On a big picture it is because we make EVERYTHING that you see. It might be an entire world made of plywood and minimal stick framing, but there is a lot of it and it’s all custom. Every costume is hand built. Robin Williams robot costume got an academy award or nod.

The six roof ribs each have hundreds of man-hours worth of work.

Everything in the room is custom built including the room. This is probably the largest single enclosed set I ever worked on. For 7 weeks, I hammered away just making the blank segments of the 180′ diameter perimeter wall- a twenty foot tall truncated conical shape that is totally undetectable. That was an extremely wasteful design detail, but the Hollywood designer said “Make it So”, Disney opened the checkbook, and this one million dollar Bicentennial Man set was ordered up and built for about 5 minutes of screen time.

Alcatraz TV pilot

Working ON Alcatraz is very expensive so they usually fake it in Hollywood. Or Canada! I’m standing in an Alcatraz set, on Alcatraz, next to real Alcatraz bars and cells. The set was built in Vancouver and trucked all the way south to San Francisco for a 4 day shoot at the National Park (the whole island is the park). I was just one of about a sozen carpenters- we all got a couple thousand for the work.

Carpenters are the low pay folks on set. That’s why I specialize in effects props:

The ‘escape props’ I created for a shoot in 1991 are still on display in the “MGM cells” at Alcatraz. (power drill, paper mache vent cover, hand tools)

In house Google ad that totally did NOT rip off JJ Abrams Star Trek set… (yeah, it did) Just a little plastic model… $7,500.

Toyota Prius “jet pack” $4,000

It’s all custom. Lights and camera equipment cost millions and millions of dollars too. And because everything is so high stakes, everyone above the carpenters gets paid eye watering chunks of change.

Have you seen how much money Hollywood movies make in profit? The gamble is worth it, especially in an established and prestigious movie industry such as Hollywood. Hollywood is the most profitable and oldest film industry in the world. It provided post WW2 world with entertainment not found anywhere else at the time and solidified the industry into our collective culture.

Most countries can't afford the flops of high budget movies and lack the overseas markets. The US is in a perfect position to both afford the losses and offset them with its vast cultural reach throughout the world.

I should also add that the US culture in itself glorifies risk taking and rewards it. So Americans are more likely to take risks on movies that might flop. Plus the major studios have a lot of money as the US is very wealthy. The wealthiest to be clear.

It's a well oiled machine. Some hits and lots of misses but it all ends in profit at the end of the day after averaging it out. Otherwise nobody would be spending that much to begin with.

It's very competitive as well like all things in the US. The best rise to the top and when the worst rise to the top they are quickly knocked down a peg.

For example, look at Avatar. The whole world saw this movie. It cost nearly 300 million. Phew that's a lot. How much did it earn? Nearly 3 billion. Worth the risk in this example.

*Final quick addition. Hollywood has political significance as well. The amount of influence and soft power gained during the cold war with the Soviets by leveraging Hollywood and American music was significant. Often times Hollywood movies reflect American ideals. China recently banned Spiderman no way home because Disney refused to remove the statue of liberty. China is very aware of this soft power. Hollywood makes the US stand out. Makes it desirable and adds prestige. Almost everyone on earth has an idea of American life, of places in the US, etc. Wether they learned it from Friends, Breaking Bad, Marvel movies, etc. US culture has long resonated around the world and Hollywood is a huge reason why.

If for “international” you mean “China”, then yes. Otherwise, no. Unless it’s a James Bond film. Everyone loves James Bond and their production company largely depends on advance foreign rights sales to finance their projects.

But for modern films, the difference between “maybe breaking even” and “massive amounts of money” depends on whether Chinese people go see the film.

So, as I’ve done before, let’s do a compare and contrast.

“Mad Max: Fury Road” was a brilliant piece of filmmaking with innovative cinematography, spectacular action sequences and intriguing, sympathetic characters. It did okay financially, but the future of the franchise is in question because no-one wants to finance an expensive sequel that “just does okay”.

“Skyscraper” is a piece of trash that requires a massive suspension of disbelief in pretty much every scene (like the one where a double amputee climbs up 300m of scaffolding in about 15 minutes). It did not do well domestically, but it made a sh*tload of money because people in China love Dwayne Johnson and it did spectacularly well there. In fact, the only reason this movie got made in the first place was because they knew it would appeal to the Chinese market.

So why didn’t Fury Road do well in China? It was banned. Apparently it offended the snowflakes in the CCP. Frankly, Skyscraper insulted my intelligence, but I don’t and shouldn’t have the authority to stop people from watching it.

So, expect “Skyscraper II” any time now whereas it might be a while before we see Max Rockatansky again.

This is more complicated than it might seem. These days everyone assumes that if a movie is a wide (in the US and internationally; although Americans will only consider a film a success if it does well in the US; if it does well internationally but poorly in the home market the international results are ignored) success, it’s a good movie worth keeping forever as a touchstone. But in the blockbuster era, is this really the case?

Star Wars, in 1977, helped usher in the modern blockbuster era. Earlier that decade there was a huge success called Billy Jack no one born after the ‘70s even knows ever existed unless they stumble on a reference like this to it. Star Wars by 1990 was being lost to the increasing list of failures from George Lucas (Howard the Duck, Willow). It was a series of comic books and novels that revived interest. Then Star Wars returned to theaters with new films starting in 1999. It was a whole phenomenon again. Several years later you wouldn’t know anyone was happy to see new Star Wars, or that it made an insane amount of money at the box office. History repeated itself in 2015 and later.

It was not remotely cool to admit you had watched the movies with anything but abject derision. Sometimes huge numbers of filmgoers won’t just show up for a big opening weekend before disappearing once word of mouth spreads and the results quickly plummet; they’ll be there for a whole theatrical run. And then a popular success will suddenly become unpopular.

It’s not just about the passage of time, like Billy Jack, being upstaged by later, cooler things (actually, it really is, but that’s always the least likely thing to be believed by movie lovers caught up in the latest thing), but about opinions being quickly revised for one reason or another.

Of course, sometimes it’s far more simple. The Princess Bride made barely $30 million on original release, but its reputation now makes it seem like it had to have been a blockbuster universally beloved upon release. Citizen Kane is often called the best film ever made, but it was a flop on release, sabotaged by disgruntled publishing magnate William Randolph Hearst, who didn’t feel flattered by its fictional depiction of him.

If you have a look at the hugely successful series of films that entail the MCU, you’ll find very few of them are actually considered classics, quite a terrible ratio once you start digging, actually. Who’s going to watch the whole thing over again? Who’s ever even heard such an interest expressed? And yet until very recently, every time a new one was released, its success was virtually assured, and sometimes a very big success indeed.

American Sniper was a surprise blockbuster, gave Bradley Cooper the license to write his own ticket, but it’s completely vanished from the public consciousness.

None of this really matters. Whether you like a movie or not shouldn’t depend on what other people think. That’s vacuous reasoning. Everyone else can be completely wrong about a movie (everyone has a movie they love that no one else seems to). They can ignore a perfectly fantastic movie. I love Tarsem’s The Fall. I’ve seen appreciation for it. I’ve seen appreciation for Andrew Dominik’s The Assassination of Jesse James by the Coward Robert Ford. I love Gavin O’Connor’s Warrior. Oliver Stone’s Alexander is my favorite movie. I’ve seen every cut! None of them have experienced any significant uptick from the obscurity (or outright derision) they’ve always experienced. Doesn’t matter.

Don’t worry about it. Like what you like. Like the popular stuff. Like the unpopular stuff. Like the obscure stuff. Sometimes reputations change. Sometimes they don’t. Popularity and impact are relative. What I like informs the kinds of things I write. Sometimes it’s invisible like that. You just never know.

As Ryan mentioned, there's no hard and fast rule on it. That said, there are a couple of things to keep in mind when trying to figure out the profitability of a film that are useful:

1. The studio-distributor usually only gets about 55% of the domestic box office revenue over the theatrical run of a movie. For international markets, it's even less most of the time (the average was 40% in 2007), but some markets offer a higher cut.

2. Advertising & Prints costs always have to be paid first, out of the studio's box office revenue. If those costs are higher than the studio's share of the box office revenue, then they almost certainly lost money on its theatrical distribution (but not necessarily on the movie itself due to DVDs, merchandise, and other "back-end" stuff).

3. The listed production budget is rarely the same as the actual costs of making the movie. The official production costs don't usually include the tax credits and shelters that the studio used to cut down costs, and these can be substantial.

Studios care about international B.O. equally if not more than the domestic figure. But citing these figures for everyone not in the "industry" doesn't make sense. At least from the outset.

Tracking box office is a bit like a checking on the stock market or the scores of a pro sports league. "Freshness" of the info matters because movies make most of their money in the two weeks immediately after they open. And because new movies open every week, box office figures for incumbents become stale very quickly. Box office in general makes for great headlines or watercooler talk. The thing is, the numbers only mean something when you can make sense of them.

What do I mean by this? A typical film, unless it is a massive blockbuster, will have a staggered release schedule, meaning all of the markets will not release day and date with the U.S. This makes the international numbers highly variable. More importantly it makes comparing the international box office of one film versus another an apples and oranges comparison. The whole point of tracking the numbers is to see who's "winning" but tallying up international figures doesn't allow for this. Being the number one film in the US or any specific territory for that matter is a big marketing tool for the studios (think back on how many commercials or print ads you've seen touting this) but this wouldn't make sense if the studios used an aggregate international number. Hence the U.S. box office have become the de facto standard upon which initial success is measured.

But like I mentioned earlier, the aggregate international numbers are in fact super important. It's just that their "usefulness" comes a bit later, after all of the numbers have been tallied. For renowned franchises that have a long theatrical run, merchandising programs, etc. these figures will be used extensively to negotiate splits with exhibitors, garner new partners, attract future investors, etc. The multi billion dollar properties also become the cornerstones upon which entire companies are built (for example, imagine where Lionsgate would be without Hunger Games) so every penny they generate reinforces their massive appeal.

Nobody actually knows. Thanks to the magic of Hollywood accounting[1], even a movie that grosses hundreds of millions of dollars can end up being considered a net loss (usually so the studio won't have to pay actors, writers, directors, and others who were naive enough to agree to a share of net profits as part of their compensation).

If we concern ourselves only with real, actual numbers instead of the make-believe Hollywood kind, then the profitability of a movie is a relatively simple equation, but can have a lot of variables.

Actual production and distribution costs are the most obvious expenses, but these are often rivaled by marketing costs. Then there's production overhead, marketing overhead, and distribution overhead, which are the murky gray areas in which most of Hollywood's magical accounting practices happen.

Movies can make money from many sources. Domestic gross box office receipts are the number most often quoted, but worldwide gross can often exceed domestic gross. DVD sales and cable and broadcast TV rights can also bring in significant amounts of money, sometimes rivaling or exceeding the box office gross. Many movies earn significant income from product tie-ins and merchandising as well.

Studios typically only report production budgets and box office gross, and rarely report other expenses or income. Sometimes they even try to keep the production budget a secret. This makes what should be a simple equation (income minus expenses) virtually impossible to calculate, since there are too many missing numbers. And it's not possible to reliably estimate a movie's other expenses based on just its production budget, since there's not always a direct correlation.

If a movie gets a sequel, though, it's a pretty good bet it was profitable. No matter what the studio's accountants say.

[1] http://en.wikipedia.org/wiki/Hollywood_accounting

Nothing much. The producers will just wait, because theatrical runs aren’t everything as far as money making is concerned.

Movies make a lot of money thru home video release and network syndication. Its just that these numbers don’t get reported with as much pomp as the box office receipts.

Unlike ticket sale, production company get a bigger chuck of returns from home video releases. Also when movies get broadcasted on network television, the production company gets their cut as well.

The best example that I can cite is Shawshank Redemption. At the end of its theatrical run, SR made less than its production costs, excluding marketing and publicity costs. So it was a definite loss.

But as the 1995 awards season had rolled in and word of mouth grew, more and more people became interested in watching the movie, so much so that SR was the most rented home video of that year. Not to mention the number of times the movie was broadcasted on tv channels. Shawshank Redemption definitely made its profits even though it had failed at the box office.

Fight Club is another example of not doing well at the box office, but making money thru home video release.

Presuming it’s opening wide in 4,000+ theaters, the per screen average should be above $10,000 to qualify as blockbuster status - or about $100mm+ in its opening weekend.

But “good” is subjective. If it’s the opening film of a possible franchise with no major stars or a more mature theme, while the more the better, the studio will accept $60-$75mm opening as an excellent start for the OPENING WEEKEND as they as they know the word of mouth would be good BUT if it’s the 3rd or 4th film in a franchise, it would be a disappointment.

Also, if they’re opening 4,000+ screens Memorial Day to July 4th (or late December) and it does not open $120mm+, it’s a disappointment as they counted on it to be bigger than HUGE … why else would they put it there?

They would be more than happy if it opened in August at $75mm for the exact same film.

Worldwide box office is a very sweet pill, but the movie quality and popularity is a lot connected now with success in US/Canada box office.

For studios, successful tentpole is the movie, which did cover production expenses in “domestic” box office, all beyond that is a cherry to the cake. And cherries can grow really big.

You see, nowadays, studios investing enormous money into the “tentpoles” - inflated-budget productions, that are expected to pull the enormous cash at the box office. Production+marketing can cost anywhere from $150 to $300 mln and more. If they are able to recover that much money from the domestic gross alone, it ensures huge profits and happy investors, who would likely finance further projects. This is usually preferred to the “overseas” returns, as they are largely unpredictable. often delayed and generally smaller gross percentage reaching the final destination - you need to compete for box office with local/other national productions + distributors are operating through their subsidiaries/partners, who also take their cut.

The US movie machine is very specific about its protocols.

You have a couple of options:

• One of the ways to get your script noticed is by entering screenwriting competitions. Producers are not only judges, but other producers regularly check for emerging talent. Many I know have had option and/or job offers as a result of winning or being shortlisted at major screenwriting competitions.
• Attend film festivals with your script’s one-page Executive Summary in hand. Most festivals have a business convention set up behind the scenes. Approach producers. Get them to speak about themselves and their processes by asking questions such as what they are looking for, what their criteria is, how they find scripts. Do not talk about yourself unless asked—you’ll burn bridges before they’re formed. Once you’ve exhausted your question list they are highly likely to ask you the same. One year at the Cannes Film Festival, using this approach I secured over 70 meetings for my client(short (15–20 minuters). And, when offered, every one of them asked for the Executive Summary (basically, the same content as the query letter).
• And, of course, agent representation is a good idea. Hollywood movie business relies heavily on their networks. In the first instance, send the agent a one-page query letter offering the completed screenplay. Their job is to get their client’s scripts seen. If they like what they read and feel they can market your work, they will ask for the full script.
• NEVER send the full screenplay unless asked for it. For legal reasons, an “unsolicited” script will be returned unread and the writer potentially blacklisted for not following professional protocols/unprofessionalism. Only ever send the full script if asked.

I don’t suggest sending producers/production companies a query letter. Instead, approach them at film festivals with your Executive Summary in hand.

Query Letter content:

No more than 1 page (about 300 words, no cheating with font size). If emailing, use the specific agent’s name in your subject line and in the email greeting:

1. Include your one-sentence logline, possibly in the opening sentence.
2. The synopsis must be brief. If you can not summarise your script in 250 words or less, you don’t know your story well enough yet ie. it is not ready for submission to an agent or producer.
3. State that a sample scene is attached (preferably as a PDF):
1. pick your best scene. It does not have to be the opening, but preferably a shorter one;
2. for documentaries, provide a brief scene summary instead of a sample scene.
4. State the genre, screenplay page count (for feature films this equates to duration), and your target audience. Be specific here, it can not be everyone. Specify male/female, age range, and viewers of XYZ-type films. Often, producers will also require that you note 3 movies that you consider are the most comparable to your script. I know, your story is unique, but… if you can not find works that are similar on some level, you do not understand story archetypes, genre conventions or tropes.
5. Introduce yourself with a short bio indicating:
1. what motivated you to write this particular script/what makes you the best person to write this story,
2. note any awards or writing credits you have, and
3. list relevant education (if any—it may relate to writing in general, or to your theme).
6. In closing, thank them and offer to provide the full screenplay, if they’re interested.
7. Provide your contact details in the email signature, including snail-mail, as well as your phone number.

Attached is the Executive Summary template. If you don’t have a development team attached or interested, remove that section.

Have you ever sat through the minutes of scrolling text after a movie ends? Those are the "credits", and enumerate people and companies who were used (and on what capacity) to make the film.

Movie companies have to pay all of the following at a minimum to make a movie:

• Sound engineers
• Directors
• Actors
• Makeup artists
• Caterers
• Set designers
• Editors
• Promoters
• Costumers
• Writers

Other roles which may or may not exist in a given film:

• Special effects engineers
• Stunt actors
• Drivers
• Assistants
• Musicians
• Graphic designers
• Animators

And I'm sure you could add hundreds more roles atop all of those.

Every person involved is entitled to their pay.

Well, many domestic systems do fine in country or in the countries surrounding it (China, South Korea, India, Nigeria, etc), the Hollywood studio distribution assures that you collect every dime from everywhere in the world. People in Brazil will be happy to show your blockbuster film but when will they pay you or maybe if they pay you? No theater anywhere is not going to cheat Disney because you NEVER get another Disney film … that’s the boring power of Hollywood, a drove of accountants and lawyers behind the scenes.

And in reverse, where else are you going toget the big bucks? Hollywood - because the pie is bigger so EVRYONE from everywhere is making “Hollywood” films - same as it ever was - in the beginning, European stars, directors and writers arrived to now … China, South Korea directors working with American, African, Caribbean actors … cinematography from an Eastern European and written by a Blacl American … That’s Hollywood - can you helpnus make money? You’re hired.

Making production costs back is breaking even, regardless of whether that comes from foreign sales or domestic boxoffice. There are also advertising and marketing and distribution costs associated which you're not mentioning, although perhaps when you say “production costs” you're including all of those things.

In any case, if it doesn't make an expected profit, then it is by definition a bomb.

Remember it's show business, not show play -time. While independent creatives might be happy with breaking even, it's not a positive for the investor to have their money tied up in a film and realize no profit.

What do you mean by foreign really; do you mean an movie made in another country by that country or an movie made in another country yet by an American company? For example Harry Potter was made in England/Scotland but was made by an American company such as Warner Bros. The Artist was an French movie but was made by an American company such as the Weinstein Company. I’m assuming you mean movie made in foreign country and by that foreign country.

Keep in mind, about ten to twenty movies are released each month in theatres. Less than 5% will make an profit.

So most American movies released in theatres are made with an budget of 5–50 million, so for an foreign movie to have to surpass that, they will have to garner about that much and more in American theatres. Also I’m talking about production not distribution, so these movies are all distributed by American companies.

Ong Bak was close, making 4 million in American theatres.

28 Days Later made about 60 in American theatres (yes, its an British film).

Pan’s Labyrinth made about 60 million in American theatres.

Spirited Away earned about 10 million in the box office.

Hugo although an flop, made about 20 million in the box office.

I was going to put District 9 but that was made by an American company and a New Zealand company.

Bigger budgets mean more spectacle and more marketing. The marketing is required because if you are spending that kind of money, you have to be clearing at least $500M in B.O. to start seeing ANY profit. And in order to do that, people need to know about it. A LOT of people. Nowadays, you have to clear $1B worldwide to claim a success. So the stakes are higher and the chances are slimmer. A studio must hedge their bets and try to make back the money in the first 2-3 weeks. There is barely a DVD market anymore so they can't rely on that. If the movie stinks, it'll tank after the first weekend. If its great, it still will be leaving theaters quickly to make room for new movies coming in. To compound the necessity of making such a large amount, the profits are divvied up between the Theaters, Distribution company, production company, et al. So, making $110M on a $100M movie doesn't mean you've made $10M.

Lower budget movies have to work harder to make money because they aren't going to get to many screens, and they won't have the marketing that Studios will put into the big summer movies. But, they don't have to make the same amount of money to make the same profit percentage.

For a great low-budget model, you can research Jason Blum of Blumhouse. They do movies for under $2M. They do 8 movies/year. And they have distribution deal with Universal. Universal gives them $16M/year to make movies -- the catering cost on a big tentpole movie. Blumhouse in turn gets top directing and writing talent by offering them less money, but more control. Then they turn out things like The Conjuring, Insidious, Paranormal Activity -- all profitable...to the extreme. And they sometimes churn out a diamond in the rough: Whiplash.

Blumhouse has figured out an amazing puzzle. Make movies for less by giving the above-the-line creatives control but paying less. Get a studio to back distribution and marketing. Laugh your way to the bank.

Only people who financially benefit from the profits of a blockbuster is the Studio. They take the biggest risk -- therefore they get the largest slice of the pie. And due to creative financials, they can hide any additional profits so anyone taking points on the back end will rarely -- if ever -- see a dime. Just ask David Prowse (Darth Vader) if he's seen anything from Return of the Jedi. According to Fox -- that movie hasn't made any money.

In general, the rule of thumb for a Hollywood movie is the movie theater gets 45% of every ticket sold and the studio that created the movie 55%. (That's not exactly true; the percentage breakdown changes from week to week of a movie's release, but it's close enough.)

So in general, a movie has to recoup both it's budget and advertising/promotional costs. For a $75 million dollar movie A&P can range from $10 million to $70 million, sometimes doubling the costs of production. But these numbers are often murky estimates, and it's not always clear how much money a studio really spends.

I often hear people say that a movie has to make TWICE its production budget in world-wide box office receipts to start making money. This is why a movie such as Cowboys and Aliens, which cost 163 million and made 175 million worldwide, is considered a "flop."

None the less, the phrase "considered a financial success" is a slippery at best. Often a movie is judged not against its budget but against "industry expectations." These expectations are sometimes driven by tracking numbers that gauge the public's awareness of a movie and how eager they are to see it.

However, expectations can also be driven by how much money an earlier installment in a franchise made at the box office, or how much money a big star or big director usually brings in with one of his/her movies, or even how much money films in a similar genre have recently taken in.

For example, a movie like this summer's Spider Man, which cost 230 million and made 680 million worldwide, can be regarded by some as a "disappointment" when compared to The Avengers, which cost about the same but brought in 1.5 billion. *

So a "financial success" is really a very murky function of costs and expectations. Big "hits" are easy to spot of course, especially when they far exceed both the films budget and industry expectations. An example is Rise of the Planet of The Apes, which cost about 90 million, was expected to make around 150 million, but made close to 500 million.*

I imagine that a producer or studio executive could answer this question in much finer detail, but that's an approximate answer. Check out Quora User's answer to this question as well.

* All numbers were pulled from IMDB on 8/11/2012.

I go see movies, and as a moviegoer and film watcher, I think, pragmatically, there is a real answer to this.

It may not be the answer you are hoping for, but not only are $50 million movies painfully common these days on professional sets and settings, but they kind of have a different emphasis, and they draw a different crowd.

Here's an example: one of my favorites, a relative indie film at the time, directed by Quentin Tarantino and released in 1992, called "Reservoir Dogs", had a budget of about $1.2 million, according to IMDb. It is very dialogue heavy. It is very action and violence heavy. It has practically no costume changes, though I bet they had several changes of what each character wore during filming. It has about three sets in the entire film. It is also brilliantly written, and has a great history and arguably launched Quentin Tarantino's career.

Here's another example: one movie I didn't even bother to watch was the latest Transformers' movie. It wasn't something I ever got excited about. I'll probably watch it if it's on TV or if friends are watching it in the room with me. For a concrete example, that's "Transformers: Dark of the Moon". Its emphasis appears to be special effects, which isn't really my thing. Its estimated budget was $195 million, according to IMDb.

Here's another example: a movie I am currently trying to see is Hayao Miyazaki's "farewell film", "The Wind Rises". It is a fully animated epic about the innovation of manned flight, in the years when it was just starting out. It is also a love story and a war film, from what I've seen in the previews. Its budget was $30 million.

So, here's the thing: with a limited budget, it takes more skill to create drama in the film and wonder in your audience, usually due to the limited amount of money for creating spectacle. It is not easy. It can be easy to see a spectacle like a fireworks display and go, "Oooh!", but it's a lot harder to do with dramatic tension, as in "Oooh, that sounds painful!" or "Oooh, that's brilliant!"

This does not mean that expensive movies should not be made. For example, "Gravity" was damn cool. It also took $100 million to make. For me, with that much spectacle, I kinda wish they had made a longer movie and developed the characters a little bit more. They seemed somehow a bit flat to me. The story was driven by the situation and arguably about the incredibly innovative special effects.

One thing you can do to help your film making career, I would think, is to demand more from yourself in terms of ingenuity and less from a crew and cast and wardrobe manager and set builder, which is difficult to do on a limited budget. Those people would expect and deserve to be paid. I would say, more importantly, do not change your sense of pacing or your style to fit the budget. Try to figure out, as best you can, how to fund your film, and then adjust the special effects, but not the drama, accordingly.

Good luck! I hope you succeed!

In order to get the box office blockbuster, it is necessary to spend that kind of money. The movie that draws multiple viewings, reaches international crowds, and plays on multiple screens in a multiplex is always a big budget film.

Take a look at this list of best BO on a yearly basis: Movie Box Office Results by Year, 1980-Present. All high profile cast. Nearly all are special effect extravaganzas or four-quadrant animated films (Forrest Gump 1994 is the last pure drama).

Take a look at this year: Box Office Results by Month. All high profile casts. Lowest result is The Ride Along, which had no serious competition because of its January release. And it still made $300M on its $25M budget. Gone Girl in October is an outlier, until you realize it had a $61M budget.

Yes, making these sorts of movies is a critical part of the business model for studios, and has been since Jaws in 1974 changed the landscape of movie production by creating ticket holder lines that wrapped around the block.

What happens financially when there is a critically successful movie in Hollywood, but didn’t do well in the box office?

The Studio responsible continues to invest in making films that they hope will make money.

One thing to understand - the film industry exists for ONE REASON ONLY. That reason is to make money.

That’s it.

Unless critical acclaim can be monetised (which does frequently happen - Oscar calibre movies frequently see a box office bump if they receive multiple nominations) then the people in charge of the studios couldn’t care less.

When a movie is released, the three factors they care about are as follows:

• How much money it makes domestically
• How much money it makes internationally
• How much money they can generate by selling it for DVD release, merchandising, streaming, TV rights etc…

The Hollywood industry can be a very risky investment in some cases. The figures we read as box office collection, does involve a lot of other factors

Budget

E.g. Production budget for Avengers - $220 million

Studios don't disclose full budgets for their films(production, marketing, development) but it counts as a part of their total cost. In this case, Avengers must have a different budget just for the fighting scenes.

Ticket price

Studio takes 50% of film ticket sales in the USA.

A portion of theatre ticket sales go to the theatre owner. The studio gets the remaining percentage.

The exhibitor gets revenue depending on the contract for each film. However, contractors help theatres get a large cut of ticket sales against a flop box office. Result in studios getting smaller percentage of a poorly performing films.

Merchandising

Star Wars made 12billion in revenue from toy licensing alone.

Star war movies have bought 4 billion in box office revenue(only one third of merchandising take). The latest part “Star Wars: The Force Awakens” could bring in $5 billion in marchandising sales alone.

DVD/ TV Streaming

“The hunger games” sold 3.8million copies in its first week on DVD/Blue ray.

Selling pay- TV and international rights is a big source of profit for producers because they don't have to pay for marketing and P&A cost.

Bottom line

In Hollywood. Ticket sales alone don't drive revenue. VOD sales, foriegn sales, distribution channels, merchandising can help filmmakers turn a profit.

So, the percentage can be anything from 50% to 200%. But there is no guarantees. Also considering customers preferences, which is not well discussed in this answer.

70% of movies lose money (Vogel 1990, 2011, De Vany 2004)
So (as you may well know) studios use `portfolio theory' and make about 10 movies at once, hoping the 3 in 10 that break even, are profitable enough to offset the 7 in 10 that lose money. Pretty much.

See: Entertainment Industry Economics (Vogel).

About 600-800 movies are released in the US each year...
Because so much money gets lost, and a rare few are highly profitable, the `average RoI of a typical Hollywood movie' is: a pretty weird figure.
ie Doesn't tell you much, that makes much sense out of it all.
Movies aren't really `average', they're unique. (Some, uniquely bad. Some uniquely good. Some lose vast amounts of money, some make vast amounts.)

See, my PhD research blog on all this: StoryAlity
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Depends on the film companies and their various distributors, but it might pan out something like this -

Let's say I'm a filmmaker who's just completed this lavish adaptation of Jules Verne’s MASTER OF THE WORLD. Had I made it for, say Disney or Warner Brothers, then I reckon most of the profits would be headed back to the US, as their foreign distribution companies are largely owned by them, exceptions being those ones they don't own (obviously!) and joint ventures they might have with other companies (EG, WDSSPR, the joint distributing venture between Disney and Sony Pictures for the Russian Federation).

…but it would be a different story were I to make it for a large independent or so-called ‘mini-major' studio. Examples of which include Luc Besson's EuropaCorp, or the now-defunct Carolco or Orion Pictures and, certainly, it's how New Line Cinema used to work before being wholly bought out by Warner Brothers. What would happen here is that these sorts of film companies would go to various distributing organisations (EG, Germany’s powerful Constantin Film, France's MK2 Distribution or Japan's Toho Company, to name a few) and raise the budget for my film by pre-selling them exclusive rights to it in their part of the world.

Put another way, if my film company pre-sold MASTER OF THE WORLD to, say, the Toho Company, then they would have full exclusive rights to distribute my film in Japan, not just theatrically but also on home video and Japanese TV sales, to name some. And the Toho Company will have chipped in a substantial chunk of money for the privilege - on a project like MASTER OF THE WORLD, we'll be talking about millions here…

Now, this is where the kicker comes in, in that the Toho Company will get to keep most (if not all) of the Japanese box office, DVD and Bluray sales, etc. So, if my MASTER OF THE WORLD is a huge hit there, the bigger chunk of the profits will be going to them in return for their initial investment. Sometimes companies which operate under this arrangement may get a portion of the proceeds, but generally the local companies get most of the pie. Does that sound unfair? You be the judge.

I should add that all this is maybe an extreme oversimplification, and there's many ways to finance a film. But, when a company like New Line Cinema announces there'll be no sequel to THE GOLDEN COMPASS (despite making hundreds of millions in profit worldwide), then the above-mentioned is probably the reason why that is.

Ah, the murky world of film finance, eh? Gotta love it!