You gotta spend money to make money

After analyzing data from the hundred most widely distributed films from the years 2000 to 2009, the results suggest an average production budget is around 30 million dollars.

In the billion dollar movie industry, spending a meager 30 million to produce a movie seems less than impressive. However, suggested by the wide distribution of the movies, this “small” budget can produce some of the most well-known movies of the year, and in my opinion successful.

I created a histogram comparing the budget of about 1,000 movies and the results suggest that there is a vast budget range of success. The height of the bars correlates with the number of movies within that budget range.

According to the histogram, majority of movies fall within the $20–50 million range, with the most around $30 million. However, there are also movies with budgets at either ends of the spectrum. At one end there are budgets that are less than a million dollars (Paranormal Activity’s production budget was a minuscule $15,000) and some that reach up to $300 million! Despite this wide range, all the movies analyzed were part of the top 100 most widely distributed movies of their year. Production budget seems to have little to do with distribution success at all. A movie does not need an insane budget to create a desire to see the movie. People do not base their desire to see a movie based on it’s production budget.

In contrast, there does appear to be somewhat of a trend in which movies with greater production budgets generate the most revenue. In other words, the movies that spend more money in making the product, earn more money.

I analyzed the data and compared the production cost of the movie to its earnings in the box office. Though many movies tend to cluster together around the area of lower budget and lower earnings, there are some movies that stray from the cluster and show that movies with higher production budgets also generate a higher revenue from the box office. This may have to do with a higher quality movie associated with a higher budget. There also may be captivating special effects or action with life-like sound that draw people to go see the movie on the big screen rather than perhaps their own television. Movies with higher budgets may give a better experience in theaters and draw audiences in with their higher quality picture, sound and effects.

However, there seems to be a cut off around $100 million production budget. The movies below $100 million do not show a relationship between the budget and money made in the box office. The $100 million mark appears to be the cut off in which the pattern leans towards more box office success with a higher budget. This might mean the special effects that create a greater box office success have a minimum cost that contributes to the $100 million budget.

In comparison, the budget of a movie may not matter in terms of distribution because distribution could mean in theaters, sold on DVD, or Red Boxes. If a movie is purchased or rented with the intention of being watched at home, audiences forfeit the movie theater experience of a huge screen and surround sound. Thus, movies with higher quality picture, sound and effects can still produce a desire at home, as well as the movie who would not have had such high quality in theaters anyways. However, for movies with higher budgets and a greater ability to produce higher quality picture, sound and effects draw crowds in because of the captivating theater experience that would make the movie more enjoyable.

In the end, its not how much money went into production, but how much money movies earn back.

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