How has the cost of making a Hollywood movie changed in the last twenty years?
Netflix CEO Ted Sarandos reportedly has been privately warning filmmakers that the firm would be more cost-conscious in the future.
The news follows the critical and commercial failure of Netflix's Triple Frontier (which reportedly cost $115 million) and the anticipated high production costs of the streaming service's upcoming blockbuster Red Notice (which will reportedly star The Rock, Gal Gadot, and Ryan Reynolds for an unprecedented sum).
A familiar narrative in Hollywood is Netflix's climb to ever-larger budgets, followed by a descent into ever-smaller ones. Major studios have gone through periods of spending sprees and cost-cutting during the previous century.
In light of last week's post, in which I detailed my investigation into the average cost of making a film over the previous five years, I'd want to shift gears this week and examine the evolution of budgets over the past twenty.
I compiled information on 5,713 domestically released (i.e., in theatres in the United States and Canada) feature films for which a budget number was available to the public. For qualifications and clarifications about the budget, please refer to the Notes section.
For ease of reading, I will provide the following budgetary details as though they were absolute reality. In actuality, some will be exaggerated while others will be underestimated, and the origins of most publicly available data are unknown. For the remainder of today's article, a picture that I prepended "reportedly" to every mention of a dollar amount in the budget.
Business is serious in Hollywood.
Let's begin with the most basic and unrefined method of analysing budgetary trends: the geometric mean. The annual median budget for all domestically released films.
The figure below illustrates a continuous fall from the beginning of the 2000s through the middle of the 2010s, followed by a dramatic increase in average budgets in recent years.
While its apparent ease of construction is appealing, this diagram serves no practical use. It obscures the diversity across film genres and the causes of the average's erratic movement. For this reason, I propose we split the information in two: by genre and by budget.
Successes and failures
The budgets of various genres were clearly displayed last week. There isn't enough room for me to talk about every genre, so I've only selected four that I think best represent various aspects of the narrative.
When compared to the national median of $18 million, the average budget for an Adventure picture during the past five years was $76 million. The Adventure genre not only has the highest median budget, but it is also the fastest-growing. Spending on average has increased from $45 million in 2007 to $110 million in 2011.
At the other end of the spectrum are Thrillers and Horror movies, which have exhibited the highest twenty-year fall.
I also wish to rapidly survey animated films. As can be seen in the table below, animation expenses ballooned dramatically in the first few years of the 2010s.
Studios may have overpaid for a number of sequels, such as Cars 2, Monsters University, Kung Fu Panda 2, Madagascar 3, and Happy Feet Two, which might be a contributing factor.
Which price bands have been growing the most?
The chart below classifies all recent film releases into one of eight price points, allowing us to see which price points are more and which are less prevalent.
Seeing the big picture can be difficult, so I've chosen three different price points to examine in isolation.
Exceeding the previous decade, movies with budgets over $100 million have had the greatest scale growth. Around 4% of nationally produced films (for which budgets are given) in the year 2000 were CGI films, although that number has risen to nearly 12% by 2017.
"Mid-budget" films have been on the decline while the "large budget" ones have been expanding. The figure below demonstrates that over the previous two decades, movies with budgets between $50 million and $100 million have steadily declined, until staging a little comeback in recent years.
Hollywood studios have been striving to figure out how to adapt to this trend, and the media has been all over the place in its coverage of it (using phrases like "an endangered species," "struggling," "silent return," and "death and return" to describe it). These films have been severely impacted by the decline of the video rental and DVD retail industries, which has directly contributed to the proliferation of expensive franchise films in theatres.
Over the past few years, both the market share and the absolute quantity of low/no-budget movies (those made for less than $1 million) released in theatres across the United States have declined. In 2012, more than one-fifth of domestically released films had a budget of less than $1 million. in 2018, that number dropped to less than one in twenty.
Though a lag in reporting lower budget films (more on this in the Notes section) might account for some of this reduction, it appears unlikely to account for the vast majority of this trend.
The information used in today's study was compiled from a variety of sources, including OpusData / The Numbers, IMDb, Wikipedia, Box Office Mojo, and the movie industry press. The Chinese war epic that IMDb says cost $18 really only cost me $8.
There are a number of caveats that make it more appropriate to think of the publicly accessible statistic as an approximate estimate than an exact one. We don't know where they got that number, whether or not it includes soft money/rebates, whether or if the filmmakers are being truthful, etc. I was able to compare the genuine cost of 29 Hollywood movies with budgets over $100 million to the sum listed on Wikipedia since I just obtained access to the entire, real expenses and income of these productions. This research revealed that, on average, these films cost 12.5% more than what was listed on their respective Wikipedia pages.
I am unsure if this trend holds true for smaller-budget films.
It's tough to tell how much of the recent changes may be attributed to selective reporting. Seeing as how it may take some time for budget information to be made public, there may be some 2018 movies for which we do not currently have a budget but will ultimately have one. If they were spread out in an unbalanced manner (i.e., more likely to be low-budget pictures), this would cause a decrease in the overall quantity of films in certain price categories (i.e. such as showing a drop in lower-budgeted films). There is probably some of this going on, but I don't think it's enough to throw off my findings for the day. About four years ago, I researched this phenomena in regard to the BFI's hypothesis that late budget discovery contributed to the UK's declining number of low-budget projects. To gauge the scope of under-reporting, I kept track of how long it took budgets to be uncovered in prior years. There's more about that in this article. When did the United Kingdom stop making low-budget movies?
Using IMDb's system, we can see that movies may be categorised into up to three different genres. IMDb's genre model could use some work (e.g., mislabeling certain works as "Drama," identifying "Animation" as a genre rather than a production style, etc.), but I'm afraid that doing so will have to wait for another study.
This analysis does not account for inflation. To put it another way, the value of one dollar in 1999 is now $1.53 in 2019.