Studios are like casinos. They always win. Studio doesn't make one movie per yer. They make dozens. One movie flops, another succeeds.
If one flops and another succeeds, then the studio might not do well in the end. It requires a healthy profit margin in order to expand operations and compete with other studios, while investors want better returns.
Yes. And besides merchandising there's $millions from disk sales, streaming, and fees from TV cable broadcasts.
Back to box office, "Covenant" will make more money in Japan. I hope the box office will end up at about 2.5 times its production budget.
It that happens, it's not great but it isn't bad.
Other films that did about 2.5 times the production budget at the box office?
"Star Trek (2009)"
Both those films got sequels. They were not flops.
If Japan's box office is about $20 million, there is still hope imo that "Covenant" will get a low budget sequel.
The catch is that studios need most revenues right away to cover operating costs and investors' returns. Given that, if they find better projects, then they may choose to shelve those that are riskier, or as you put it resort to lower budgets.
About the two examples, I'm guessing that they represent more attractive franchises compared to Alien.
I'm not an executive in a film studio.
The way I approach this is; I don't pretend to try to fully understand Hollywood accounting or how studio economics works.https://en.m.wikipedia.org/wiki/Hollywood_accounting
* What I can do is look at box office performance with movies in a science fiction film franchise like Star Trek. I can see their production budgets and their worldwide box office and what films got sequels.
That lets me understand about how much money a Star Trek film (or even an Alien movie) needs to make (compared with its production budget), in order to get a sequel.
- "Star Trek: Insurrection" was a slight flop. Production Budget: $58 million. Double that = $116 million. But the film's box office = $112,587,658.
Still "Insurrection" got a sequel.
- The sequel, "Star Trek:Nemesis" flopped hard. What I'd call a bomb. Production Budget: $60 million. Worldwide box office: $67,312,826.
Barely above 1 x production budget. Imo it lost $millions and that ended Star Trek movies for 7 years.
* Back to "Covenant". It could get up to about 2.5 its production budget from Japan's box office.
Both "Star Trek (2009)" and "Star Trek Into Darkness" made box office that was about 2.5 times their production budgets.
Those Star Trek movies got sequels.
- "AVP" had a Production Budget: of $60 million (Box Office Mojo) to $70 million (Google). Box office: $172,544,654. Using the Google budget = box office about 2.5 x the production budget. (The Box Office Mojo budget = box office 2.86 x the production budget.) And "AVP" got a sequel.
- Conclusion based on this information?
If "Covenant" makes about 2.5 times its production budget (after its Japan release), it could get a sequel.
* As for comparing a Star Trek film with an Alien movie; in several ways "Prometheus" was similar to a sci-if adventure Star Trek film.
There can be an overlap between the two franchises in terms of overall style imo.
For instance "Star Trek First Contact" had horror elements in a sci-if adventure (like "Prometheus"). And "First Contact" made about 3 x its production budget.