But as I explained to you earlier, I was not making any theories about sequels.
Earlier, you speculated about why a studio would choose to release a sequel to a film which had box office which was about 2.5 times its production budget.
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.
Your reply with emphasis by me.
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.
What is being discussed here to me is the decision by the studio to release a sequel (or not to release one).
I have found several films which got sequels that performed at the box office (compared to the production budget) at about the same level to where "Covenant" should end up after its Japan release.
- I have taken the known public financial information which could be part of the studio's decision.
In terms of testing a film theory about what a studio "may choose" to decide about a sequel release, I think that's the best I can do.
Rather, I explained how studios profit.
You gave expense / income calculations. I already knew about that.
Still presenting a thought experiment/film theory about studio finances doesn't bring much clarity imo to when studios will approve of sequels.
For the examples you gave above, you need to include marketing cost...
1. Marketing costs / total film expenses are very hard to find and are almost always unknown to the public.
2. If I did have the total movie expenses, I could give a more accurate measure (using formulas) of whether a film lost money or made money. http://www.deadline.com/2013/01/movie-profits-december-snl-kagan/
* But even if I had the total film expense information (and almost always, none of us have it), that still doesn't give an answer to the question of when a studio may approve a sequel for a particular movie or not.
- I don't work for the company where those decisions are made.
- What I have looked for is the cut off area, using numbers available to the public, of when studios may approve a sequel.
It seems again to be when box office is about 2.5 x the production budget.
- Here's another example (from the-numbers.com);
2015 The Divergent Series: Insurgent; production budget: $110,000,000, worldwide box office: $295,279,072, ratio box office/budget = 2.68
Given that, there are many reasons why sequels are approved even if studios did not earn as much. Read my previous post for details.
I understand. Those are your theories about why sequels are approved or are not approved.
Again, it's our privilege to bring up film theories/thought experiments.
- What I have done is to find the cut off area between box office and production budgets to determine the zone of where roughly there is a chance for a sequel to be approved.
To find out why sequels are approved, you need to look at the other revenue streams of the studio.
- That information is not available.
* To recap what is not available to the public;
1. Total film expenses.
2. All revenue streams for a studio.
3. The effects of arcane Hollywood Accounting which tries to hide film profits.
4. Studio executive discussions about sequel decisions.
* What is known?
- Box office numbers and production budgets.
- Therefore a ratio between those two numbers can be figured out to find about where studios are approving sequels based on that.
Here's another article to consider:
"How is a cinema’s box office income distributed?"
Thanks for the link.
I have read several articles about that topic including one by the author you posted, Stephen Fellows. https://stephenfollows.com/how-movies-make-money-hollywood-blockbusters/
- Here are a couple more articles about studio finances;http://io9.gizmodo.com/5747305/how-much-money-does-a-movie-need-to-make-to-be-profitablehttps://en.m.wikipedia.org/wiki/Hollywood_accounting