OpusData Analysis: Measuring the Studios

December 15, 2010

In last week's OpusData column, we looked at the most profitable movie genres, and concluded that horror and romantic comedies have produced the best return on investment among major releases over the past five years. This week we look at which studios have delivered the best return on the production dollar over the same period.

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Before we get into the analysis, a quick note... For this analysis, we have used the same measurement as last week: average consumer spending on theatrical tickets and DVDs compared to the average production budget of movies released by the studio. The study includes all movies for which we have the production budget, theatrical box office and DVD sales numbers, which covers the vast majority of studio releases since the beginning of 2006. To measure a studio, we use the ratio between the average consumer spending total and the average budget for the movies they have released.

While we think this is the fairest way to do the analysis, because it says how good a studio is at translating dollars spent on production into money spent by movie fans, it should be noted that the amount a studio contributes to the production cost of a movie varies widely, so the business performance of a studio might be better than the tables below imply if they are particularly good at striking deals to distribute independently-financed pictures. Even with that in mind, however, a studio would clearly prefer to be towards the top of this list than towards the bottom.

So... first let's take a look at how the major studios perform on this basis:


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Top of the list comes Fox, which benefits, of course, from having Avatar on its roster, but mostly wins thanks to an impressive record with maximizing the returns from mid-budget hits. Think Taken, Marley & Me and Borat. Fox's formula doesn't give it the biggest revenue -- at $146 million or so per movie over the past five years, it's decidedly mid-table -- but with an average production budget of $51.56 million, it gets the most mileage out of each production dollar spent.

Interestingly, Disney earns second place by taking almost exactly the opposite approach to Fox. It focuses on producing a relatively small number of relatively high-budget movies, and benefits from its ability to shift DVDs in huge volumes. Pixar is, of course, one of the major keys to its success.

Among the other majors, Warner Bros. releases more movies than any other studio now, but has managed to maintain a solid record, thanks in part to the Batman and Harry Potter franchises. Universal lags behind, largely because it hasn't had a franchise to fill its coffers in recent years.


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Remarkably, Fox tops this list too, with its Searchlight arm generating the best return of any distributor in the study: over four dollars are spent by consumers on Searchlight films for every dollar spent on production. Summit Entertainment comes second, in large part thanks to the stellar performance of the Twilight franchise, of course, although the performance of recent releases like Red and Letters to Juliet show that the studio is hitting its stride more broadly.

The third standout among the mini-majors is Lionsgate, which has enjoyed the benefits of the Saw franchise and Tyler Perry's loyal fan base, but also has a solid record when releasing movies in many different genres.

The bottom three studios in this analysis, Weinstein, New Line and MGM have all struggled in recent years, and the chart makes it clear why: their financial returns on production expense have lagged behind what's necessary to maintain profitability. Recent speculation about the future of Focus Features also makes sense when seen in the light of its sixth-place finish in this chart.


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Previous analysis:
- Why You Should Be Making a Romantic Horror Comedy
- Crunch Time for Video Sales
- OpusData Reveals the Top Leading, Supporting and Voice Actors of All Time.