Wednesday, April 18, 2012

The Theatrical Movie Business Perished

Last post I showed you that the most pirated movies of all-time were highly profitable. I also showed you that of the 50 most pirated movies of the last five years, 49 of them made money. To me, I think those numbers speak loud and clear. But ok, you're not convinced yet. Fair enough, let's go bigger.

Since the end of April 2011, TorrentFreak has published the top 10 pirated movies of the week. That's a years worth of monitoring the top 10 downloaded movies each week. I went through each movie on every list and collected as much data that was available. Here's what I came up with:

Raw CSV data.  

Over the last year, 135 movies have appeared on those weekly lists, however not all of them are relevant to our discussion. Two movies haven't been released theatrically yet and 10 movies went straight to video. There were also 6 movies where I couldn't find any budget information. If we exclude those 18 movies, we have 117 left.

Now, there were 5 movies where I found a budget but there was no ticket sales data at Box Office Mojo, IMDB or Wikipedia. However, instead of using that as an excuse to exclude those movies, I'm going to leave them in and say that they all had $0 in ticket sales and therefore lost all their money. I'm also going to restrain myself from cherry-picking individual movies to exclude. For example, I could have excluded Red State because the box office data shows it lost over $2 million but Kevin Smith said the movie was profitable before its theatrical release.

I could have also excluded 5 Days of War because it only played in 6 theaters and I could have excluded Shaolin for only playing in 11 theaters. I could have also excluded and The Awakening because they didn't play anywhere in the United States. But I didn't exclude any of those films. It's not fair to try and have an honest discussion while at the same time manipulating the data prove your point. So those movies stay.

So we've got 117 movies and 92 of them (78%) made a profit. Let that sink in:

Of the 117 most pirated movies in the last year, 78% of them made money.

And 72 of the films (61%) had profits that were equal to or larger than the budget. Just like before, we're not dealing any special type of movie either. Jack and Jill got a 3 from Rotten Tomatoes and profited $70 million. Insidious had a $1.5 million budget and grossed $97 million. Rockstar played in 112 theaters and made $10 million in profits. Explain to me why we needed SOPA again?

For me, the most amazing number is that the median profit to budget ratio for these 117 movies was 144%. I had to check my numbers to make sure I didn't have any glaring typos. The lobbying groups are trying to pass insane laws to combat online piracy and yet half of the most pirated movies had ticket sales that were at least 2.4 times larger than their budgets. In a recession no less! Impressive. For anyone interested, combined these 117 movies grossed $21.3 billion with a budget of $6.8 billion. That's a profit of $14.4 billion.

So it comes down to this: either my data is wrong, or the conventional anti-piracy logic is wrong. Pick one.

Some people are going to question the accuracy of my numbers. They're going to say that the profits in my charts are too high because budget numbers are often under-reported and the longer a movie stays in theaters, the less the studios get. To which I will counter that my numbers don't include licensing deals, DVD sales, rentals, product placements, pay-per-view, tax breaks and Hollywood Accounting.

And let me be perfectly clear, I am not insinuating that online piracy helped these movies be profitable.  I am also not saying piracy is ok because the most pirated movies make money. The only thing I am saying is that online piracy is not harming the theatrical movie business.

And for anyone who is critical of file-sharing, take (copy) my data and see what you can do with it. Spin the numbers in a way to prove to us that file-sharing is killing the industry. Until you do, I'm going to point to these posts every time you bring it up.

1. It's wrong to steal/copy.
2. The creator/publisher should get to control formats, price, release dates, etc.
3. Piracy is killing the movie business.

Next post: My favorite critics.

No comments: