Traditional filmmaking = high dollars spent with only approximately 10% of feature films breaking into the profit zone. Imagine concurrent production of the CineLogic original film into multi- language versions, simultaneous PG-13 and R-rated versions, creation of a faith-based version, and sequel(s) ready to bring in $erious ROI before most films are out of pre-production, at the typical cost of 1* traditionally produced film (*with the exception of sequels which adds additional $$ to the production budget). Our technology allows us the freedom to out-produce the big 6 Studios or streaming platforms' old-fashioned, trial and error, traditional filmmaking practices that drive up the costs without putting the investors' money fully on screen, resulting in their films' lower production value for higher costs. We are streamlined and experienced in all your $$$ geared towards financial film ROI aka profits, beyond the means of Hollywood's aging, budget-bloated, filmmaking practices. CineLogic ROI Films packages either buyouts or distribution, merchandising, marketing and exponentially high ROI, the CineLogic ROI Films way, yielding extraordinary financial windfall potentials to investment partners.
Merchandising revenue typically comes from the sale of items such as:
- Toys and Action Figures: These are often based on characters or scenes from the movie. Companies like Hasbro and Mattel are known for producing action figures tied to blockbuster films.
- Clothing and Apparel: T-shirts, hats, pajamas, and other clothing items featuring movie-related designs are popular merchandise items.
- Video Games: Many successful films have tie-in video games released on various gaming platforms, contributing to merchandising revenue.
- Books and Comics: Novels, comic books, and graphic novels based on the movie's storyline or characters are common.
- Collectibles: Limited edition items such as prop replicas, posters, and art prints are often sought after by collectors.
- Home Entertainment: DVD and Blu-ray sales, as well as digital downloads and streaming rights, also contribute to merchandising revenue.
The potential for merchandising revenue is particularly high for blockbuster franchises that have a strong appeal to a specific demographic, such as superhero films, fantasy epics, and animated features. Successful merchandising requires strategic partnerships with manufacturers and retailers to ensure widespread distribution and visibility of the products. Toy Story 3: $1 Billion b.o., $10 Billion merchandise.
For Hollywood studios, maximizing merchandising revenue involves carefully planning and executing licensing agreements with companies specializing in product development and distribution. Effective marketing and cross-promotion also play a crucial role in driving merchandise sales and extending the reach of the film's brand beyond the theatrical release.
Overall, merchandising revenue can be a substantial and lucrative component of a Hollywood blockbuster's financial success, contributing significantly to the film's overall economic impact and cultural influence.
Toy Story 3 (Lee Unkrich, 2010)
The Toy Story trilogy ended on a note that was about as near-perfect as it gets, but Disney decided to make another one anyway. Toy Story 4 did much the same, only for a fifth entry to be officially announced in 2023. Why? Not to be too blunt, but because Woody and Buzz are merchandising monsters.
As part of Disney’s fourth-quarter earnings call following the threequel’s release, CEO Bob Iger highlighted how “almost $10billion in retail sales” had demonstrated how “these wonderful characters are clearly just as relevant and beloved as ever”. When he said “relevant and beloved”, what he really meant was “lucrative”.
Frozen (Chris Buck and Jennifer Lee, 2013)
Frozen, a monster-sized hit that made its box office run look like chump change compared to what happened in retail outlets across the globe, Frozen hauling in $1.2billion from cinemas was nowhere near the volume of cash it brought in from merchandise.
Two years after the film had released, Disney’s chief operating officer Tom Staggs noted (per the Wall Street Journal) that Frozen had been selling merch ten times faster than it had the previous year, with over $5.3billion worth of products shifted since the whimsical musical fantasy’s 2013 debut on the silver screen.
The Lion King (Roger Allers and Rob Minkoff, 1994)
The highest-grossing traditional hand-drawn animation of all time with $968million in the coffers, The Lion King comfortably outstripped its theatrical earnings in merchandise sales within the space of a few months, which came long before the stage adaptation would go on to provide yet another multi-billion source of income for the Mouse House.
Less than two months on from its premiere on the big screen, an investment firm dubbed The Lion King as “the most profitable picture Disney has ever had and the most profitable picture in the history of Hollywood.” That’s a lofty claim, but considering David Londoner told the Los Angeles Times that $1.5billion in merchandise sales was on the cards, it made it much harder to argue.
Jurassic Park (Steven Spielberg, 1993)
Becoming the highest-grossing film in the history of cinema upon its initial run on the silver screen, it may have taken Jurassic Park 20 years and a 3D re-release to finally cross the fabled billion-dollar threshold in ticket sales, but it was only a matter of months before it reached that figure in merchandise.
Per UPI, Universal confirmed in May 1994 that “sales of toys, books, video games and clothes inspired by the dinosaur blockbuster Jurassic Park have topped $1billion”. It took merchandise 11 months to reach the same number it took the movie two decades to achieve, underlining the massive cultural impact of Steven Spielberg’s classic blockbuster.
Star Wars: The Force Awakens (J.J. Abrams, 2015)
The return of Star Wars to the big screen was always going to be a major event, and audiences responded in kind by propelling Star Wars: The Force Awakens to over $2billion at the box office. And yet, that was a drop in the ocean to the desperation for consumers to snaffle up as much merch as possible.
Analyst Tim Nollen projected that in the first year following Episode VII, new lines of merchandise derived directly from the return to the big screen of a galaxy far, far away reached $5billion. That isn’t just two and a half times more than what The Force Awakens would take in from cinemas, but more than Disney paid for the entirety of Lucasfilm.
Space Jam (Joe Pytka, 1996)
A childhood-defining classic for an entire generation, Space Jam may not hold up anywhere near as well when viewed through the jaded and cynical modern lens of what was first its target audience, but it can’t be argued that the combination of Michael Jordan and the Looney Tunes was a licence to print money.
The film’s $230million tally at the box office is positively quaint compared to its unbridled earning power, though, with Print & Promo Marketing estimating that Space Jam comfortably cleared a billion dollars in merchandising revenue, a figure that not even its long-awaited and ultimately terrible sequel A New Legacy could hope to match.
Cars (John Lasseter, 2006)
John Lasseter’s Cars is regarded as one of the weakest entries in the entire Pixar back catalogue, but it doesn’t really matter what the critics think when the film has gone on to spawn one of Disney’s most unstoppably profitable enterprises.
In the five years between Lightning McQueen’s first high-speed adventure and the arrival of sequel Cars 2, Disney confirmed (per The Hollywood Reporter) that the movie had crossed $8billion in retail revenue, making an absolute mockery of the opening chapter’s relatively tepid $462million tally at the box office.
Thanks to faroutmagazine.co.uk/10-movies-that-made-more-money-through-merchandising-than-the-box-office for the statistics.
CineLogic Note: Hollywood's use of 'creative financing' means we have to take everything into consideration for recognizing actual results - did Hollywood hide the actual budget number, mis-report earnings, invent numbers for their benefit etc.
Hollywood Reporter article:
Galloway on Film: Lies, Damned Lies and (Hollywood) Statistics
The numbers that really matter are kept secret — the ones made public distort the full truth.
The numbers never lie.
That’s one of Hollywood’s more egregious myths, along with “The camera never lies” and “You’ll get a cut of the profits,” both liable to draw howls of disapproval from anyone in the know.
But numbers are different, aren’t they? There’s something safe and solid about a number. It’s either right or wrong, it speaks to the notion of absolute truth, and it cannot be manipulated, unlike so much else in an industry that has turned manipulation into an art form. A number is sacrosanct, it would seem.
But not in Hollywood.
Hollywood numbers have their own special logic. They twist and turn, bend and melt, and sometimes vanish altogether into an ether of obscurity. They’re the quarks of the entertainment industry. Reporters like myself spend hours each week trying to get the real ones, and then often fail miserably to decipher them. When you hear that a star has 20 percent of the adjusted gross, what does “adjusted gross” mean? Your guess is as good as mine. But the definition of “adjusted” can affect income by millions of dollars. The indies exaggerate the cost of their movies; the studios lie in the other direction. Both are masters at bundling groups of films when they sell them abroad so that one movie’s loss is factored against another’s success.
All this is called “Hollywood accounting,” and it’s barely more transparent now than it was when the industry was founded.
Art Buchwald could have told you this a long time ago.
In the early 1980s, Buchwald, a humorist and Pulitzer Prize-winning columnist, wrote a two-and-a-half-page movie treatment about an African prince who travels to the U.S. He took the project, It’s a Crude, Crude World, to producer Alain Bernheim, who in turn sold it to Jeffrey Katzenberg, then an executive with Paramount.
Katzenberg spent several hundred thousand dollars developing it into a screenplay that he titled King for a Day. That’s just about how long Buchwald got the royal treatment before Katzenberg left for Disney, when a new regime at Paramount took over and King was put into turnaround. It was subsequently bought by Warner Bros.
Soon after, Paramount began to develop its own, similarly themed film, with Eddie Murphy attached to star. When Coming to America was released in 1988, five years after Buchwald sold his treatment, his name was nowhere near it. Instead, a “story by” credit went to Murphy, who received the grand sum of $400,000 for his idea — one of those murky numbers that is never mentioned when you hear what a star is getting paid.
Plagiarism or not, Buchwald sued and won.
But that’s not what made his case special.
When a judge decided he was owed a share of the net profits, a minor spat became a major brawl, “an historic legal battle over the way the motion picture studios keep their books and diddle their talent,” as the plaintiffs’ attorney, Pierce O’Donnell, put it in a book about the lawsuit.
Paramount claimed the picture was still in the red (even though it had earned $289 million worldwide) and argued so much was spent on marketing and distribution that there was no net profit — a defense the judge deemed “unconscionable.”
Buchwald and Bernheim were awarded $900,000 in a 1992 settlement. Paramount had egg on its face. And, for the first time, the world had proof that Hollywood numbers lie — or at least, that Hollywood people use number to lie.
* * *
Few lies are more effective than the ones that use a small truth to hide a big falsehood.
I couldn’t help but think of that this weekend as a host of local and national news reports touted the latest box-office tallies. What was once kept secret has now become an important marketing tool, and studios scramble over each other to ensure that their picture comes in No. 1.
But box office is just the tip of a numeric iceberg, and the numbers that really matter are drowning beneath the waves.
Once again, Suicide Squad was No. 1, having grossed $262 million domestically and $572.7 million worldwide. While Warners insists the picture will be profitable, there’s plenty of debate as to what constitutes success. How much did the movie cost? What percentage of gross will go to its stars and director? How much was spent promoting it? And how much more will Warners spend to keep the picture in theaters, pushing the break-even point into the distance — a concept known in the business as a “rolling break,” as the profit margin rolls further and further away.
Suicide may have been No. 1, but its overall ranking is almost irrelevant compared to whether it made money. And shouldn’t those news reports be touting another picture, instead? That’s Sausage Party, which may have come in No. 2 but which only cost a reported $19 million — a fraction of Suicide’s budget.
As any studio chief can tell you, it’s profitability that counts.
But it’s almost impossible to assess. Few studios ever give an accurate account of the negative cost of their films — that is, how much they cost to make, before prints and advertising are added to the mix. On the rare occasions they do, they stay mum about their marketing outlay. Their lips are also tightly sealed when it comes to nontheatrical revenue — income that eclipses earnings from theaters — including home entertainment, network and cable TV, along with a host of other ancillary sources. Without these numbers, nobody can know whether a movie is in the black or how profitable it truly is.
Box-office numbers may not be lies, but they obfuscate and distort the truth. As Mark Twain famously observed (or Disraeli, depending on your preference), there’s lies, damned lies and statistics. And few statistics are quite as untrustworthy as Hollywood’s.
* * *
Take movie piracy as an example.
In November 2011, a White House aide, Victoria Espinel (then commonly referred to as the “intellectual property czar, though her title was the U.S. intellectual property enforcement coordinator for the Office of Management and Budget), told indie filmmakers gathered at the American Film Market that IP theft cost the U.S. some $58 billion a year.
Many who were present for Espinel’s talk might be forgiven for thinking Espinel was talking about movie piracy, when she was actually referring to IP as a whole, of which piracy is only a small part. Even then, her number was more myth than reality.
Why? Consider the source.
That $58 billion statistic comes from a 2007 report written by Stephen Siwek of the Institute for Policy Innovation. In case you’ve never heard of him or the Institute, it’s a think tank backed by Dick Armey. Who’s Armey? The former right-wing Texas congressman who was a longtime liberal bogeyman and big-business advocate — hardly the best source of objectivity.
Siwek also estimated that movie piracy cost the U.S economy some $20.5 billion a year. Just to put that in context, it’s almost half the global box office revenue for 2015, which was slightly more than $38 billion. The Motion Picture Association of America’s own number seems more reasonable, at least at first glance. Drawing on a L.E.K Consulting study, in 2004 the MPAA reported that piracy cost the majors $6.1 billion a year. But the MPAA’s number boasts its own quota of red flags. There’s no indication of the specific questions that were asked to the 20,000 consumers in 22 countries who were interviewed for the L.E.K. study.
Nor does its number fairly attempt to estimate what a consumer might have paid for something he or she downloaded illegally. The MPAA study assumes that a poor person in a Third World country would pay the $10-plus that a DVD costs if he or she were unable to access the movie. I’ve seen pirated DVDs hawked in Third World countries. Would the locals buy them at full cost? Not a chance.
Why the gap between the MPAA’s $6.1 billion and Siwek’s $20.5 billion? Because the latter also factors in estimated losses from revenue that fails to circulate through the economy.
“[The Institute for Policy Innovation report] says that a dollar less in film spending actually has a larger impact since it impacts other parts of the economy,” KolemanStrumpf, an economist at the University of Kansas School of Business, told The Wall Street Journal. “But if file-sharing leads to less spending on films, consumers have more money to spend which will completely offset these effects.
There is no multiplier effect at all.”
There’s no doubt piracy significantly hurts the industry. But there’s yet to be any definitive assessment of the actual loss. Until there is, the $6.1 billion and $20.5 billion and $58 billion numbers are all just estimates.
They’re not quite lies, or even damned lies. But they’re statistics of the most dubious kind.