Study: Studios must pay for film profits

Bigger budgets mean bigger boxoffice returns, Kagan says

It takes money to make money.

That's the essence of a newly released study by SNL Kagan, which found that pics toting the biggest negative cost also tend to fetch the most profit.

Kagan's "Economics of Motion Pictures" analyzed costs and profits of all films released on 1,000 or more screens from 2004-08. A total of 83 films with production costs higher than $100 million averaged $247.3 million in net profit under a major-studio distribution-fee structure.

That topped the list of budgetary groups, followed by the $90 million-$100 million range, with a $117.9 million average net profit. The 764 films in the study averaged $50.5 million in net profit.

"In terms of genre, animated films performed the best," Kagan said.

Fifty animated films averaged $220.5 million in net profit under a major-studio deal scenario. Sci-fi/fantasy films formed the next most profitable genre, with $125.4 million average net profit.
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