Wednesday, October 26, 2005

Book Notes: "As I Lay Dying" by William Faulkner

Kicking off my renewed interest in literature I dusted off the only book within reach - Faulkner's "As I Lay Dying".

I had read it in AP English in high school, but remembered very little of it. I'm not the fastest reader, but I was a bit shocked to find that I finished it in about four and a half hours (a plane ride and then a bit last night). Somehow I remember it being a longer slog in high school.

"Dying" is an interesting bit of heightened stream-of-consciousness writing. Each chapter is told from the perspective of a different character that may be intimately or only tangentially involved in the story. I say "heightened" stream-of-consciousness writing because Faulkner's poor farmer family surely couldn't have had the vocabulary or insight attributed to them.

Many of the characters have similar musings. One constant theme comes off as a kind of home-grown, grass-roots existentialism. There are many confusing jumbles of language that emerge to form their own logic about existence, reality, and labels - "I am not are, I am is" "My mother is a fish. She is not in the box because she is in the water because she is a fish" and the like.

And at its broadest level it's a modern day retelling of the story of Job, but this time as a farce. Anse Bundren, father and head of the family, is a born fool carrying out a fool's errand to bury the wife that secretly and not-so-secretly despised him.

Overall I found it strangely compelling. The surface story unwinds itself as you get drawn deeper into the strange, mostly hidden lives of these supposedly simple people. It would take another couple readings and closer study to get at all the nuances here. Solid work and more accessible than you might expect.

Tuesday, October 18, 2005

"Serenity" profit/loss guesstimate updated

I've updated my profit/loss formula to be a bit more precise, primarily in the areas of international costs and revenues.

Also revised certain guesstimates for Serenity's performance.

My original calculations put Serenity at around -$13mil but the revised approach and numbers put it around -$7mil. Hopefully this isn't just wishful thinking.

Monday, October 17, 2005

Guesstimating profit/loss for "Serenity"

Revised and updated 10/18

Remember the magic formula discussed in the previous post:

45%(BOd + BOi) - (Int'l Dist) + 67%(DVDd + DVDi) + 40%(Rentals) + 90%(SYNDd + SYNDi) + Misc(VOD, etc) - (Prod Budget + Mktg Budget + Dist Budget)

In Serenity's case, I offer the following projections and guesstimates:

45%(BOd + BOi) - (Int'l Dist)
After its third weekend in release Serenity has crawled to a domestic box office total of $22mil and a foriegn box office total of $6mil. With theaters already dumping the movie and its performance continuing to weaken, it looks to top out domestically at $25-28mil. Let's average it and call it $26.5mil.

My original estimate of a foreign box office cume of $9mil seems to have been way off base. Serenity's foreign cume is currently $6mil with only two major foreign markets in play - UK and Australia. France, Germany, Italy, and Spain seem to track similarly to the UK, albeit in slightly smaller numbers. Japan is a wildcard but can also post numbers similar to the UK.

Note: All historical data derived from Edward Jay Epstein
Serenity int'l box office cumes courtesy of

With the UK heading towards perhaps $5.5mil, I'll give a conservative $3.5mil to each of the remaining four major European countries. Unfortunately I don't see a release date at all for Japan on IMDb. Other territories are much less significant, but all told will yield a (very) conservative guess of $8mil.

That gives us a foreign box office estimate of $27.5mil.

However, each territory incurs a penalty for prints and advertising, dubbing and subtitling, etc. Assume modest marketing and distribution costs in the six major territories (UK, FR, DE, IT, ES, and AU). Let's put it at an average of $1.4mil per major territory and I'll count all other countries collectively as twice that amount.

Int'l Dist = 6*($1.4mil) + 2*($1.4mil) = $11.2mil in costs

Therefore total worldwide box office revenue is:
45%($26.5mil + $27.5mil) - $11.2mil = $13.1mil

67%(DVDd + DVDi)
Using $15 per DVD as a guess we need to estimate total number of DVDs sold. It has a Christmas release (12/20/2005) allowing for a good sales window. Total die-hard Firefly/Serenity fans number ~300,000. Each will buy an average of 2.5 copies. Non-rabid fans who saw Serenity in theaters will account for another 300,000 copies. People who were curious but passed on Serenity in theaters will account for 200,000 copies. That comes out to about 1.2 million copies sold.

If that sounds low to you, bear in mind that at $26.5mil (assuming $10/ticket), that's only 2.65 million people seeing Serenity in theaters. And many of those are repeat viewings by the fanbase. DVD sales will be good but not great. Expect more action on the rental side.

And as stated in the previous post, my guesstimate for international DVD sales (DVDi) is:

DVDd = 1.2mil * $15/DVD = $18mil
DVDi = 67%(1.2mil) * $10/DVD = $8mil

Worldwide home video/DVD revenue:
67%($18mil + $8mil) = $17.3mil

If Hitch can hit $60mil in rentals while Hitchhiker's Guide nets $15mil in its first four weeks, I'm confident Serenity will get quite a boost from the rental numbers. I don't want to overestimate so I'll put it at $15mil over the first few weeks of release, gradually making its way up to $20mil. But, to be conservative, let's just use the $15mil number.

Total rentals revenue:
40%($15mil) = $6mil

90%(SYNDd + SYNDi)
We already know that USA Networks has paid $3mil for syndication rights to Serenity. That's in addition to HBO's first-run rights. I'll estimate HBO's rights at a modest $5mil.

Serenity is making a decent showing in the UK and Australia. So rather than assume a 1/3 discount off the domestic syndication take, I'll up it to 2/3:

SYNDd = $5mil + $3mil = $8mil
SYNDi = 67%($8mil) = $5.3mil

Total worldwide syndication revenue:
90%($8mil + $5.3mil) = $12mil

Misc(VOD, etc)
Video on demand sales will be decent, just like rentals. Without firm data here I'll estimate it at $3mil, with the studio getting 50% (same as rentals). Licensing revenue (books, toys, soundtracks, etc) will be essentially nothing.

Total Misc revenue:
90%($3mil) = $2.7mil

Prod Budget + Mktg Budget + Dist Budget
$39mil production budget and reported $10mil marketing budget. Distribution to 2200 screens guesstimated at $9mil.

Total production, marketing, and distribution costs:
($39mil + $10mil + $9mil) = $58mil

Total Estimated Profit/Loss:

$13.1mil + $17.3mil + $6mil + $12mil + $2.7mil - $58mil

= -$6.9 million

The mid-2006 release of Blu-ray High Definition DVDs will offer an additional profit stream for the movie (and sci-fi and high def go hand-in-hand). Firefly and Serenity are likely to grow larger followings over time. It will incubate slowly and will account for further library sales.

A $7mil overall loss is significant, but not quite as dire as the initial disappointing box office results seemed to indicate. Assuming these numbers are at all decent guesses, I think Serenity will break even over the next two years.

It remains to be seen if that is sufficient motivation for Universal to greenlight a Serenity sequel.

How to guesstimate a movie's profit/loss performance

Revised and updated 10/18

Determining the ultimate profitability of a feature film is essentially impossible for an outsider. Hollywood is notorious for cooking their books to make sure no movie ever appears profitable. At the same time, no Hollywood studio is really raking in the dough these days. It's a brutal business.

As an outsider it is possible to reasonably guesstimate the numbers for a non-franchise movie (i.e. not a sequel) from a modest director with no A-list stars. This is because the various contract terms and distribution deals are likely to be somewhat standard, as opposed to blockbuster deals like Arnold Schwarzeneggar's terms for T3.

The following formula is offered:

45%(BOd + BOi) - (Int'l Dist) + 67%(DVDd + DVDi) + 40%(Rentals) + 90%(SYNDd + SYNDi) + Misc(VOD, etc) - (Prod Budget + Mktg Budget + Dist Budget)

This requires lots of educated guesswork so don't expect a simple chug-and-plug excercise. But then again, this is a vastly complicated subject, so what did you expect?!

Now each part analyzed and explained:

Box Office Profits: 45%(BOd + BOi) - (Int'l Dist)
Movie theaters generally keep at least 50% of the US box office revenues. Ignoring domestic and international marketing and distribution costs, the total studio take from the gross domestic box office (BOd) and international box office (BOi) is guesstimated at a conservative 45%.

International distribution costs will vary by movie and by country, but in general only six to eight foreign markets play major roles (lots of info in Edward Jay Epstein's article on the foriegn box office). Use Epstein's article as a guide for guesstimating international distribution costs for each of the major markets.

A guesstimate of $1.25mil per major market seems reasonable. Remember to add in an additional amount for all the other non-major markets combined - perhaps 2x your guess for the major markets.

Home Video/DVD Sales: 67%(DVDd + DVDi)
For simplicity I'm ignoring VHS sales - DVDs account for the majority of home video sales these days. And DVDs are quite a profitable endeavor. "Studios ...estimate that manufacturing, shipping, and returns costs average 12.4 percent; marketing, advertising, and returns costs average 18.5 percent; and residuals paid to guilds and unions for their members and pension plans come to 2.65 percent. So, about two-thirds of video revenues are gross profits" (source: Edward Jay Epstein).

In order to estimate revenues for a particular movie you have to estimate both the number of DVDs sold and the revenue per DVD. Epstein's numbers above do not account for the merchant's take, so we have to guesstimate the cost to the retailer rather than use the cost to the consumer. $15 seems a reasonable guess for domestic DVD sales.

International DVD/home video sales are harder to estimate. According to Epstein they account for 44.5% of the studios' total home video take. Unfortunately, like the international box office, there's wide variation in performance here so we can't just assume numbers similar to domestic DVD/home video sales.

I propose that until more precise figures are known for a particular movie, international sales (DVDi) should be no more than two-thirds domestic sales (DVDd).

Furthermore I assume international home video sales incur higher distribution costs (including foreign marketing, taxes, currency exchange, etc). Rather than using $15/DVD as a revenue-basis, I'm leaning towards a conservative $10/DVD.

Therefore if a DVD sells 1mil copies in the US at $15/DVD, guesstimate:

DVDd = 1mil * $15 = $15mil
DVDi = 67%(1mil) * $10 = $6.7mil

For a total home video/DVD take of:

67%($15mil + $6.7mil) = $14.5mil

Rental Revenue: 40%(Rentals)
This is the most speculative part of the formula. I have not yet found numbers for how studios share rental revenues so your guess is as good as mine. I have no clue if there is an international rentals market. For now I assume it is insignificant.

Rental revenue for the top DVDs can be found here:

A blockbuster rental (no pun intended) can hit the $40-60mil mark (Shrek 2, Hitch). Unknown, unspectacular movies can still muster $3-5mil (The Marksman).

Television Syndication: 90%(SYNDd + SYNDi)
TV syndication rights are almost pure profit. The only costs are residuals royalties owed to actors, directors, and producers.

Acquiring actual syndication sales data is difficult. It is occasionally published in Variety and The Hollywood Reporter. More often you'll just have to take a guess based on past syndication deals. Here are some snippets on recent deals to help you make a better guess:

""The 40-Year-Old Virgin" is pocketing about $13 million in license fees from the USA Network in an exclusive four-year deal. ...the parties to the deal said the net paid top dollar because other buyers surfaced to bid on the movie, which has grossed a strapping $104 million in U.S. theaters."

"USA bought two other titles from NBC U: Kate Hudson horror movie "The Skeleton Key," which went for about $5 million, and Joss Whedon's "Serenity," which fetched $3 million or so. USA's sister Sci Fi Channel will get some plays of "Serenity,"... USA gets "Skeleton" and "Serenity" in May 2008 and "Virgin" in July 2008, after all three complete their first-window runs on HBO as part of an exclusive pay TV deal."

"USA ponied up $23 million for the first plays of "Dukes of Hazzard" and for later plays in the network window of "Terminator 3," "Troy" and "Alexander"

-source: Variety

Take particular notice to the line "after all three complete their first-window runs on HBO as part of an exclusive pay TV deal." The amount paid by HBO is not disclosed but can be estimated as being larger than the amount paid for the follow-on syndication deal on USA Network. It is assumed that most movies will have an initial pay TV deal on HBO, Showtime, Starz, etc in addition to broader cable or network TV syndication deals.

Also keep in mind that subsequent syndication deals are always possible. Any time a movie or TV show is rebroadcast a new syndication deal is struck - and all at the 90% profitability margin for the studio.

International syndication deals are even more difficult to suss out. Epstein states that international TV revenue is 39.1% of the studios' total worldwide TV take. We could just assume that internation syndication (SYNDi) is 2/3 domestic syndication (SYNDd). But syndication deals depend on how popular the movie was in the particular locale. We can't assume all movies are equally popular in the US and in each locale, so there has to be a discounting factor.

I propose SYNDi = 33%(SYNDd)

If a movie nets $15mil is domestic syndication deals:

SYNDd = $15mil
SYNDi = 33%(15mil) = $5mil

Total TV revenue = 90%($15mil + $5mil) = $18mil

Misc Revenue: Misc(VOD, etc)
I have not uncovered any numbers for video on demand (VOD) revenues. While this is a growing and important source of revenues, I think it only makes up $3-5mil for a decent performer. Admittedly this is a blind guess.

I'm also sure there are other revenue streams to factor in - marketing tie-ins, licensing deals (action figures, toys, etc), etc. The degree to which this impacts a movie's profitability greatly depends on the property - The Incredibles will reap enormous licensing coin while Rain Man likely netted none. For our purposes I offer a placeholder in the formula for such revenue, but make no effort to offer any real estimates or analysis.

Actual Costs: (Prod Budget + Mktg Budget + Dist Budget)
Finally we reach the actual costs incurred by the studios to create a movie.

Production Budget is the easiest number to find. It is reported on IMDb,, and numerous other places. It is not necessarily entirely accurate, but it's the best we're going to get.

Marketing Budget is more difficult to find. It will occasionally be discussed in Variety or The Hollywood Reporter articles and sometimes listed in boxofficemojo's data sheets. A huge marketing blitz will generally be in the $40-50mil range. A more modest push will hit $10-15mil.

Distribution Budget is the most difficult to find, but the easiest to guess. Distribution includes the cost of printing physical copies of the movie for theaters and delivering them across the country. A saturation release (3500 screens) will cost about $12-15mil.

And remember that we've already accounted for the international marketing and distribution costs.

Final Profit/Loss Results:
Plug in all of your guesses and add up the numbers to see if the movie will ultimately make a profit or a loss.

This is of course a very rough estimate but it gives you the foundation to make an educated guess.

Up next: applying this formula to "Serenity"

Monday, October 03, 2005

Other "Serenity" Reviews

Consider me a biased content aggregator, but here are a few reviews of interest:

Ebert & Roeper
"Two thumbs up"

Roger Ebert
"it has the rough edges and brawny energy of a good yarn, and it was made by and for people who can't get enough of this stuff."

The New York Times (free registration required)
It probably isn't fair to Joss Whedon's "Serenity" to say that this unassuming science-fiction adventure is superior in almost every respect to George Lucas's aggressively more ambitious "Star Wars: Episode III — Revenge of the Sith." But who cares about fair when there is fun to be had? Scene for scene, "Serenity" is more engaging and certainly better written and acted than any of Mr. Lucas's recent screen entertainments."

"A gently intelligent action sci-fi with wit, drama, and emotion to spare, this is the blockbuster you've been waiting for all year.

"The characters and their relationships are more credible than in most serious dramas, while Whedon's unique dialogue - a self-aware jumble of teen-speak, technobabble, literary swagger and merciless Cantonese swearing - serves up some dazzling one-liners."

LA Times
"Engaging, ragtag characters blend with action-packed script in Joss Whedon's universe."

"There's no need to have seen a single episode of "Firefly" to digest any of this as Whedon craftily weaves the complex exposition into the main story."

"A strongly acted, well-written story fortified by riveting action sequences — a rarity these days among studio releases — "Serenity" should delight Whedon novices as much as the already converted."

Chicago Tribune - Robert K. Elder
"And oh, what a movie it is. "Serenity" is a brash, funny, action-packed bit of sci-fi ecstasy"

Boston Herald (contains minor spoilers)
"Joss Whedon's "Serenity" is "Buck Rogers" on Red Bull, a hipper, funnier, action-packed throwback to the original "Star Wars."

Entertainment Weekly
"Serenity, despite its simple chase plot and elegant narrative ductwork, is unmistakably a TV season's worth of roller-coastering drama, most of it balanced on the capable shoulders of [Nathan] Fillion, a natural leading man. Jaw set but never stiff, he gets both the Whedon wit and the Whedon grandiloquence between cheek and gum, and gives the whole enterprise the heft of a real saga. Which it most certainly is — especially for those who were already saddled up for the ride."

Village Voice (contains spoilers)
"Of course, it remains to be seen whether anyone who couldn't be bothered to watch Firefly for free will pay $10.75 to see Serenity, but those who do will be too engrossed by the film's effective blend of humor, horror, and action to contemplate what they've missed."

TV Guide (contains spoilers)
"Fans of the short-lived TV series are this film's built-in audience, but you don't have to have seen a single episode to enjoy it immensely."

Associated Press
"You can see how "Firefly," the short-lived TV show that provided the basis for "Serenity," could have gotten addictive if given the chance. The movie is a spirited mix of the familiar and the futuristic, of fast-paced chase scenes and butt-kicking brawls, of witty banter and well-drawn characters."

Slate's David Edelstein (contains spoilers)
"Having missed the fleeting run of Joss Whedon's TV series Firefly, I arrived at Whedon's feature-film follow-up Serenity in a state of absolute ignorance. And I couldn't believe what I was watching: an outer-space Western with smartass Whedon banter! Cool! I had such a good time I couldn't wait to get hold of the complete series on DVD.

"Well, now it's 10 days later and I'm afraid I've almost forgotten Serenity. In the interim, I've become a Firefly freak. What a show..."

US Congress of Catholic Bishops (no joke!)
"The movie weds the science fiction and Western genres resulting in a sly, offbeat and witty hybrid, full of gunslinging space cowboys and dusty one-horse planets -- Buck Rogers meets Roy Rogers."

Slate's Seth Stevenson addendum

In my previous post I was outraged that Seth Stevenson's recent article, "Joss Whedon: why he should stick to television", revealed a significant spoiler in the new movie "Serenity".

Now that I have seen the movie I can safely read the rest of his article without fearing further spoilers (there were none).

And I'm happy to report that I am in complete agreement with him. It's an easy admission - he and I are more like-minded than you'd think. He too is a Joss fan and makes a strong, concise argument for the man to leave feature films behind and return to creating excellent television.

Banzai's Review of "Serenity"

Just posted:

Banzai's review of "Serenity"

Check out the review - especially if you didn't quite know what to make of the movie.