“I-Gad!” (Begin With The End In Mind)

When is an $8M opening weekend good news? When you see it coming. :) Hopefully, the creators of “Igor” did. Producer John Eraklis commented in the October issue of Animation Magazine that: “We don’t need to generate hundred-plus million dollar returns for all the investors in the company to be happy.” That’s good, because the recent history of independent CG animated feature returns is a far cry from the lofty heights enjoyed by Pixar and Dreamworks/PDI:

Film Opening B.O. Global Gross
Hoodwinked (2005) $12.4M $110.0M
Valiant (2005) $5.9M $61.7M
The Ant Bully (2006) $8.4M $55.2M
Barnyard (2006) $15.8M $116.5M
Doogal (2006) $3.6M $26.8M
Everyone’s Hero (2006) $6.1M $16.2M
Happy Feet (2006) $41.5M $384.3M
The Wild (2006) $9.7M $102.3M
Arthur & The Invisibles (2007) $4.3M $113.0M
Happily N’Ever After (2007) $6.6M $38.1M
TMNT (2007) $24.3M $95.0M
Fly Me To The Moon (2008) $1.9M $13.5M
The Pirates Who Don’t… (2008) $4.3M $12.9M
Star Wars: The Clone Wars (2008) $14.6M $62.2M
Space Chimps (2008) $7.2M $33.2M
$7.7M $62.4M

I employed the good practice of culling the highest and the lowest figures (“Happy Feet” and “Fly Me To The Moon”, respectively) before determining the average, and also took the liberty of removing idiosyncratic properties based on the popular, pre-existing franchises of “Star Wars” and “Teenage Mutant Ninja Turtles”. What we’re left with is a fairly sobering assessment of the economic realities of independent CG feature animation. And by this token, we can see that the opening weekend for “Igor” adhered very closely to precedent ($8M vs. the $7.7M average). And this isn’t “bad” news… if you begin with the end in mind.

So, what’s the difference between popping champagne over Sunday brunch as your $8M opening weekend B.O. crawls in vs. closing the garage door and starting the car? Whether you anticipated it or not. Whether you planned for it or not. In short: whether you stand to make a profit at that rate… or not. Nevertheless, first-time filmmakers and seasoned pros alike commonly proceed with so-called “conservative” projections that are still wildly optimistic, and/or budgets that qualify as “lean” only by comparison to the wasteful excess of major studio production.

People always want to know what was spent to make a given animated feature film (you can see this question raised by a student during one of my recent lectures on film production planning). I’m going to advance the radical notion that it doesn’t matter. Nor does it matter what a movie makes. What matters is HOW MUCH YOU KEEP. Of course, how much you keep is indeed based upon what the movie cost to make vs. how much it earned, and this is where the wonderful world of film feasibility analysis come in: pragmatic film feasibility analysis (as opposed to the starry-eyed fantasy that often passes for such).

The beauty of feasibility analysis is that we don’t really need to know what the comparative films cost. We simply need to consider what the average returns are, and then plan our own costs accordingly. For example, as a producer of an independent CG animated feature film, I’m going to look at that average $62.4M global theatrical gross, round it down to a flat $60M for good measure, and then make the following napkin projection:

Global B.O. Gross $60.0M
Exhibitor Share $30.0M (50% to theater owners)
Distributor Share $30.0M (remainder)
Global Home Video/DVD $75.0M (approx. 125% of B.O.)
Global Broadcast/Ancillaries $25.0M (less than half of B.O.)
Production Budget $25.0M (actual production cost)
P&A $35.0M (prints & advertising)
Distributor’s Fee $35.0M (50% under this deal)
PRODUCER/INVESTOR NET: $35.0M (remainder)

The general rule of thumb is that in order for a film to be considered economically feasible, the distributor gross should be at least twice the total cost of the picture – a consideration which this projection satisfies. In addition, the film’s investors stand to not only recoup their initial nut of $25M, but also to reap 100% profit, leaving the producer with $10M to cash out and/or reinvest in upcoming projects. Of course, this scenario is predicated upon obtaining feature-quality production values within the parameters of a $25M budget. Certainly not impossible, but requiring the utmost efficiency in production planning (which, lucky for you, is Animation Option’s bread and butter).

Of course, we all hope that our gorgeous, ground-breaking labor of love will be another “Happy Feet”: raking in a $40M+ opening weekend, nearly $400M worldwide, and an Oscar to boot. And here’s to that! :) But is this assumption the most responsible business plan? Will it satisfy your investors? Will it sustain your studio or production company? Will it keep you from spending opening weekend vomiting as the actuals roll in?

BEGIN WITH THE END IN MIND. You’ll be glad you did. 😉

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7 Responses to ““I-Gad!” (Begin With The End In Mind)”

  1. mindmovies.eu Says:

    I am not clear if I totally understand the full thought pattern behind this.

  2. Kevin Geiger Says:

    What aspect puzzles you?

  3. cpwozzie Says:

    what puzzles me is your global tv and dvd sales. you’ve got $75million in global home video sales, that seems an unrealistically high wholesale figure. If this is not a wholesale figure, how did you arrive at this number? Same goes for braodcast and ancillaries, both of which are not ‘average’ numbers based on the going license rates. Would love to unearth more of your assumptions for this otherwise very helpful analysis.

  4. Kevin Geiger Says:

    Global home video/DVD sale & rentals typically amount to 125% of the global theatrical returns (over time, of course). Global broadcast and ancillary income returns are usually less than half of the theatrical return. Studios are loathe to reveal their actuals, but you can check this book for more info on the metrics: http://tinyurl.com/5ejb9r

    Of course, as a responsible filmmaker, if you find this hypothetical too optimistic, you would be wise to reduce it to something more conservative. :-)

    Kevin Geiger

  5. satoridork Says:

    Thanks for these valuable insights. I’m passing them on to the animation students at Ravensbourne, so that they can start to “follow the money”.


  6. Kevin Geiger Talks Money « Ravensbourne Animation Hub Says:

    […] modest targets when spending modest budgets. There’s a lot of sense in his argument. Read it here. Follow The […]

  7. Kevin Geiger Says:

    My pleasure. :-)

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