Disney’s Mufasa - the lion king

[BrianLo]

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.

As do I. I hope this one continues to chugs along to the 700’s so we can get the sheet out of deadline. At least we’re getting Moana, IO2 and Deadpool.

 

[erasure fan1]

Well it sure doesn't

2.5x more closely aligns with the reality we end up seeing vs. other methods most often.

It sure doesn't seem to with tent pole type movies. When budgets hit that 150mil plus range, it doesn't seem to hold water.

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.

But you can? Can't you see the flaw in your argument? What you are doing is giving the same arbitrary number but saying that the trades said it. I've seen plenty of sites say my number as well. We are doing the exact same thing but you are just giving a lower arbitrary number and saying I'm wrong.

They might have only spent 10mil on marketing for all I know. But if you are looking at it objectively, it would be a complete shock if it was only 50mil. They spent a lot on marketing, it's obvious. As I've said numerous times with this subject, we are all just guessing. That's why I look at from a more common sense standpoint. I'm not going to try and sugar coat anything for anyone. I do the same calculations for any movie, like or dislike.

 

[Disney Irish]

Well it sure doesn't

It sure doesn't seem to with tent pole type movies. When budgets hit that 150mil plus range, it doesn't seem to hold water.

Have you tested that out using the final P&Ls of a movie as @BrianLo has? Are you sure it doesn't add up properly using 2.5x for larger budget films? Have the math to show that?

But you can? Can't you see the flaw in your argument? What you are doing is giving the same arbitrary number but saying that the trades said it. I've seen plenty of sites say my number as well. We are doing the exact same thing but you are just giving a lower arbitrary number and saying I'm wrong.

They might have only spent 10mil on marketing for all I know. But if you are looking at it objectively, it would be a complete shock if it was only 50mil. They spent a lot on marketing, it's obvious. As I've said numerous times with this subject, we are all just guessing. That's why I look at from a more common sense standpoint. I'm not going to try and sugar coat anything for anyone. I do the same calculations for any movie, like or dislike.

I'm not the one trying to assign a specific number to marketing though, you are. You're trying to say its more, and maybe it is, but that still doesn't mean that 2.5x doesn't work in the end. Again I don't know why this is a debate when the trades themselves use it. I'm just saying lets take what they use and use the same, something that we've used for many years in this forum until some others joined in on the discussion post-pandemic trying to use other figures to make Disney look worse than they already were.

 

[MisterPenguin]

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.


View attachment 835065

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

I've seen Deadline use a 3x rule.

Add in a secret 50% to the budget to cover administration and advertising. Then split the BO with the theaters 50/50.*

That winds up being a 3x rule.

And it's what I've been using.

*Production companies get more than 50% initially, but after a while, the theaters get bigger slices of the pie. Also, internationally, production companies get *less* than 50% at the BO. This is maybe why 2.5x works domestically, but not world wide.

 

[Dranth]

It sure doesn't seem to with tent pole type movies. When budgets hit that 150mil plus range, it doesn't seem to hold water.

Sure it does, there is a reason this is the standard and until we get direct access to studios books, it is the most accurate tool we have. Yes, there will be times when it doesn't work but that is not the norm and typically only in extreme situations (like majority of the revenue coming from China which studios keep a lower percentage of).

Honest question as I haven't been paying attention, is there something with Mufasa that was out of the ordinary that would cause the standard rules to not hold true? If not, why would we calculate it any differently?

 

[Disney Irish]

Honest question as I haven't been paying attention, is there something with Mufasa that was out of the ordinary that would cause the standard rules to not hold true? If not, why would we calculate it any differently?

Some want to assign a higher break-even point of $600M using other methods instead of the $500M using 2.5x as to show that the movie is somehow a "loser".

 

[Disstevefan1]

Some want to assign a higher break-even point of $600M using other methods instead of the $500M using 2.5x as to show that the movie is somehow a "loser".

The only difference is the 2.5X estimate assumes they spent 50M on marketing and the 600M figure assumes 100M spent on marketing. Both seem insanely high to me but what do I know.

Both estimates also assume the movie did not exceed the 200M budget.

The good news is Mufasa is closing in on the 500M estimate for break even. its now at 476M

Its also funny how we throw around these hundreds of million numbers like its monopoly money.

In a way, I think it is like monopoly money to us.

 

[Disney Irish]

The only difference is the 2.5X estimate assumes they spent 50M on marketing and the 600M figure assumes 100M spent on marketing. Both seem insanely high to me but what do I know.

Both estimates also assume the movie did not exceed the 200M budget.

The good news is Mufasa is closing in on the 500M estimate for break even. its now at 476M

Its also funny how we throw around these hundreds of million numbers like its monopoly money.

In a way, I think it is like monopoly money to us.

But as has been explained by @BrianLo, very well I might add, is that marketing isn't a fixed cost. Its not one number that we can pinpoint saying "it must be X because movie had a Y budget". The number for Mufasa might be ~$100M but that doesn't mean break-even has to increase beyond what the 2.5x "rule" tells us just because marketing might be higher for this movie. Marketing is for the life of the movie, and its going to be used for its life after its theatrical run where it will still gain money.

 

[BrianLo]

I've seen Deadline use a 3x rule.

Add in a secret 50% to the budget to cover administration and advertising. Then split the BO with the theaters 50/50.*

That winds up being a 3x rule.

And it's what I've been using.

*Production companies get more than 50% initially, but after a while, the theaters get bigger slices of the pie. Also, internationally, production companies get *less* than 50% at the BO. This is maybe why 2.5x works domestically, but not world wide.

I know… and I think you’ve been wrong all this time. I’ve back tested nearly every movie against the deadline P&L sheets and no Disney production has ever extended really beyond 2.5X. Often they are lower. Across all studios, including Universal live action. With the dubious accounting practices of Illumination and Dreamworks aside.

Somewhere along the line the internet confused several rules and mashed them together. 2.5X was never about estimating final marketing costs. It was also about estimating a rough box office goal where films would reliably break even as a production with the back end accounted for. I think there’s a world in which 3X holds if you want to ignore the entire back end… but what’s the point of doing that? What part of a production and marketing is spent simply because there’s a back end. It would be like saying production credits for the UK also ‘don’t count’.

 

[Disstevefan1]

But as has been explained by @BrianLo, very well I might add, is that marketing isn't a fixed cost. Its not one number that we can pinpoint saying "it must be X because movie had a Y budget". The number for Mufasa might be ~$100M but that doesn't mean break-even has to increase beyond what the 2.5x "rule" tells us just because marketing might be higher for this movie. Marketing is for the life of the movie, and its going to be used for its life after its theatrical run where it will still gain money.

Totally agree we cant pinpoint marketing costs. If in the case of Mufasa marketing costs can be kept to 50M (or less) then the 2.5X estimate works fine.

If the marketing costs which is not a fixed go beyond 50M, the 2.5X estimate becomes less accurate.

Lets just keep it a 2.5X estimate because its an easier target to hit for movies on the edge of breaking even.

For blockbusters that bring in 1B it doesn't even matter.

 

[BrianLo]

If the marketing costs which is not a fixed go beyond 50M, the 2.5X estimate becomes less accurate.

The higher the box office, the higher the marketing and the higher the back end. They sort of cancel each other out in lock step. It’s easy enough if you only consider streaming. If Mufasa spends 125M on marketing, DTC is going to “buy” the film for 150M in the back end to compensate because the film is now ‘worth more’ to the service. If Mufasa stayed dead on arrival, the marketing budget might have been stopped in its tracks, slashed to 75M and DTC may have only picked up the film for 100M.

It’s the same model whether the movie remains fully in house or gets rented out to Netflix. D+ and other services bring in billions of dollars of customer revenue (per month) and that’s where most of the money is shunted, towards content productions.

 

[Disney Irish]

Totally agree we cant pinpoint marketing costs. If in the case of Mufasa marketing costs can be kept to 50M (or less) then the 2.5X estimate works fine.

If the marketing costs which is not a fixed go beyond 50M, the 2.5X estimate becomes less accurate.

Lets just keep it a 2.5X estimate because its an easier target to hit for movies on the edge of breaking even.

For blockbusters that bring in 1B it doesn't even matter.

I think for these discussions its best to just take the marketing cost calculations out of it and just use the 2.5x "rule". It just makes things easier for our purposes.

 

[erasure fan1]

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.

I don't think it's trying to eliminate it. But you really start to muddy the water trying to figure out back end deals.

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?

We all know it's not the only source. But as a snap shot, it's a way to gauge films in the theatrical run. And that's what we are really discussing. Only the studios know those back end dollars. Sure the studios only know the budget and marketing. But there's enough information to make a fairly decent comparison, unlike merch sales, streaming revenue...

I'm not the one trying to assign a specific number to marketing though, you are.

Uhhhh, that's exactly what you are doing. You are assigning it 2.5x specifically. I hate to break it to you, 2.5 is a number, and you are assigning it. The difference is I'm assigning 50% and you are assigning 25% of budget for marketing.

We're doing the exact same thing with a different percentage. You can think my way is totally off base, fine. But to act like I'm trying to make Disney look bad and you're not doing the same analysis just a slightly different formula is disingenuous at best.

Have you tested that out using the final P&Ls of a movie as @BrianLo has?

No because what he posted has dvd sales, tv rights... We're talking about the theatrical run only. I'm not looking at the p&l, it's a discussion about performance in the theatrical window. We all know the profitablity will change post theatrical.

is there something with Mufasa that was out of the ordinary that would cause the standard rules to not hold true?

Well with mufasa the 2.5 would make the marketing 50mil under the 500mil break even that people here have said. To cover the reported budget, it needs 400mil just for that. You still need to cover marketing. So to hit that 500mil, that would mean the budget for marketing would be 50mil. I think anyone paying attention would see that mufasa was significantly higher than that.

 

[BrianLo]

Uhhhh, that's exactly what you are doing. You are assigning it 2.5x specifically. I hate to break it to you, 2.5 is a number, and you are assigning it. The difference is I'm assigning 50% and you are assigning 25% of budget for marketing.

You really are not listening to what we are saying. We aren't guesstimating marketing costs, marketing costs are never fixed. One single revenue source (box office) generally has a semi-fixed relationship against one single cost (the original production budget) in a predictable 2.2-2.5X relationship. I'm consistently telling you marketing on successful productions is more than 50%, 50% is often near the bare minimum floor.

No because what he posted has dvd sales, tv rights... We're talking about the theatrical run only. I'm not looking at the p&l, it's a discussion about performance in the theatrical window. We all know the profitablity will change post theatrical.

Correct. I am talking about everything. You only want to talk about box office as the sole arbiter of revenue. But no one can actually present me with firm data. Why?

What's the problem with presenting something that's more accurate to the final production tally? Why does only box office count as revenue, but every single dollar in production and marketing must must be accounted for up front? Why does a box office dollar need to account for a commercial Disney ran for Mufasa after it leaves the box office to land on streaming? Why are we so opposed to using the tested rule from the 90's that lead us closer to the true final number?

Movies are produced and marketed against their earnings in ALL windows. It's disengious to equate money against only one revenue source. It's even more disingenuous to think that money that's temporally spent AFTER a film is in the box office must be accounted for in the box office... for what real motivation?

The only motivation I can come up with is setting the arbitrary cut off of "profitability" further out than it actually is.

 

[BrianLo]

Another case example. Moana 2 has a budget of 150million. Disney Plus already procured the film and it was thrown into theatres. Should we say Moana 2 has a theatrical production budget of exactly zero dollars now?

No, because that's also silly. Just as silly as saying the entire budget and marketing costs are exclusively earmarked for the theatrical window. It's a fluid situation... it's both... and coincidentally we have a rule that gets us roughly there to the end point.

The end tally does not account for merchandising by the way, which is a separate product line.


If box office only mattered and the back end evaporated, movies would probably need to earn a 4X multiplier to be profitable. But then studios would spend less on marketing and production costs reactively, simply because that difference is spent and accounted for what they are already anticipating in the back end. It's kind of silly semantics... I'm just in pursuit of something that's actually meaningful. When does participation get triggered because a production is profitable in totality? Pessimistically 2.5X box office earnings, often 2.1-2.4.

 

[wtyy21]

Mufasa is eligible for the list of Oscar's Best Picture. https://www.thewrap.com/oscar-qualifying-films-2025-not-eligible-best-picture/

 

[Disstevefan1]

Another case example. Moana 2 has a budget of 150million. Disney Plus already procured the film and it was thrown into theatres. Should we say Moana 2 has a theatrical production budget of exactly zero dollars now?

No, because that's also silly. Just as silly as saying the entire budget and marketing costs are exclusively earmarked for the theatrical window. It's a fluid situation... it's both... and coincidentally we have a rule that gets us roughly there to the end point.

The end tally does not account for merchandising by the way, which is a separate product line.


If box office only mattered and the back end evaporated, movies would probably need to earn a 4X multiplier to be profitable. But then studios would spend less on marketing and production costs reactively, simply because that difference is spent and accounted for what they are already anticipating in the back end. It's kind of silly semantics... I'm just in pursuit of something that's actually meaningful. When does participation get triggered because a production is profitable in totality? Pessimistically 2.5X box office earnings, often 2.1-2.4.

In my opinion, yes zero. They took a D+ series which in reality is like throwing money down a hole and reworked it into a movie and made good money on it. They sorta made infinity on Moana 2 at the box office

This was super smart by Disney. They turned a big D+ COST into a BIG MONEY MAKER in the theater. Did Iger think of this? Probably not, he just buys things for too much money.

This was almost as good as LLPP. Nothing can beat LLPP. LLPP is literally money for nothing.

 

[BrianLo]

In my opinion, yes zero. They took a D+ series which in reality is like throwing money down a hole and reworked it into a movie and made good money on it. They sorta made infinity on Moana 2 at the box office

This was super smart by Disney. They turned a big D+ COST into a BIG MONEY MAKER in the theater. Did Iger think of this? Probably not, he just buys things for too much money.

This was almost as good as LLPP, money from nothing. Nothing can beat LLPP is literally money for nothing.

I support your post because you are consistent in the mental gymnastics!

May Moana 2 enjoy its record setting infinity multiple (even if that's not how I would prefer to frame it).

 

[Disstevefan1]

I support your post because you are consistent in the mental gymnastics!

May Moana 2 enjoy its record setting infinity multiple (even if that's not how I would prefer to frame it).

Ha! This was Disney divide by zero magic

Seriously, this was a brilliant move by Disney and when they do smart things I say it!

 

[Disney Irish]

I don't think it's trying to eliminate it. But you really start to muddy the water trying to figure out back end deals.

We all know it's not the only source. But as a snap shot, it's a way to gauge films in the theatrical run. And that's what we are really discussing. Only the studios know those back end dollars. Sure the studios only know the budget and marketing. But there's enough information to make a fairly decent comparison, unlike merch sales, streaming revenue...

Uhhhh, that's exactly what you are doing. You are assigning it 2.5x specifically. I hate to break it to you, 2.5 is a number, and you are assigning it. The difference is I'm assigning 50% and you are assigning 25% of budget for marketing.

We're doing the exact same thing with a different percentage. You can think my way is totally off base, fine. But to act like I'm trying to make Disney look bad and you're not doing the same analysis just a slightly different formula is disingenuous at best.

No because what he posted has dvd sales, tv rights... We're talking about the theatrical run only. I'm not looking at the p&l, it's a discussion about performance in the theatrical window. We all know the profitablity will change post theatrical.

Well with mufasa the 2.5 would make the marketing 50mil under the 500mil break even that people here have said. To cover the reported budget, it needs 400mil just for that. You still need to cover marketing. So to hit that 500mil, that would mean the budget for marketing would be 50mil. I think anyone paying attention would see that mufasa was significantly higher than that.

In reality you're never really going to get the profit numbers only for theatrical, sorry but its not gonna happen. That is because you're not going to get a budget+marketing cost breakdown that is theatrical only. That is what we've been trying to tell you. Its why there is no formula to be used for such, and why 2.5x is used to get you as close as you can get.

But lets say for example that marketing is $100M, ok. So does that only cover theatrical marketing spent or does that also cover any post-theatrical marketing? And if post-theatrical marketing is covered under that, does any of the post-theatrical earnings count too or not? Or are you not concerned about that because its all an unknown, just like the marketing number itself? So if its an unknown and not of concern why even care about the marketing cost at all then?

Just do the known budget against the known box office and divide by half, that gives you just the theatrical take. Take the marketing out of it since you don't want to worry about any of the post-theatrical stuff. Or you could just do the 2.5x rule that almost everyone uses.