More Films More Profit

22nd July 2009 by Maura McHugh

A recent article on the L.A. Times suggests that movie studios should be considering making more films, not less, despite the current economic crisis.

The advice is based on industry research from SNL Kagan, which examined the 611 major studio releases between 2004 and 2008 to create imaginary slates of five, ten, and fifteen films broken down by genre. It then created three versions of each slate, using a variety of genres.

Without getting caught up in the nitty-gritty of the analysis (which is available for a fee here), the end result of their study was that the bigger the slate, the better the odds for profit. The five-film slate had a net loss of $94 million. The 10-film slate had almost $140 million in profit, while the 15-film slate had $466.4 million in profit. The study, which used a time frame of 12 years to determine the results, assumed 8% in distribution costs and 10% profit-participation and also included video and television revenues.

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