Disney’s Mufasa - the lion king

[BrianLo]

From what I can see, the advertising push was pretty heavy for this film. I'd be very surprised if it was only 50mil. I'd guess it needs about $575mil total at a minimum. But who knows.

Oh it’s almost assuredly more than 100 million for marketing.

The trouble is the industry rule always was a 2.5x modifier for a film production to break even when all is said and counted. On the generous assumption end even. There’s even circumstances it’s as low as 2.0x. The industry rule has been completely misinterpreted to try and estimate all sorts of things it doesn’t do, like guesstimate marketing spend. Marketing spend is almost always more than 50% of the budget.

Marketing includes post theatrical spend, you market for streaming or PVOD. Trying to carve out only box office as the single revenue source has merely been a tactic to make Disney productions appear less profitable than they historically have been. But it also buries the true costs too (post theatrical marketing spend, profit sharing, participation / residuals).

2.5X tracks very well, so generally the production at 600M Box office will make Disney 50 million and at 700M 100-ish.

 

[BrianLo]

The 2.5 is just a guess too, but I get you.

It’s not a guess, it’s an established rule dating back to the 90’s that often under-estimates film profitability. I’ve been running it through the final deadline production tally’s annually.

There is no tool for films breaking even ‘only in the box office window’ because no films are budgeted and marketed to only be released in theatres since VHS took off. There is also no tool to estimate marketing spend because it’s not remotely fixed. The better films do the more they are marketed.

Since Mufasa has found legs the marketing team is probably spending more to push those ‘number one movie in America’ commercials.

 

[Disstevefan1]

It’s not a guess, it’s an established rule dating back to the 90’s that often under-estimates film profitability. I’ve been running it through the final deadline production tally’s annually.

There is no tool for films breaking even ‘only in the box office window’ because no films are budgeted and marketed to only be released in theatres since VHS took off. There is also no tool to estimate marketing spend because it’s not remotely fixed. The better films do the more they are marketed.

Since Mufasa has found legs the marketing team is probably spending more to push those ‘number one movie in America’ commercials.

Good point. Marketing spend is not a set number and continues throughout its run. In any event, Mufasa will indeed make money.

 

[Disstevefan1]

So it will make probably $600…at $470 ish now…

So a profit of $50…not a failure…but probably not worth the time and resources invested either.

The positive is they didn’t lose…and maybe they’ll knock this nonsense off.

I am going to take this as a win.

50M is 50M, they employed folks on this project, maybe some folks got some meaningful advancement in their career development, AND they didn't LOSE MONEY!

For these folks, Its got to feel better to have worked on a project that made money rather than lose money,

 

[Disstevefan1]

It’s not a guess, it’s an established rule dating back to the 90’s that often under-estimates film profitability.

My point is we do now know how much they actually spent to make and market the movie in the end but they have to use something to estimate so here it is.

Glad to know it tends to under estimate.

 

[erasure fan1]

Its only a debate when someone wants to make a movie look a lot worse than it is.

Or better than it is. See, two can play that game. Do yo honestly believe marketing for mufasa was at the low end of the spectrum? It was marketed huge, and that's not cheap.

 

[Sirwalterraleigh]

I am going to take this as a win.

50M is 50M, they employed folks on this project, maybe some folks got some meaningful advancement in their career development, AND they didn't LOSE MONEY!

For these folks, Its got to feel better to have worked on a project that made money rather than lose money,

I think they assume $1,000,000,000

That’s the only way to explain the movies they keep pumping out

 

[Sirwalterraleigh]

Or better than it is. See, two can play that game. Do yo honestly believe marketing for mufasa was at the low end of the spectrum? It was marketed huge, and that's not cheap.

I guarantee they had a high ad spend…likely increased when they saw it wasn’t gonna track well.

Never admit defeat

 

[erasure fan1]

2.5X tracks very well, so generally the production at 600M Box office will make Disney 50 million and at 700M 100-ish.

If you say it most definitely didn't cost 50mil to market and it's more likely 100+. Your math doesn't track then. No matter what math anyone uses, the studio is going to average a 50%-ish take. So if the budget was 200mil, plus the marketing is probably 100mil at least. That puts the film at dead even at 600mil, give or take, theatrically. Not 50mil profit. Maybe 2.5x is the Hollywood estimation. I've never really seen that. I've more commonly seen half the budget or larger.
Here's from a gizmodo article

According to Contrino, the Print & Advertising (P&A) costs of a movie can be incredibly high — for a small $20 million film, the promotional budget can be higher than the production budget. That’s because those films are often romantic comedies or kids’ movies, which are cheap to make but still need a lot of promotion. For a film which cost between $35 and $75 million to make, the P&A budget will most likely be at least half the production budget. And the numbers only go up with bigger films. “If the studio spends a lot on the budget, they’re going to want to protect that investment by advertising it heavily,” says Contrino.

 

[Disstevefan1]

I think they assume $1,000,000,000

That’s the only way to explain the movies they keep pumping out

It’s not a bad movie, and being Lion King fans we went to the theater to see it but if TWDC thought this would make 1B they need a reality check.

We know how the story ends before we watch the movie. Maybe they were banking on all the Lion King fans going out and see it?

 

[erasure fan1]

I guarantee they had a high ad spend…likely increased when they saw it wasn’t gonna track well.

Never admit defeat

You can look at the numbers and see that 500mil can't be a break even for the film. And yet I'm the one trying to make it look worse than it is. Most every tent pole film spends huge on advertising. I'm not really sure why that's being questioned.

 

[Sirwalterraleigh]

It’s not a bad movie, and being Lion King fans we went to the theater to see it but if TWDC thought this would make 1B they need a reality check.

We know how the story ends before we watch the movie. Maybe they were banking on all the Lion King fans going out and see it?

To be honest…I think they’re in a pattern of “overestimating” the appeal of alot of things

 

[Dranth]

If you say it most definitely didn't cost 50mil to market and it's more likely 100+. Your math doesn't track then. No matter what math anyone uses, the studio is going to average a 50%-ish take. So if the budget was 200mil, plus the marketing is probably 100mil at least. That puts the film at dead even at 600mil, give or take, theatrically. Not 50mil profit. Maybe 2.5x is the Hollywood estimation. I've never really seen that. I've more commonly seen half the budget or larger.
Here's from a gizmodo article

2.5x more closely aligns with the reality we end up seeing vs. other methods most often. It isn't perfect but tends to be the most accurate picture we get because people tend to WAY overestimate marketing spend as well as front loading all of it to the theatrical window.

 

[Disney Irish]

Or better than it is. See, two can play that game.

Except its not, because in the end it averages out no matter the spend. The only reason to use any other method is to make things look worse than they are. There is a reason why 2.5x is used by the industry trades, and its not make Disney or any other studio look better I can assure you that.

Do yo honestly believe marketing for mufasa was at the low end of the spectrum? It was marketed huge, and that's not cheap.

I don't know how much they spent. But lets say you're right and they spent more, then what is the number to use for discussion purposes? $75M? $100M? $125M? $150M? That is the problem, you can't just say some arbitrary number and say that is it. As has been pointed out, and said better than I can, marketing isn't a fixed number. Its not a hard and fast rule that it must be 50% of budget and stick to only that and be no more or no less. It could be more or it could be less, which is why the 2.5x rule of thumb averages it out.

 

[Disney Irish]

If you say it most definitely didn't cost 50mil to market and it's more likely 100+. Your math doesn't track then. No matter what math anyone uses, the studio is going to average a 50%-ish take. So if the budget was 200mil, plus the marketing is probably 100mil at least. That puts the film at dead even at 600mil, give or take, theatrically. Not 50mil profit. Maybe 2.5x is the Hollywood estimation. I've never really seen that. I've more commonly seen half the budget or larger.
Here's from a gizmodo article

Your Gizmodo quote is from an article from 2011, here it is for others that would like to see the source -

How much money does a movie need to make to be profitable?

If you really liked a particular movie, and you're hoping it made enough money to warrant a sequel, then the wealth of box-office news can be confusing.

gizmodo.com

Do you have anything more recent, such as something in the 2020s that makes that same claim? I showed where Hollywood trades use 2.5x in an article from last year. Which if that is what the trades use, I suggest we use it too.

Edit - By the way even in that same article from 2011 they quote an older version of the Hollywood rule of thumb -

"So how do you know if the box-office gods have smiled enough on your favorite movie that studios are likely to greenlight similar films?

The short answer is, it depends on a number of factors, but a rule of thumb seems to be that the film needs to make twice its production budget globally."

The 2.5x is an updated more modern version of that same 2x that was used previously.

 

[BrianLo]

If you say it most definitely didn't cost 50mil to market and it's more likely 100+. Your math doesn't track then. No matter what math anyone uses, the studio is going to average a 50%-ish take. So if the budget was 200mil, plus the marketing is probably 100mil at least. That puts the film at dead even at 600mil, give or take, theatrically. Not 50mil profit. Maybe 2.5x is the Hollywood estimation. I've never really seen that. I've more commonly seen half the budget or larger.
Here's from a gizmodo article

I think the trouble is a fundamental desire that people have to eliminate the back end. That’s why the math doesn’t work. But movies make predictable money in the back end, which covers a portion of the production budget. Which also covers a portion of the marketing (which also occurs in part during the back end temporally). All the numbers are much larger than what people keep over simplifying them to be.

No the issue is more people want to over simplify and eliminate all the variables. SVOD, PVOD, Streaming, Participation. Mostly because it makes the break even further away and the profit look smaller.

I understand why people want the box office to be the only source of revenue in part. But if a film say makes 150M in streaming, and 80M in other revenue sources, what portion of the marketing and original budget does that account for? Movies aren’t made and marketed to only make money in the box office. I’ve kind of let people entertain this oversimplification for 2 years now and the group has underestimated everything. Including marketing costs and including inevitable profit.

 

[Disney Irish]

I think the trouble is a fundamental desire that people have to eliminate the back end. That’s why the math doesn’t work. But movies make predictable money in the back end, which covers a portion of the production budget. Which also covers a portion of the marketing (which also occurs in part during the back end temporally). All the numbers are much larger than what people keep over simplifying them to be.

No the issue is more people want to over simplify and eliminate all the variables. SVOD, PVOD, Streaming, Participation. Mostly because it makes the break even further away and the profit look smaller.

I understand why people want the box office to be the only source of revenue in part. But if a film say makes 150M in streaming, and 80M in other revenue sources, what portion of the marketing and original budget does that account for? Movies aren’t made and marketed to only make money in the box office. I’ve kind of let people entertain this oversimplification for 2 years now and the group has underestimated everything. Including marketing costs and including inevitable profit.

I agree, the overall problem is the box office is the only number that people can see and because its more tangible they use it as the end all be all for a movies profitability. I'll even admit I fall into that trap sometimes too, because we all get caught up in these discussions.

 

[BrianLo]

Here’s a good case example. Frozen 2 had a budget of 150 million. If all these assumptions are in any way accurate the production had a 75million marketing budget and 286 take home domestically and 388 internationally. So the film made 450million.

The simple 2.5X “rule” would mean the film made at least 487.5. It makes no assumption about marketing costs, it really just means once the film cleared 425 it was likely profitable.

Here’s the actual amount… notice how marketing is double the assumptions and profit is also 33% higher.

As I mentioned 2.5X is a pessimistic rule. Often films can clear production profit with 2X modifiers. It’s the rare production where budget costs are totally out of lock step with marketing. Mostly Dreamworks and Illumination that under report production costs by separating out studio costs from the individual productions. So they can require as high as 3X

 

[BrianLo]

I agree, the overall problem is the box office is the only number that people can see and because its more tangible they use it as the end all be all for a movies profitability. I'll even admit I fall into that trap sometimes too, because we all get caught up in these discussions.

Certainly and I don’t mind that. It’s more the evolution of all these other rules have lead to a declarative statement that productions are only profitable at X amount of box office and that’s wildly over called these days. People have over-escalated that in the last 18 months. Mufasa as a production might even break even in the mid 400s for all we know. 600 is ridiculously overcalled.

The only numbers we know are production budget and box office and we have a pessimistic tool already that’s validated, no need to keep inventing even more pessimistic ones. There is no reliable tool to estimate marketing and I don’t know why it’s taken hold that there is. Marketing fluctuates drastically with performance.

The reality is ignoring all the back end numbers hasn’t really led to accurate data… and I know… mermaid was a profitable production and that’s where this all swings back to. A contingent does not want that to be the case.

 

[Disney Irish]

Certainly and I don’t mind that. It’s more the evolution of all these other rules have lead to a declarative statement that productions are only profitable at X amount of box office and that’s wildly over called these days. People have over-escalated that in the last 18 months. Mufasa as a production might even break even in the mid 400s for all we know. 600 is ridiculously overcalled.

The only numbers we know are production budget and box office and we have a pessimistic tool already that’s validated, no need to keep inventing even more pessimistic ones. There is no reliable tool to estimate marketing and I don’t know why it’s taken hold that there is. Marketing fluctuates drastically with performance.

The reality is ignoring all the back end numbers hasn’t really led to accurate data… and I know… mermaid was a profitable production and that’s where this all swings back to. A contingent does not want that to be the case.

I just like 2.5x because its easy, pessimistic as it might be, no need for extra math trying to breakdown anything especially the splits which can be wildly different depending on the studio or even the film. I don't know why anyone would want to over-complicate it even more unless they are trying to make things look even worse for a certain studio or film.