table id=21 /]

Company Credits

Warp Films were awarded £115,333 across three projects, meaning that they received over 10% of the total amount awarded by the BFI. [table id=19 /]  

Key Findings - Film financing

• 27% of film financing came from private finance / high net worth individuals

• Government grants and tax incentives combined account for 21% of film funding

Where does film financing come from?

The largest source of film financing was Private Finance, which includes high-net worth investors.  The second largest source was Pre-sales, where the film is sold to sales agents or distributor prior to completion (sometimes just based on a script and cast list). Tax incentives and government funding combined account for 21% of film financing for feature films.

About the survey

The survey involved 1,235 film industry professionals, all of whom have attended at least one of the three major film markets (Cannes, Berlin or AFM) within the past five years.  I asked questions on a variety of hot topics including piracy, the appeal of 3D, gender, and how optimistic industry professionals are for 2014. More details of the survey and my methodology can be found here and if you have any questions or require clarification  on anything please contact me.

Key Findings - Film business investment

• Over half of the industry feel that investing in film is a “sensible business investment”

• There is more confidence in the soundness of film business investment on lower budgets than on higher budgets.

• The two sectors which had the least confidence in film business investment were Development and Sales & Distribution.

• The sector with the highest confidence in film business investment is Marketing.

Do film professionals think film is a sensible investment?

I figured that asking outright "Is film a good investment?" would create a skewed result so I used a sneaky method to get closer to the truth. I presented one group three general statements and then a similar group were show the same three statements but mixed with a fourth statement relating to film as a business investment.  Both groups were asked how many of the statements they agreed with in total (0, 1, 2, 3 or 4). By comparing the two sets of results we can deduce the average effect of the additional film business investment statement. Just over half of film professionals think that investing in film is a sensible business investment.  46% do not.

Breakdown by sector

The two sectors which had the least confidence in film as a business investment were Development and Sales & Distribution. In a pattern that is mirrored across many questions in my survey, those who work in Marketing seem to be the most optimistic.

Breakdown by budget level

There is much stronger confidence in film investment by those who work on the lowest budgets. Film is a risky investment at the best of times so I ascribe this result down to a mix of naivety and youthful optimism, rather than cheaper films making for better investments.

About the survey

The survey involved 1,235 film industry professionals, all of whom have attended at least one of the three major film markets (Cannes, Berlin or AFM) within the past five years.  I asked questions on a variety of hot topics including piracy, the appeal of 3D, gender, and how optimistic industry professionals are for 2014. More details of the survey and my methodology can be found here and for any  questions or clarification please contact me.