Do award-winning films make money? (Part II)
Updated: Jun 17, 2019
...or... How do I convince investors to finance my independent film?
This is the second article in our series examining the commercial success of "good independent films" as represented by winners of the Palme d'Or. Click here to read Part I.
Last time we looked at the concept of revenue per theater. Since most of a film's advertising costs are directly related to the number of theaters showing the film, revenue per theater gives us an idea of how much profit the film will make. We saw that good independent films* have a better "profit margin" than most films, which is an important selling point for investors. And if I lost you with any of that, take a minute to read Part I here.
This time, let's look at how good independent films perform in the international market.
Global Box Office
In 2018, the US box office was $11.9 billion**, which sounds like a lot until you find out the international box office was $29.2 billion. There were 7 international markets with a total box office over $1 billion: China, Japan, UK, South Korea, France, India, and Germany. (Go get that money!)
China has the largest box office at $9 billion, and Hollywood has found that action movies tend to translate best in this market. (This is one of the reasons we've been seeing the trend of big-budget action movies.) However, Europe, where independent films tend to perform better, has a combined box office of over $7 billion. Japan and South Korea, which both have growing appetites for artistically risky films, have total box offices of $2 billion and $1.6 billion respectively.
Clearly, there's a lot of money to be made in the international market, and good independent films that don't do well in the US will often make up for it overseas. Of course, some of these films are made in other countries and obviously tend to perform better in their home market. I, Daniel Blake, which was a notable low point in terms of revenue per theater in the US, made almost 60 times as much overseas, including the UK, its home market.
One way to look at a film's international success is by calculating the international multiplier. It tells you how much money a film made overseas compared to its US box office. A higher number means it made more money overseas.
This is another area where independent films excel. On average, good independent films make 9 times as much overseas as they do in the US. To put this in perspective, the average for most films is half as much to 5 times as much. In other words, a film that makes $10 million in the US will generally make between $5 million and $50 million overseas. A good independent film that makes $10 million in the US will generally make $90 million overseas. This is a metric that even blockbusters can't compete with. Blockbusters rarely have an international multiplier higher than 3.
Now this doesn't mean that indie films are making more money total. If Avengers makes $1 billion in the US and another $1 billion overseas, it had an international multiplier of "only" 1. (Don't worry; they're gonna be fine.) What this does mean is that films that may not appeal to a wide segment of the US market, should still appeal to US investors. Investors aren't just concerned with the total box office numbers; they find good ratios and multipliers very sexy.
As the international box office continues to grow (China is on track to pass the US), we can expect to see this trend continue. A wider and more diverse international market creates incredible opportunities for independent films to find their niche. This means that a much wider array of films can be profitable, but it also means that you might have to work harder to find your audience, since they might be spread out across many countries. Investors and filmmakers that can leverage this will be well rewarded.
Now go win that Palme d'Or!
To learn more about how to get investors to fall in love with your independent film, check out Do Award-winning Films Make Money? (Part III), which looks at the return on investment from independent films. (Coming Soon)
For a more comprehensive look at what investors really want, read The ONLY Number You Need to Attract Film Investors FREE at www.JourneyConsulting.tv.
*20 most recent Palme d'Or winners as listed by BoxOfficeMojo.com. Does not include winners from 2014 and 2018. Final numbers from the ancillary market are still coming in for Shoplifters (2018), but you'll have to ask Box Office Mojo why they hate Kış Uykusu (2014). ;) (It was the only movie from the last 20 years left off the list.)
**2018 MPAA THEME Report
"average" was calculated using median to mitigate outliers
If you love spreadsheets as much as I do, you can look at the appendix here : Do Award-winning Films Make Money? (Appendix).