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3.31.2016

CASE STUDY: The Outliers Of 2015 - Small Movies With Biggest Profits (+ MY TAKEAWAYS)

A snapshot of what these 2015 low-budget films did to make a profit.
Deadline just published a good article with breakdowns of the numbers of 5 "small" films (by Hollywood standards) that had big profits. I was curious to probe a bit more into why these films were able to make a profit and came across a couple of recurring themes which I elaborate on in the FILM STRATEGY TAKEAWAY: their use of the horror genre, that the films are based on a well-known novel or sequel, their exploitation of production incentives, their release on a day with no competition and more. Check it out:
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Each year when Deadline runs its film profitability countdown, readers understandably ask about wildly profitable films, usually genre pictures, that don’t merit inclusion on the basis of highest domestic gross. But that doesn’t mean these films don’t tell compelling stories in their own right. So this time, we included snapshots of five overachieving pictures. The final four films in our tournament will roll out Monday, along with every one of the revenue charts.


THE SECOND BEST EXOTIC MARIGOLD HOTEL 
Fox Searchlight 

THE FILM
The original 2012 film was a spectacularly successful sleeper hit for Fox Searchlight, hitting an adult audience in its sweet spot and grossing $136M worldwide on a $10M budget. The sequel didn’t hit that number, but it held the production budget to the same level, while adding Richard Gere. The global box office was $85M, and the participations to talent were on the low side. The picture turned out a net profit of $10.85M to Fox, for a Cash on Cash Return of 1.14. 

THE BOX SCORE 
Here are the costs and revenues as our experts see them:



THE FILM STRATEGY takeaway: "Marigold Hotel 2" benefited from a March 6, 2015 release date. The only real competition were Chappie and Unfinished Business. Huh? Exactly. No real competition. Besides Chappie and Unfinished Business were not after the same demo as Marigold Hotel 2 which was the "older moviegoing audience" i.e. aging hippies and retired folks with leisure time. It also benefitted for being the sequel to a sleeper hit which was based on the book These Foolish Things (which was also sold under the title The Best Exotic Marigold Hotel. So this formula amounts to: release in a slow month for movies + sequel based on a hit + aim for an underserved audience = profit at the end of the rainbow. (It's a given that part of the formula is a low budget.)



PAPER TOWNS 

20th Century Fox 

THE FILM
Paper Towns was Fox and author John Green’s follow-up to the wildly successful YA movie The Fault In Our Stars, which grossed $307M worldwide. Let’s call Paper Towns a single, by comparison. The picture turned in a global box office performance of $85M, on a $12M budget. The outlays to talent were minimal. So the net profit to Fox was $14M, for a Cash on Cash Return of 1.18. No wonder Green’s books are still in such hot demand as film properties.

THE BOX SCORE
Here are the costs and revenues as our experts see them:



THE FILM STRATEGY takeaway: This time the movie was based on a YA novel so it had a built-in audience. The writer of the novel, John Green, had optioned the rights to the film in 2008 and the screenwriters involved, Scott Neustadter and Michael H. Weber, had success with another adaptation of Green's work, The Fault in Our Stars. Even though the film takes place in Orlando, it was shot in North Carolina to take advantage of generous production incentives. The producers were so eager to use the incentives that they made sure the cast and crew finished filming before December 31, 2014, the date on which certain tax incentives would have expired. The producers decided to use the release date strategically. The film was released on July 24, 2015. Even though it was released in the summer which is prone to blockbusters, Paper Towns had no real competition to threaten attracting its demo (The Vatican Tapes? Samba? Smosh: The Movie? Pixels?). Finally, the soundtrack relied on less mainstream artists that would be familiar with YA audiences such as Twin Shadow, Santigold, Grouplove, HAIM, Vampire Weekend, The Mountain Goats, The War on Drugs, and Galantis. So this formula amounts to: exploit generous production incentives + aim for a YA audience of Green fans + release on a day of no real competition + create a soundtrack of cool non-mainstream artists those YA audiences would like = profit at the end of the rainbow. (It's a given that part of the formula is a low budget.)



UNFRIENDED 

Universal 

THE FILM
The Blumhouse genre film launched in April without much fanfare, from Timur Bekmambetov’s Russia-based film factory Bazelevs. The key here is that the makers delivered this movie for a $1M budget, and it reached the mainstream. The picture grossed $64M globally, and participations were minimal. That meant that the net profit on this little but overachieving murder mystery with supernatural elements was a whopping $17.3M, for a Cash on Cash Return of 1.3.

THE BOX SCORE
Here are the costs and revenues as our experts see them:



THE FILM STRATEGY takeaway: First of all the genre is found footage horror which allows for the film to be low-budget AND get away with looking low budget. The producers engaged in an endurance speed-a-thon to finish the film. Production was 16 days total, including six 12-hour days of principal photography, three days of pick-ups and then a few more reshoots. Unfriended then had a slow rollout which it used to build a buzz and test it with audiences. According to Wikipedia, Unfriended initially had its world premiere on July 20, 2014 at the Fantasia Festival and screened on the film festival circuit under the title of "Cybernatural." A generally positive film festival reception and test screenings for the film prompted Universal Pictures to pick up the film rights with the intent to give it a wide theatrical release the following year. The film was screened at Playlist Live on February 6, 2015 (a popular convention for internet celebrities from Vine and YouTube) and premiered at SXSW on March 13, 2015. The film's title was changed from "Cybernatural" to "Unfriended" and the film was theatrically released on April 17, 2015. April 17 did not provide for any major competition with the likes of Paul Blart: Mall Cop 2, Child 44 and Monkey Kingdom being released on the same day. The filmmakers also tried to use social media strategically to organically create interest for the film. 

  • On March 13, 2015, the day of the film's official premiere at SXSW, scenes from the film were uploaded and a chat box appeared, where viewers could talk to Laura. Once she was finished talking, scenes appeared on the screen. 
  • On February 13, 2015, a campaign was launched with Kik Messenger, in which Kik users could have a chat conversation with Laura. This made use of automated responses and pre-scripted responses, while also driving users to a dedicated microsite. 
  • During production, official Facebook and Skype accounts were set up for the characters in the film, and, after the premiere at SXSW, people who attended were "friended" by the official Laura Barns Facebook account. There was also a Twitter account, which tweeted attendees of the after-party. (Wiki)

So this formula amounts to: make a found footage horror film which can be done cheaply and look cheap + generate buzz via film fest screenings + release on a day of little competition + create a virtual world of the film that fans can participate in via social media = profit at the end of the rainbow. (It's a given that part of the formula is a low budget.)



THE VISIT 

Universal Pictures 

THE FILM
Another highly profitable Blumhouse-produced genre film success for Universal, this one with M. Night Shyamalan. The picture cost just $5M to make, and when these babies hit at that budget level, the returns can be scary. The global box office was $98M, and while the participations were higher than on Unfriended, the gross was much higher as well. So the studio’s net profit on The Visit was $43M, for a Cash on Cash Return of 1.61. A smashing result to the studio’s bottom line.

THE BOX SCORE
Here are the costs and revenues as our experts see them:


THE FILM STRATEGY takeaway: This is another found footage horror film which also allows for low budgets and a low budget look. The film went through multiple editing phases starting out as an art house horror film before becoming a dark comedy to then finding a blend between the two for its release. The film was also shot in PA which has generous production incentives. Finally The Visit was released on 9/11 which is after the official end of summer movies and a date that most studios would prefer not to release a major film on. Plus it was a horror film that was released before all the other horror films competing for Halloween would come out on. So this formula amounts to: make a found footage horror film which can be done cheaply and look cheap + shoot in a state with generous production incentives + release on a day of little competition = profit at the end of the rainbow. (It's a given that part of the formula is a low budget.)




INSIDIOUS: CHAPTER 3 
Focus Features

THE FILM
The third installment of the fright franchise — and another one from Blumhouse — slipped from the high-water mark of Insidious 2, but it was still great business. The original, made for just $1.5M, grossed $97M worldwide. The sequel carried a $5M budget and brought in a whopping $161M globally. The third installment carried a $10M budget and grossed $112M worldwide. The participations and bonuses reached that budget, but the film was still a profit-maker. The net profit was $44M for a Cash on Cash Return of 1.6.

THE BOX SCORE
Here are the costs and revenues as our experts see them:


THE FILM STRATEGY takeaway: This is the third horror film on this list and one based on a hit series so it already had buzz and credibility with an audience built of fans who recognized the brand. It also used social media to generate anticipation. According to Wikipedia, on October 23, 2014 the same day the teaser trailer came out, director Leigh Whannell invited fans to join him for a live Q&A session on the movie's official Facebook page. A few days later, on October 28, 2014 the same Facebook page reached 4 million fans. On December 17, 2014, fans were invited to connect with Insidious on Kik Messenger for exclusive content. The producers also created events in select cities to great fanfare. On March 16, 2015, Focus Features debuted a teaser for the full official trailer that was eventually released the following day, on March 17, 2015, during a series of launch events in selected cities, including Miami (where lead star Stefanie Scott held a Q&A session), Chicago (with supporting actress Hayley Kiyoko in attendance), and New York City (where Fangoria Magazine hosted a Q&A session with Lin Shaye). Finally, it launched on June 5, 2015 which had no real competition in its genre or in general (Spy and Entourage being the most prominent films released that day). So this formula amounts to: make a horror film which can be done cheaply + base it on a film with brand recognition + release on a day of little competition = profit at the end of the rainbow. (It's a given that part of the formula is a low budget.)

For help in formulating a strategy for your film as well as using production incentives, contact me at danny@djimlaw.com.

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