Derek Thompson breaks down box office economics:
In The Hollywood Economist, Edward Jay Epstein revealed that the American box office accounted for less than 10 percent of the MPAA’s total income (and international box office accounted for just a little more than 10 percent). “The other 80 percent now came from the ubiquitous couch potato who was viewing his movies at home via DVDs, Blu-rays, pay-per-view, a digital recorder, cable channels, or even network television,” he wrote.
What does that mean for summer movies? It explains why $1 spent on a blockbuster is (all things considered) worth more than $1 spent on a non-blockbuster. The potential for each mega-budget movie to go big and create a train of merchandise, licensing and sequels makes it strategically wise to bet a very large sum of money on a very small number of big films.
Meanwhile, Alex Mayyasi wonders why the films aren’t shorter, since all tickets cost the same:
For a summer blockbuster, Spider-Man 2 is not terribly long at 128 minutes (just over 2 hours). But let’s imagine what would happen if a thrifty producer had decided beforehand to decrease the length by half an hour. If we assume that the cost of shooting the film ($100 million) and editing it ($70 million) would decrease in proportion to the decrease in the length of the film, then the trim would reduce the cost by $39.8 million.
That’s a lot of money. It’s over 14% of the film’s cost – enough to fund the production of a film like the recent sci-fi flick Looper or pad the producers’ salaries. But in the world of blockbuster movies, where a few product placements can rope in an extra $10 million, it’s also not enormous.