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Friday, September 18, 2015

Pacific Rim 2 Halted Indefinitely.

Now I'm pissed... Universal announced that Pacific Rim 2 is put on hold indefinitely. The talk is that it may never been made either. I was so looking forard to that one!

Apparently it's a question of money. Though the first one brought in some good money (at least with international releases), producers aren't quite sure the second installment would do as well.

The thing is, Pacific Rim is a hard piece to market and advertise. It's not dinosaurs you can sell a lot of toys and merch, it's not a Transformers franchise or a space opera with an infinite lineup of characters and derivative products. Marketing is everything, and advertising budget is usually the same as the production budget.

Rule of thumb, a film that has a production budget of 100 million$ must reach a box office of 500 million$ BEFORE it starts making a profit. And these guys are after a 'true' profit, something that's worth their while, not just a handful of millions. Under that perspective, it's not surprising that Universal has some concerns about Pacific Rim 2. I still knock some wood they'll make it happen.

Most people think that if a film that costed 70 million$ to produce had a box office of 100 million$, it made a profit of 30 million$. That's totally wrong! Here's a very basic math (NOTE: these numbers are NOT Pacific Rim, just some industry averages):

  • Given a film with a production budget of 70 million$
  • Marketing / advertising roughly the same as production budget, 70 million$
  • Total film release cost: 140 million$

Let's say box office is 400 million$. Box office is split between the theater, the distributor and the producers. Let's round it to 33% shares, it comes down to 133 million$ for each party.

Now, from the producer's share, this one must take away licensing fees if there are copyrighted characters, if it's based on a best-seller book, pay royalties to the actor names or music composers, and so on... The list can be pretty long. All these fees are small fractions, but the total of these fees can be significant.

So if people only look at how much the film has cost (70 million$) and the box office number (400 million$), it's easy to think the film made a lot of money. But the fact is the film may have been a catastrophe.

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