Dune OS Thread: DESERT POWER 400.2M WW!!!!!!!!!!!!!!!!!!!!!!!!!!! (292.3M OS)

[charlie Jatinder]

11 minutes ago, solaris said:

I think it's still to early to call as so many key territories are yet to open

If I was at WB/Legendary, I would have announced sequel by now. The Europe numbers are alone big enough to warrant a sequel or franchise.

[Elessar]

I really do hope it cracks the $400m barrier. Needs to do a bit better than 50% plus BR2049's performance on average.

[solaris]

1 hour ago, charlie Jatinder said:

If I was at WB/Legendary, I would have announced sequel by now. The Europe numbers are alone big enough to warrant a sequel or franchise.

Perhaps... I'd imagine WB are waiting for the US release before making a final decision. At the very least I think they'd want to see how this one fares theatrically v HBO Max before committing. I live in hope!

[efialtes76]

Strong first presales day in SK.

 

[Elessar]

In the title it says 17.7m weekend. Typo?

[Eduardo]

19 minutes ago, efialtes76 said:

Strong first presales day in SK.

 

This tell me many going to regret downplayed DUNE when all markets sum to the final BO.

[Valonqar]

52 minutes ago, Elessar said:

In the title it says 17.7m weekend. Typo?

 

yes. Sorry it was 14.7M I think lemme check and change. 

[ThomasNicole]

Dennis already said in a interview that the only thing that would stop Part 2 is if the first one turn into a box office bomb.

 

It's not a bomb, it's actually a solid success, the sequel is happening. There's no logic comparing to Alita or pre covid numbers, this is gonna be one of the biggest movies of this year which is already good but it will do that while available at HBO Max. Of course it's not reaching it's full potential, we would be talking about possible 450-500M if it wasn't day and date, we would be talking about even more if it wasn't the pandemic.

 

There's clearly much potential for this to grow and both WB and Legendary know this by now, the only question is when they're gonna announce. Ideally, they will drop the news right before the US release to get people excited.

[titanic2187]

Alita will get a sequel if  domestic (85m) and china (133m) can swap their gross, Likewise, we would have already seen Warcraft 2 if it is NA grossing 225m, instead of China.  

 

 

[eridani]

Recently I happened to have an interesting conversation with a person working in one of EU countries' local distributors. Explaining me how the box office share is really done.

Lets say a movie does 100 monetary units at the box office. A certain percentage, which is in this particular case 60%, but it could be slightly different at other times as it's being negotiatied on a yearly basis or even per movie basis - and it of course differs a little in other countries (so maybe 50%?)  goes to the movie theaters. It is justified by the fact those movie theaters have to be built, invested in, various new projectors bought (digital conversion, 3d etc) and have a fair number of employees working. 

Out of the remaining 40 monetary units, the local distributor has managed to negotiate around 12 monetary units for itself. The rest, 28 monetary units, goes to the hollywood studio. But the studio also then reimburses the local distributor for the marketing costs. Basically, the local distributor, before the movie comes out, says what they believe the movie may make and what sort of marketing budget they need. The hollywood studio decides how much marketing money is actually worth spending. The local distributor spends that much marketing money and is in the end reimbursed by the Hollywood studio by said amount.

 

So what does that mean? It means I was wrong in my previous calculation about Dune breaking even point.

Even if we assume that within the US the studio will indeed get over 50 percent or even 60 percent - the overseas share of the studio is likely to be far less than usually quoted in the media 45%.  In fact, it may be just 30% or so on the average, as I don't believe the studio is likely to be able to negotiate much better terms in other countries.

 

It also means that the local distributors (meaning distributors outside the NA) are NOT paying for the marketing themselves. But the hollywood studio is, in fact, covering worldwide marketing costs.

 

In my previous post, i went with the following Box office Dune projections

 

Which gives us the grand total of:
40 to 100 for china
50 to 100 for NA
70 for HK/SK/TW/JP/Aus
221 for rest of the world.

So we're at 380 to 490 million.

Of course, not all countries pay out equally. Overseas distirbutor cut is closer to 55%. China is at 75%. Domestic theaters are closer to 45%.
27.5 to 55 for NA
10 to 25 for China
131 for rest of the world.
For a total of 169 to 211 million.

 

First of all, i made a simple math error. Even with 45% going to the studio, that should've been 100 million and not 131 million.

 

But, as I've said now, the distributor cuts are likely to work differently!

So even if domestically the studio will take 55%, overseas it will not take 45% but it will take maybe 30%. We will assume china stays at 25%, as sometimes reported in the media.

 

So suddenly the cuts are as follows:

27.5 to 55 million for North America

10 to 25 for China

and 66 million for the rest of the world.

 

So now the total is 104 to 146 million of studio BO revenue, to go against expenses.

And to make it worse, studio not only pays for 165 million budget but also for worldwide marketing expenses. So those are SURE to be higher than some middle of the road 45 million figure I went with in my previous post.

But even if they're just 50% higher (considering we're adding the rest of the world even that seems low) and we're at 65-70 million for marketing suddenly the figure to beat becomes at least 230 million dollars.

Basically, the total projected box office return is on track to cover only half of those expenses. And the rest will have to be covered by HBO income (maybe the producer Legendary in the end managed to get a contract with WB/Time warner to get a piece of that as compensation for unilateral day and date decision. who knows?) and by various later digital/rental/streaming and tv rights to trickle in over the years. 

[Issac Newton]

As of 6 Oct (Italy)

€88,844 / €5,931,727

14,499 / 823,318

 

Will surpass 6M today! !

[jma22]

Please stop this..

Domestic; studio takes 50%

China: studio takes 25%

International: studio takes  43% 

The production cost are offset by profits from box office. 

Marketing cost are offset by profits from DVD/ Blue-ray / television rights / streaming.. 

About streaming: HBO Max pays a small part too  (10 M?) and keep in mind that there coud be new suscribers that also help to make a profit to offset the marketig costs as well

If Dune makes 100 M Domestic + 50 China + 235 International = 163,5M to the studio (50+ 12,5 +101) (That would be great for me in that conditions)

Remember Godzilla vs Kong was: 100M Domestic +188 China + 179 International=174 M keeps WB (50+47+77) and it was cosidered a success against the same budget

Stop being so negative with Dune please!!!!!  I didnt see this numbers and negative % in  007, SC, Venom

And this is my first post , glad i find this amazing forum!!

 

[eridani]

I do hope I am not the one perceived as being negative. I am mostly interested in figuring out how do distribution and earnings work. I don't think various media write ups of percentages can be believed blindly, as the figures do not mesh with what actual people in the business told me.

 

When it comes to the case of Dune, one must not forget the home entertainment. It's a huge money maker. Let's take the example of WW1984. Another WB movie which was released on HBO and in theaters. Probably more familiar to the US audience than Dune, but with internnational home entertainment sector that might even out.

 

WW1984 earned 28 million dollars in physical disc sales in the US. I don't know what percentage goes to the studio, but even if it's just 50%, it's decent money. According to DEG, digital sales and rentals are some 250% of phyiscal sales figures for 2019. And I would think that studio gets more than 50% for digital sales. Easily 70%. But it'd be nice if someone could provide actual percentages. 

 

But that's just the US. how much more home entertainment is there outside the US? Just the physical sales are 1.3 billion in US versus 8.8 billion total sales. I would guess that digital Home Entertainment sales have the US a bit greater percentage of the worldwide HE sales. But it should still be several times over.

 

Importnat to note - those digital sales and rentals do not include SVOD. Though, SVOD portion of earnings is notoriously hard to find. I can only very roughly assess it - judging by those half a billion deals for 5 years of tv show rights, and judging by that recent sony-netflix deal where sony will give its movies 2022-2026 to netflix for one billion dollars (but sony still gets to sell their movies thru traditional digital home entertainment). Knowing the number and earnings ratio of sony's movies, it pretty much means that a big hit that does 200-300 million in the US box office can be valued at several tens of millions in such a sale to a major SVOD service.

Smaller movies that do, say, 100 million would be sold for less, possibly as little as 10 million.

 

So, if Dune does just half the home entertainment business in the US as WW1984 did - that's 14 million phyiscal sales (of which 7 goes to studio) on top of 35 million digital sales (of which 25 goes to the studio). And then on top of those 32 million there should be at least a few times that figure for overseas physical and digital sales profit to the studio. We're very likely over 100 million there. Plus SVOD sale (or equivalent value to Warner/HBO) of at least 10 million.

 

So... That's 110+ million of pure profit guaranteed. Even if Dune marketing budget is 100 million, and if its prudction budget is 165 million, that'd suggest that the box office pure profits need to cover "just" 155 million worldwide.  That certainly seems  doable, as the BO earnings seem pretty sure to go over 350 million.  And long term sales/rentals and tv rights over the years would still add to the overall figure.

 

[eridani]

I don't want to bore everyone but here's another detail which goes into Dune's favor. China's Box office gives just 25% to the studio. In most cases that'd be bad for the producer.

But who's the majority producer of Dune? Legendary entertainment. (75% produced by it) Owned by Wanda Group. Which, coincidently, is also owner of Wanda Cinemas in China, which is the biggest Chinese cinema chain with some 4000 screens. So Wanda group, parent of Legendary, is going to get some extra profit from the Chinese market, which most of other Hollywood movies would not otherwise see. 

Edited October 7, 2021 by eridani

[pepsa]

@eridani You should have a talk with @Barnack, he has looked in to the sonny leaks and in there you could see the studio's accounting and revenue streams etc.

[Issac Newton]

Well, why studio share/revenue should be discuss? Keep the thread limited to BO (Gross/Admission/+-%/Prediction/Upcoming Release) That's all. Discussing Studio share does not help anyone here, If I am not wrong. Because, those are insider business, no genuine info exist unless you yourself is the CEO. But, please do not mind my language, I am just speaking out my brain.

[nguyenkhoi282]

26 minutes ago, Issac Newton said:

Well, why studio share/revenue should be discuss? Keep the thread limited to BO (Gross/Admission/+-%/Prediction/Upcoming Release) That's all. Discussing Studio share does not help anyone here, If I am not wrong. Because, those are insider business, no genuine info exist unless you yourself is the CEO. But, please do not mind my language, I am just speaking out my brain.

Because if something makes 200 million in the US, it will get a sequel. Can't say the same about 200 million in China. It's the same amount of gross but also the difference between 120 million or 50 million goes back to the studio. 

 

Profitability has always been discussed along with BO number. I don't see your point.

[Issac Newton]

I understand that sorry just my eyes got blow off seeing those huge paragraphs😅

[Barnack]

2 hours ago, nguyenkhoi282 said:

Because if something makes 200 million in the US, it will get a sequel. Can't say the same about 200 million in China. It's the same amount of gross but also the difference between 120 million or 50 million goes back to the studio. 

Yes but it is not particularly due to the different theatrical return structure, but how much more post theatrical revenues a movie that make over 200 dbo will have than one that do well in China.

 

a 200m DBO movies with a 53% return, will give you back 106m in the domestic market and with a 55m release, you will net 51m.

 

In China your 200m movie will return you only 50 million and with your 6 million release you will net 44m, it is not that different, China theatrical return is a little bit above world average for medium performer and worst only for the big performer. There is a THR roundtable with studio runners (the one release just before Force Awaken release I think), that the studio guy try to explain to the journalist that the public and even media view of the China deal is quite off the mark, that if every country in the world would offer the same deal, they would consider saying yes.

 

2 hours ago, Issac Newton said:

Because, those are insider business, no genuine info exist unless you yourself is the CEO. But, please do not mind my language, I am just speaking out my brain.

That true, but it is not the type of info only the CEO of company knows, a lot of people working in distribution-production will. And like stated above, a lot of insider information got leaked. 

 

In it we can see the retention rate, margin expected for many title, I extracted for a blockbuster (James Bond-Specter expectation), a smaller movie (5th wave) and the total year studio slate average, that looked like this:

 

James Bond	Retention rate	Profit margin
Japan	49%	16%
South Korea	47%	31%
Germany	45%	35%
Austria	45%	38%
Australia	44%	34%
UK	44%	35%
Switzerland	44%	36%
Belgium	43%	35%
Spain	43%	13%
Russia	42%	25%
Brazil	41%	13%
Italy	41%	16%
Netherlands	41%	36%
France	39%	30%
Mexico	38%	15%
China	25%	21%

Average

42%

30%

 

5th wave	Retention rate	Profit margin
UK	31%	-1%
Russia	43%	12%
France	39%	8%
Germany	43%	6%
Australia	37%	14%
South Korea	48%	2%
Mexico	35%	5%
Brazil	41%	5%
Spain	46%	5%
Italy	41%	-1%
Japan	45%	19%
Belgium	42%	16%
Netherlands	38%	11%
Switzerland	42%	20%
Austria	38%	10%

Average

39%

7%

 

For a smaller movie that 21% would look really good, it would be the best market return rate, would it release there.

 

Total slate:

Total	Retention rate	Profit margin
UK	40%	23%
Germany	44%	22%
Australia	41%	22%
France	39%	19%
Spain	44%	13%
Russia	42%	22%
Japan	47%	15%
Brazil	40%	13%
Italy	41%	11%
South Korea	47%	19%
Mexico	37%	13%
Switzerland	42%	29%
Netherlands	40%	28%
China	25%	21%
Belgium	43%	26%
Austria	42%	27%
Average	40%	20%

 

 

In China you have less control on the release (will you even be able to), but if you get a release you have little risk and virtually all net return in domestic you will spend from 20m for a very small movie to 80m to a giant one, have better return only if it is a giant success, the vast difference is that for any $ at the dom box office it often mean that you would net $2 over the rest of the movie life.

 

 

Edited October 7, 2021 by Barnack

[eridani]

13 hours ago, Barnack said:

Yes but it is not particularly due to the different theatrical return structure, but how much more post theatrical revenues a movie that make over 200 dbo will have than one that do well in China.

 

 

I got so many questions here. Don't know if you've got the time to engage in a discussion. but here goes

 

Quote

a 200m DBO movies with a 53% return, will give you back 106m in the domestic market and with a 55m release, you will net 51m.

I understand that 106m is 53% of the 200m. But what does a 55m release here means in the context of netting 51m? It can't possibly mean that the movie will get 93% return to the studio, can it? If so - how?!?

 

Quote

In China your 200m movie will return you only 50 million and with your 6 million release you will net 44m, it is not that different, China theatrical return is a little bit above world average for medium performer and worst only for the big performer. There is a THR roundtable with studio runners (the one release just before Force Awaken release I think), that the studio guy try to explain to the journalist that the public and even media view of the China deal is quite off the mark, that if every country in the world would offer the same deal, they would consider saying yes.

Let me see if I understand this. 50m return out of 200m is the often quoted 25% that studios retain from china. Is that true?

But what does "6 million release will net you 44m" mean?   I am completely confused by that. How can 6 million yield 44m? What is does then 6 mil refer to then? what does 44m refer to?

 

Quote

In it we can see the retention rate, margin expected for many title, I extracted for a blockbuster (James Bond-Specter expectation), a smaller movie (5th wave) and the total year studio slate average, that looked like this:

Is then the retention rate in those tables the percentage of money retained by the studio out of total BO revenues?

 

But what is profit margin then? those percentages are what in relation to what?  I don't understand how profit margin can fluctuate so much depending on different movies and different markets. Isn't profit margin whatever is left after expenses are substracted from revenues on the level of entire movie/marketing production? If so, how can it even be calculated to individual markets? 

 

OR does profit margin there means there are territory specific expenses (those could only be distribution and marketing?) which are partly nearly fixed (distribution) and partly variable (marketing can differ a lot between 5th wave and spectre) and then if someone invests a million into marketing for 5th wave, and the movie does 2 million in BO revenue, out of which the studio gets 0.8 million back due to its share - then the studio is in fact in negative profit margin because locally it spent more? 

 

Or do those profit margins somehow even add portion of the production budget as well per each territory? But if yes, how does one even calculate how much of production budget should be covered by each territory? That seems completely arbitrary.

 

Quote

In China you have less control on the release (will you even be able to), but if you get a release you have little risk and virtually all net return in domestic you will spend from 20m for a very small movie to 80m to a giant one, have better return only if it is a giant success, the vast difference is that for any $ at the dom box office it often mean that you would net $2 over the rest of the movie life.

Does the above mean that in most countries around the world the studio gets a big say in how the local territory marketing and distribution is handled - but studio also gets some direct, additional expenses in each of those territories?

 

But in china, the studio doesn't get much say, but it also has very small additional expenses?  Though, obviously it still has some expenses. If, on bond example, retention cut is 25% and profit is 21%. I assume the 21 percent is not out of 25 but that is it 21 out of original 100 percent? So basically 4% difference (out of total worth of BO returns) is spent by studio on distribution and marketing costs? Is that correct?