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.


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