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

by Allen Palmer 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.

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