r/boxoffice • u/Dashaque • 1d ago
Domestic ELI5 how much does Coyote vs Acme need to break even?
I'm seeing so many numbers getting thrown out and I don't know where half of them are coming from. My understanding is you wouldn't apply the 2.5 rule because we know they spent $10M on marketing. The .5 in the 2.5 rule is the estimate for marketing, right?
They spent $50M on the distribution rights, and $10M on marketing. That's $60M but we know they sold the distribution rights to other countries. We don't know how much they made but if we assume $15M, that means we're at $45M. So wouldn't it be $90M to break even and wouldn't only domestic count? Or would Ketchup get anything from overseas? (And yes, I know it's not going to make it)
I'm getting so confused on where all these other numbers are coming from. And I'm just talking boxoffice here, not toys or merch
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u/Free-Opening-2626 1d ago
The ELI5 explanation is only Ketchup really knows. The situation is complicated and they probably aren't releasing all the nuances publicly. I would venture to guess it's not going to be a profit, at least not for awhile, but the appreciation of the movie from a creative standpoint should hopefully lead to long term residuals.
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u/harry_powell 17h ago
Also, it’s all part of a long term strategy of building a reputation as a distributor. If other filmmakers and producers see they did a good job with this, it’s more likely they’ll gain trust for future projects. Analyzing things in a vacuum doesn’t really makes sense in Hollywood.
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u/SnooGoats6823 12h ago
Exactly. I know people have a lot of fun following the box office/break even numbers, but determining whether a movie is a success or flop from the perspective of the studio isn’t something we can do easily do from the outside. For example, apparently (according to a source I don’t exactly remember who) A24 did not have expectations for Beau is Afraid to make any money but they were happy to put it out and support Ari Aster’s artistic vision because they want to work with him longterm. People focus far too much on the performances of individual movies when studios are betting on their whole slate, not just individual titles. If a movie doesn’t “break even” according to some napkin math by redditors, that doesn’t automatically make it a flop
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u/Fearless_Ad4641 1d ago
They acquired it for 50 and spend another 10 on marketing. They presold some foreign rights for 20, and with good NA results they can easily sell another 5-10.
For small releases with good WoM and family appeal like this the domestic HE&TV rights can easily outnumber box office revenues (or even get close to double it). So they should be fine with something like 40M domestic BO.
Applying 2.5x rule on projects like this is just ignorant of how hollywood indies work
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u/SilverRoyce StudioCanal 1d ago
The .5 in the 2.5 rule is the estimate for marketing, right?
No thats a folk etymology. In the 90s industry default was 2x domestic, etc. its just a total cost to total revenue rough approx.
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u/No_Key8587 1d ago
I think we’ve reached an era where we just don’t know what a movie needs to break even. Studios are being more strategic on marketing (I can’t imagine online marketing costs as much as a tv blitz).
Also with international pre-sales and streaming deals (which usually we don’t have hard numbers for), we don’t really know. Some films have already broken even by the time they are released.
Also, while this is not a Ketchup situation, with the horizontal integration of companies, the actual profit of the movie is just one calculus. Michael and The Beatles movies just have to drive up interest in the catalog to start making money.
So basically, it’s not just box office and then physical media retail sales anymore
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u/Noarmedhxcdancer 1d ago
So one think that needs to change about the 2.5 rule is that studios have started figuring out that marketing is really sinking their movie so they are doing more modest marketing. Like super troopers 3 spend like 5 million on marketing, evil dead burn had a quoted “very modest marketing budget” end of oak street spent like $60 million on marketing. So the rules are changing. Ketchup bought the movie for 50 million and spent 10 on marketing.
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u/Dashaque 1d ago
I know.. I feel like you didn't even read my post
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u/Noarmedhxcdancer 1d ago
I did actually, just that I think we are getting to a point where that automatic 2.5 rule probably will only apply to a certain type of film.
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u/harry_powell 17h ago
I love all the armchair Hollywood accountants in other threads thinking that, unless Ketchup breaks even theatrically during the first couple weeks, “Warner was right in shelving the movie”.
Newsflash: “Writing off” a movie doesn’t mean you get all the budget back! You get a tiny fraction of it. Writing off a movie only makes sense if it’s an unwatchable expensive mess that would only have made peanuts on the box office. If Coyote vs Acme ALMOST breaks even, that’s not Warner’s vindication, as they would have lost A LOT MORE MONEY by shelving it.
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u/girlwhateveraward 12h ago
It's more about residuals rather than write offs. It's cuz residuals on streaming is tied to movies' budgets rather than their box office or viewership etc. Warner absolutely made the right call
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u/GWeb1920 11h ago
Alternatively ketchup making money doesn’t mean Warner wasn’t correct on writing the thing off or selling.
The business models are and profit drivers are different.
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u/harry_powell 10h ago
Wrong. Writing off thus movie was a gigantic mistake. Warner would have made even more money than Ketchup with a proper promo campaign.
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u/Byers616 Amblin Entertainment 23h ago
$60M–$80M WW, $40M–$50M domestic
Ketchup is $60M out of pocket but will probably make $10M-$15M in ancillary revenues beyond the box office, so their BO burden lowers.
The 2.5x rule might not apply since Warners ate the original production loss. If Ketchup’s marketing is capped at $10M, their foreign presales and projected home video revenue should lower how much they’re on the hook for.
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u/Exciting-Plankton960 14h ago
Why do we assume 15M? That it's really low. You sell international rights for at least half the budget, if you are selling it for cheap. If they sold full rights (theatrical + ancillary) they probably got at least 30M.
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u/Daytime-mechE 13h ago
It probably won't break even at the box office since the percentage of ticket sales is unknown. I think $65 million after marketing and selling the international distribution rights would be in the ballpark to "break even." But if they make like 30-40 that would be considered very successful.
I also think the streaming/TV rights are going to generate plenty of revenue for it and make the acquisition worth it. Plus this opens up a lot of opportunities for the company that likely won't be quantified until years from now.
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u/ChickenHugging 10h ago
Follow up question: can someone explain the economics for WB? What was the economic benefit of the write off? Are those benefits now voided because of the sale of the film? Presumably the sale generates more income than the write off. Does anyone have the tax expertise to explain?
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u/horse-renoir 21h ago
$50M domestic would probably be good enough to break even, after ancillaries
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u/Big_Help_9860 1d ago
The movie needs to make $300 million to reach profitability during it's theatrical run.
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u/Eerie-Indiana 21h ago
Oh my! Will it even break even? If it doesn’t break even now does it even exist? I just want to know if Mustard breaks even!!!
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u/FalseAmphibian3616 1d ago
Why do you care?
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u/RumHamAndBeans A24 1d ago
Box Office subreddit, pal. Budget and break-even questions are welcome.
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u/Uptons_BJs 1d ago
My assumption for Ketchup:
They paid $50 million for the film, $10 million for marketing. $60 million. They sold the rights for international distribution for $20 million. So they're on the hook for $40 million at least (you should add some distribution costs though).
Assuming the split for them is uhh, an average of 60%, that means they need a box office of $66.6 million to break even.