Box office reporting focuses heavily on ticket sales and revenue numbers. So it’s no secret that (according to latest Box Office Mojo numbers) The Hobbit: The Desolation of Smaug has pulled in just over $944 million in ticket sales.
Profit figures, on the other hand, tend to be more opaque and mysterious.
However, movie website Deadline | Hollywood has crunched some numbers with a number of “experts” as part of its effort to unearth the most valuable blockbuster of 2013. By its calculation, the second film in Peter Jackson’s Hobbit sequence has (thus far) made a profit of $134.1 million.
Just how did they do it?
The Hobbit: Desolation of Smaug profit breakdown. Source: Deadline | Hollywood.
Explaining the earnings
Disregard the calculations for The Hunger Games: Catching Fire in the second column — it’s part of the head-to-head thing that Deadline is conducting.
The first thing to realise (and it took me a little bit of research to work it out) is that that enormous $944 million global box office is split a number of different ways. Nominally at least (Hollywood accounting practises are notoriously dubious), distributors and theatres are taking a goodly chunk of that gross.
How big?
Well, according to Deadline’s figures, USA domestic distributors and theatres are taking just under half the domestic box office, while Warner Bros. sees a mere 42.9% of the foreign take and as little as 23.4% of the Chinese gross. The remainder — named Theatrical Rental — is Warner Bros. income. Thus, of that $944.2 million, only $420.3 will make its way to Warner Bros. coffers.
That’s why, according to Deadline, even with other revenues (telly and etc.) factored in, Warner Bros.’ gross revenue from The Desolation of Smaug will hit only (only!) $795.6 million.
Accounting for the expenses
Deadline puts Desolation of Smaug’s production cost at $260 million. I’m not entirely certain how they arrived at that, I’ve seen figures as low as $225 million, and others as high as $295 million (the latter admittedly including printing and advertising costs).
Yet Deadline lists printing and advertising (domestic and international) costs as an additional $155 million.
It’s a puzzle, but this article on io9 gives some insights.
According to Contrino, the Print & Advertising (P&A) costs of a movie can be incredibly high — for a small $20 million film, the promotional budget can be higher than the production budget. That’s because those films are often romantic comedies or kids’ movies, which are cheap to make but still need a lot of promotion. For a film which cost between $35 and $75 million to make, the P&A budget will most likely be at least half the production budget. And the numbers only go up with bigger films. “If the studio spends a lot on the budget, they’re going to want to protect that investment by advertising it heavily,” says Contrino.
If Deadline is correct, the amount invested on marketing The Desolation of Smaug’s around the world clocked in at more than half its estimated production budget.
Rights payments presumably include royalties to the late Saul Zaentz’s Middle-earth Enterprises as well as to Tolkien Estate, while Participations refers to payments to actors, writers and directors as a percentage of either gross or net profit. And overheads seems to be calculated at a straight 15% of the production budget.
According to Deadline, all these factors mean that the total cost of making, marketing and putting The Desolation of Smaug on screen add up to a sizeable $661.4 million.
Return on investment
Which brings us to the bottom line — a profit of $134.1 million. As Deadline calculates, that’s a cash return on cash invested of 20% (134m/661m x 100). It’s a return on investment that as best I can tell compares favourably against other forms of investment — the 10-year (to December 31, 2013) performance of the the S&P 500 is an average annual total return of 7.40%. US bonds, as gauged by the Barclays Aggregate U.S. Bond Index, average 4.55% annually over the same period.
The numbers for The Hunger Games: Catching Fire (an ROI of an unbelievable 200%) illustrate even more starkly (in big, fat $$$ signs) the reason studios relentlessly chase blockbuster success.
Of course, the flipside is the greater risk involved. Stocks and bonds, generally, offer a safer investment. For every profitable film, there’s a long list of grand commercial failures that see studios losing tens of millions of dollars. And that’s the hard calculus under all that creative accounting.
Note: This is mostly an attempt to puzzle out the numbers. I am not an expert (in this area at least). If there’s anything I’ve missed, or seems out of whack, leave a note in the comments or drop me a note at demosthenes at the onering dot net.
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According to The Hollywood Reporter, Warner Bros. will preview of The Hobbit: There and Back Again at CinemaCon in two days time.
On Thursday at 2.30pm Warner Bros. CEO Kevin Tsujihara, president of domestic distribution Dan Fellman, and president of international distribution Veronika Kwan Vandenberg will showcase a number of the studio’s films that are set to debut this year, including Godzilla, Blended, Edge of Tomorrow, and The Hobbit: There and Back Again. CinemaCon is an annual gathering of USA cinema owners and film distributors. The 2014 edition is being held at Caesars Palace in Las Vegas. Continue reading “Warner Bros. to preview The Hobbit: There and Back Again at CinemaCon”
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The Blu-ray and DVD editions of The Hobbit: The Desolation of Smaug won’t be released for another two weeks – but for those of you who just can’t wait any longer, the film is now available on iTunes.
Along with the film, you’ll also gain access to the bonus features “Peter Jackson Invites You to the Set” (In the Company of The Hobbit & All in a Day’s Work) and “New Zealand: Home of Middle-earth: Part 2”. Continue reading “‘The Hobbit: The Desolation of Smaug’ now available on iTunes!”
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One of the showstoppers at Comic-Con 2013 was a character I had been looking forward to seeing since the The Hobbit Trilogy was announced. Being pretty pleased with how this character was done left me looking forward to finally adding a statue of him to my collection. Thankfully that wish came true when I made my voyage to the Weta booth during Comic-Con last year. I was really blown away by the job done on the Radagast the Brown statue and just how spectacular a job was done to translate the onscreen character into a 1:6th scale statue.
PACKAGING
The overall graphic layout for Radagast’s box stays the same as we’ve seen with previous entries in the line. Per the format we’ve come to know, the front of the box gives you a great shot of Radagast, graphic work for the title of the movie, and of course the Weta logo. The sides of the box for Radagast also present a familiar format with different looks at the statue. While the other side of the box presents some of the various products you can get for The Hobbit line of collectibles. The back of the box contains a great story on Radagast as well as information regarding details of the character and statue. The Styrofoam on the inside is typical with what we’ve come used to getting with these statues.
SCULPTING
The task of sculpting Radagast the Brown was handed to the ultra talented Steven Saunders. He has once again shown why he is a master of his craft with the skills needed to bring the movie to life within your collection. The Istari would be proud to have Mr. Saunders sculpting them I believe.
I personally think the likeness to actor Sylvester McCoy with all the makeup he wore is pretty much spot on. You’re going to be hard pressed, I think, to deny that this isn’t an excellent reproduction of the character. This goes all the way down to his nose being just a little crooked. As we know Radagast‘s appearance is a total mess, which is wonderfully shown on this statue with his beard going every way possible.
One of the things I love the most about Radagast is the unique look he has with his hodgepodge of an outfit. It is one of my favorite things about him. His coat has some amazing details in it with little plants or flowers on the back of his coat, which just happens to be fraying at the ends of it from the constant wear and tear. His vest and undershirt appear to be the same type of material along with looking exactly the same. Both of these are also fraying/tearing at the end from him wearing them all the time, as is the case with Radagast’s entire outfit. One small detail I love on the vest is it being held closed by just one simple button, which has some nice details within those buttons. Radagast’s pants which now resemble capris from most likely being the only pants he wears as he roams Mirkwood. The one detail that I think I love the most about his outfit and did not notice until after seeing the movie is he wears two different shoes. This reminds me of a neighbor that used to live by me that always had on two different pairs of shoes. They’re totally different designs with one having fir at the top and leaves while the other is a plain black leather looking shoe. He also carries with him a worn out bag that appears to be made out of the same material as his coat.
Radagast lives a simple life style so he doesn’t really have weapons or jewelry that we’ve seen on other statues from this line. He does have his unqiue hat that like the rest of his outfit is made of cloth with the little cloth fiber details that make up the hat. Wizards really don’t need too many weapons, but one you can bet they will have is a staff. The staff has the little wood grain details put into it, which when painted help create a real wood looking staff. It also at the top of it has the crystal that he used to help save his little pal Sebastian when we first meet him in The Hobbit: An Unexpected Journey. Speaking of Sebastian he joins Radagast on this statue climbing the log that has fallen on the ground making up part of the base. This little addition may be the part I love the most as that moment when Radagast saves Sebastian made me think of how much I love my puppies. Those are not the only animals that help make up this statue with a cute little mouse and robin that is landing on Radagast’s outstretched hand.
I think Weta has done an excellent job with the poses on these statues allowing them to gives us a look inside these characters. As I mentioned in a previous review the Elves have both a power as well as a beautiful elegance. The pose for Radagast shows his care of nature and love of the animals that make up his world. As an animal lover myself it really is the cherry on top of this statue.
PAINT
The streak continues by Weta with how the factory paint came out on Radagast. The overall skin tone on Radagast I think is really well done, and very much looks like a healthy human should look. The one issue with my statue is the redness is a little on the strong side but overall doesn’t take away from the statue. The grey coloring of his beard does a great job highlighting the hair detail and matching what we saw on screen. When put into my collection cabinet his paint apps look great along with the rest of the collection.
As I mentioned earlier the outfit is really exceptional. I love the way they used the various shades of browns to help create the worn look of the clothes. It’s also great that the browns highlight the detail within the outfit and don’t hide the details that were sculpted into the outfit. His shoes have a great paint job with the one having some cool gold painted leaves on the shoes while the other does have the old worn leather look. The animals and parts of Mirkwood that make up the rest of the statue stays at the high level as Radagast himself when it comes to paint detail. They even did a nice job on my least favorite part of the character with the bird poop in the proper spots.
Overall
Radagast retails for $275, which puts him inline for the non-Dwarven characters. I really love this statue! I love the character and just how well done this statue is. Again, I think this is a statue you must see in person to appreciate how beautiful this statue really is. I was also lucky recently to get Mr. McCoy’s autograph here in Kansas City’s Comic-Con to add something to my Radagast statue.
SPECIFICATIONS
Radagast is limited to just 1000 pieces worldwide and is ready to order now from our friends at Weta. As we wind down The Hobbit Trilogy this is going to be a hard statue to get a hold of so don’t wait an let it pass you by.
Dimensions:
11.8″ x 9.1″ x 5.5″ (H x W x D)
30 cm x 23 cm x 14 cm
Weight:
5.1 lbs (2.3 kg)
PHOTOS
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Middle-earth is coming to Canada this Spring, April 24-27, and staff from TheOneRing.net will be there to join in the fun! Calgary Comic & Entertainment Expo will be taking place at the BMO Center in Calgary’s Stampede Park; you can find out full details at their website.
There are several guests from both The Hobbit and The Lord of the Rings movies who will be attending, and of particular interest to Middle-earth fans is a very special event which will be held on the evening of April 25th: ‘Middle-earth EXPOsed’. From the organiser’s press release:
Continue reading “Richard Taylor, Craig Parker, Dean O’Gorman, Billy Boyd and more at Calgary Comic & Entertainment Expo”
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Originally, Peter Jackson intended his adaptation of The Hobbit to be a two-film effort — a duology. 
