How much do Australian films have to take to break even?

by on June 11, 2010

in Australian film industry

Box office

In LA, they say your film has to take 4 times its budget at the box office to break even – but local producer Vincent Sheehan says in Australia the equation is even more daunting.

When people hear that, say, Mao’s Last Dancer took $15m at the local box office, they think, wow, the producer, writer and director must be swimming in money. What most fail to appreciate is that the filmmakers see very little of that money.

In the States, the rule of thumb was always that your film had to take 4 times your production budget before it started turning a profit. Why? Because the cinema keeps 50% and the distributor takes another 25%. That leaves the producer with just $1 for every $4 taken at the box office. So if you spend $25 million making your film, it needs to take $100m at the box office before you’ve covered your costs – and in case you weren’t aware, not that many films take $100m at the US box office.

I’ve been quoting these figures in my courses for a while but I was wondering whether the same situation applied in Australia. So walking back from lunch today with Vincent Sheehan, who’s Head of Producing at AFTRS (and Exec Producer of Animal Kingdom), I asked him. The news wasn’t good.

Vincent said the rule of thumb he uses locally is that films need to take not 4 times – but a whopping 6 times – their budget at the Austrralian box office before you start seeing a profit. That means that for a low budget $3m film, you have to sell $18m in cinema tickets before you can start thinking about entering the Sydney property market. Do you know how many Australian films have taken more than $18m at the local box office? By my rough reckoning, just 8:

  1. Crocodile Dundee – $48m
  2. Australia – $38m
  3. Babe – $36.7m
  4. Happy Feet – $31.8m
  5. Moulin Rouge $27m
  6. Croc Dundee 2 $24m
  7. Strictly Ballroom – $21.7m
  8. The Dish $18m

I asked how DVD sales and the 40% producer offset played into this and he said that this factor took that into account.

So what harsh home truths do we learn from this? I think it tells us that local film makers have 2 options:
1. Make films with strong concepts that have a chance of hitting box office pay dirt
2. Make films for love not money

Of course, a third option is that we could choose to make films in the US rather than Australia, but I’ll cover that controversial possibility in a future post.

{ 3 comments… read them below or add one }

Steve Sagovac July 30, 2010 at 2:07 pm

Incredible figures… Ive never heard the equation being x6 the production costs. Seems very high.
Also, out of the 8 films mentioned, most of those have production costs exceeding $3m. Any idea what their costs are in relation to their takings?

Tom May 5, 2011 at 10:21 am

Great bit of insight here. Makes you wonder why any of us bother, when all we usually get is a kicking from the local press for most of our films and the mid range budgets have all but dried up. Very confusing times.

Ridwan Hassim July 19, 2011 at 4:19 pm

This article only affirms the fact that making movies is a huge risk.
Budget compared to local and worlwide box office of Top 8 Australian films above are:

Film
1. Crocodile Dundee $8 million Cost /$48 million Australian Domestic Box Office/ $328 million Worldwide
2. Australia $78 million after government tax rebate / $38 million/ $211 million
3. Babe $30 million/ 36.7 million/ $254 milion
4. Happy Feet $100 million/ $31.8 million/ $384 million
5. Moulin Rouge $50 million/ $27 million/ $179 million
6. Crocodile Dundee 2 $15.8 million/ $24 million/ $239 million
7. Strictly Ballroom $3 million/ $21.7 million/ $33 million
8. The Dish $10 million/ $18 million/ $24.5 million

Ridwan Hassim- is an award winning Australian independant short film maker of “KHATABAH” (Matchmaker) and THE BEACH short film funded via Screen AUSTRALIA and Screen NSW.
RIDWAN HASSIM CREATING MAGIC Pty. Ltd.

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