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David Poland

By David Poland

Margin Call Math

There’s a THR story that our very own Ray Pride linked to the front page… and the math doesn’t seem to match the enthusiasm.

The movie cost $3.4m to produce.

Lionsgate/Roadside picked it up for $1 million.

Score: Movie, down $2.4 million… Distrib, down $1 million.

The theatrical did $5.3m, which is rentals of $2.9m. Shall we put the marketing cost of the theatrical at $1 million.

Score: Movie, still down $2.4 million… Distrib up $.9m.

VOD, according to THR numbers, did no more than $3.5m. Let’s put the split to distribution at 60% or $2.1m.

Score: Movie, still down $2.4 million… Distrib up $3m.

Let’s not assume to know what the split between the producers and the distributor is at what stage. Let’s just look at the overall situation.

After theatrical and VOD, there is a $600k profit on an investment of $3.4m.

Now, acknowledge all the post-theatrical revenue, which could be substantial. Let’s say that it’s 70% of the VOD and theatrical…. $6.2 million. So we’re up to $6.8 million in profit on a $3.4m investment. Great.

Who is chasing after a business like that? If you can assume that you can turn this trick once out of every three times, you’re in a breakeven business. And no one can assume that in the indie world. That’s how you end up chasing bubbles.

And let’s say that post-theatrical/VOD is 150% of what those first distribution methods made. Now you’re looking at $13m or so in profit on the $3.4m investment, plus the opportunity costs and more than a year of lots of people’s focus and work. Now we’re looking at 1 in 5 to make a breakeven business.

I’m just saying, let’s remember why people are really in this end of the business. They love movies. They can get personally wealthy, though getting corporately wealthy is almost impossible. But for a bunch of risk takers, it really can only come back to a love of what they are doing, what they are involved with.

Most of the high profile movies bought at Sundance last year were loss leaders for their buyers in anticipation of the next work from the filmmaker or actor. They would have all loved to have had hits. But Par didn’t buy Like Crazy expecting to have a Paranormal Activity happen. They surely wanted a higher gross, but mostly, they bought into Drake Doremus’ talent. And he is in post on his next film for them now.

It’s not accurate to say that no one is getting rich up here in the mountains. But a few million in profit isn’t “fuck You” money by any stretch of the imagination. It’s “I can write the next one while eating steak for 3 years if I need to” money. And that’s not nothing. But life is too short for anyone truly creative to be that simply mollified.

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23 Responses to “Margin Call Math”

  1. Joe Leydon says:

    Well, there’s something else to think about. If all the numbers you’re tossing about here are accurate — and I have no reason to believe they’re not — we’re talking about a movie that, at best, was viewed by less than one percent of the US population. Yet it received (and, I would quickly add, deserved) press coverage vastly out of proportion to the number of people who were interested in seeing it. (It made my Top 10 list.) But all that coverage wasn’t enough to get many asses into seats, or eyeballs onto TVs.

  2. berg says:

    MC has great blu and dvd potential

  3. David Poland says:

    I would say that in today’s market, MC has average DVD potential.

    That doesn’t mean that it won’t build a cult, just that the cult thing ain’t what it was.

  4. Cloudless says:

    Margin Call isn’t a long term earner, either. It’s a here-and-now earner, of its time and place.

    But other less topical movies of the size and scope of MC can and will earn at least a small stream of revenue for a decade or more. Corporately not a big deal, personally maybe a big deal.

  5. berg says:

    I guess a cult built around Margin Call would also watch films like Rollover and docs like Inside Job

  6. JKill says:

    I’m pretty sure THR article lists the VOD revenue at 5 million, not 3.5 million…

    “Simultaneously released day-and-date on VOD, the film picked up another $5 million in revenue, according to sources, an eyebrow-raising accomplishment.”

  7. spassky says:

    While the numbers for Margin Call may not seem impressive to a lot of those used to parsing the numbers in this way, as leydon said, the disproportionate influence is where the profit may come from (how? i don’t know… i’d think dvd sales, but f*** if i know these days). A lot of friends of mine (particularly in urban areas, particularly in finance) who normally never see new movies saw this on VOD. For almost all of those friends who normally don’t see films on a regular basis, it was their prestige picture– you know, the one movie that average moviegoers cite as the best movie of the year, regardless of how many movies they actually see in a year. While I don’t think MC will be changing the game much, it at least is given people ideas on how to connect with these infrequent moviegoers who in fact are interesting in seeing a somewhat intelligent picture made for adults.

  8. Hallick says:

    If that VOD number is right, then can we finally put to bed the idea that VOD is going to be the out and out savior of independent and low budget filmmaking?

  9. sanj says:

    here’s the dp/30 for margin call –

    he talks about the money they made

    this movie is about bankers / wall street people screwing up – so i wonder how many of those people have seen the film …

  10. Joe Leydon says:

    This will represent a very small revenue stream, I’ll admit, but I can see Margin Call generating a few pennies over the next decade or 2 as it’s screened by college instructors who teach courses (like the Social Aspects of Film course I teach at UH) focusing on films that represent or illuminate the zeitgeist of the era in which they were made. Of course, it would help a hell of a lot more for the producers’ balance sheet if Kevin Spacey or Jeremy Irons got an Oscar nomination.

  11. The Big Perm says:

    This seems like the kind of movie that will pop up on AMC for the next ten years.

  12. Joe Leydon says:

    Perm: That, too. Unless, of course, AMC switches over to all scripted series by 2022.

  13. Paul D/Stella says:

    People are probably looking for a bright spot considering the performance of most of the Sundance movies that received major buzz & press last year. Martha Marcy May Marlene, Take Shelter, Like Crazy, etc. Seems like most either underperformed or didn’t perform. The biggest success was a wide release from Weinstein at $25 million. So rather than focus on the disappointments and failures, it’s “Look, Margin Call, that one did OK!”

  14. Sam says:

    David, you may want to check out the Q&A podcast with interviewer Jeff Goldsmith. Early in the film’s theatrical run, Goldsmith asked producer Zachary Quinto and director J.C. Chandor how the recoup on the initial backers’ investment was going (he asked toward the end of the discussion). Quinto remarked, I believe, that after the Sundance sale and the pre-sold foreign rights, the producers had already broken even — clearly due to the cast assembled as this is rarity nowadays. The remainder of the theatrical and VOD run would be all profit; Quinto subsequently added that the film was over-performing in the international markets. By estimation, Margin Call has proven extraordinarily profitable.

    However David, I agree with your fundamental assessment. Producers enter a project knowing that there is very little chance they will see money on the back-end. It’s a high risk business. Fortunately, Chandor’s film is an outlier.

  15. pete says:

    Your numbers are way off. After NY tax credit this movie cost the original investor 2.8 mil to make. It took in 1.1 mil from sundance for US and sold in 40 other territories internationally. Clearly Quinto is right that the investor was in the black very early in this game. On the distrib side It has already made over 6 mil overseas theatrically alone. Then made 5.4 mil us theatrical plus 6 mil from VOD. Lionsgate handled all the VOD elements so they probably have a 75-25 split with cable ops etc. That puts its at almost 17 mil worldwide in first run income. Then add in Airline, cable, dvd, etc and this little movie starts to look pretty damn profitable. Not sure what you are talking about with your f you money but it aint easy to clear five or six mil profit in any business.

  16. LaVerdad says:

    It is so frustrating to read this site. It just is. David Poland is the guy who was too scared to become an actual filmmaker. That would take talent and work. Even a lowly CE has to have talent and a work ethic. As we can see by his appearance, David lacks basic interpersonal skills.

    But, failing in his ill suited dream to become an actual filmmaker, he has decided in some unholy misguided attempt to become the Dean of Students or something. Those who can’t do, teach, but he can’t even teach so he sits here lording himself each week as if he understands the tea leaves and the numbers. He alone understands.

    The traffic the site gets is minimal and the content is laughable. No one would come here to read Klady’s often inaccurate regurgitation of Rentrack. One understands the need for Voynar to pay down the enormous Vons bill, but do her lame essays get even two figure hits? The only traffic of any note comes from the 30 or so commenters who actually try to make sense of Poland’s hogwash. Certainly the stupid ads currently on the site have not made ONE person sit up and go “Oh, sure I will vote for such and such.”

    But does Stacey Snider or Tom Rothman actually read his nonsense and go “Aha, thank God David, because of you I will no longer make a film like that!” Of course not. They don’t even know the guy or read him, nor do their underlings. In an unofficial canvass of 22 actual studio level executives only one knew who Poland was and then only vaguely -“Is he that Internet Misfit?”

    But it isn’t just the condescending, stentorian tone that sucks hard. He is usually WRONG. In the above example, he doesn’t know at what point money flows back to the film. He admits that, yet without that his whole analysis is useless. And he doesn’t gloss over Foreign Revenues, he SKIPS THEM ENTIRELY. Foreign revenues on this film could be in the millions, thrusting the film into profit. But that doesn’t suit his thesis so he just IGNORES them.

    The guy has censored/banned actual film producers and screenwriters. His business model is failing. Yet some of you still reply. He speaks for no one to no one. Lex G you are a thousand times more interesting that Poland- stop being a lurker and start your own site. You expose yourself in your posts as does Wells. David has no personality to expose.

    Internet Misfit indeed!

    (post likely to be taken down, truth remains)

    for those keeping score, David has blocked the Hospital IP to censor me without addressing a single point.

  17. David Poland says:

    Sounds like you got a new IP address, Don.

    PS There is a good answer for your frustration. Join the billions who don’t read this site.

  18. David Poland says:

    Pete… I’m just riffing off the Hollywood Reporter story. If they presold – not surprising – and made real money overseas, then it was even more profitable for them. And everyone who has mentioned it is right that I should have pointed to foreign as well.

    Not that there’s anything wrong with that… but it was presold off the cast, not the great movie. And as anyone who attends festivals knows, the movies with these all-star casts are usually turds, not quality. God bless the exceptions, but they are very rare exceptions.

    I guess my bottom line is that the VOD model can work for indies… but it’s not a return to the DVD can’t-lose-money era. And it’s not a huge amount of money.

    There aren’t many people clamoring to get into a low-margin, high risk business for business reasons. They do it for love or ego or a willingness to build library without worrying about big profits.

    VOD hasn’t changed that.

    I’m not anti-Margin Call. I’m just saying, VOD has had a cap so far. It’s a stable, but unexciting piece of business.

  19. yancyskancy says:

    I don’t know enough about any of this inside stuff to throw stones, but I do know that it would have been possible for “LaVerdad” to question the popularity of Kim Voynar’s essays without couching it in a cruel, irrelevant insult.

  20. David Poland says:

    LaVerDon has nothing to say about anything except how much he hates. Let it sit.

  21. Dberg says:

    This doesn’t seem like a good “foreign” sale…. especially a presale, even with the cast… For example let’s say you were talking with a German Distributor… you would probably – based on the budget ask 400 – 425 for the territory. SO a distrib would have to put up 400K plus have some money set aside for P&A… on this film (not to denigrate the story nor to comment on creative side). That seems like a stretch… and distribs usually don’t care about US Film Fests, unless a US distrib buy includes a big P&A commitment…

    Anyone disagree?


  22. cadavra says:

    I feel the need to point out that MC was a good model for a VOD title, since it’s literally all talking-heads, as opposed to something more action- or effects-oriented that would play better in a theatre, like most of the Magnet titles.

  23. pete says:

    The real question that no one seems to be asking in any one of the many articles about Margin Call’s Dual release strategy is the fact that the theater owners wouldn’t allow Roadside to expand the release beyond 199 screens. Once it started doing pretty damn good business in week 2 they didn’t allow it to expand any further. So we still don’t really know what would have happened. I heard a talk where one of the owners of Roadside said that if they had been allowed to expand the film to three or four hundred screens they would have. And then it would have been really interesting to see what all that additional P&A spend would have done to the theatrical but more importantly what it would have down to the VOD. He also said that the theater owners wouldn’t allow them to advertise anywhere that it was even available on VOD. So they made 6 mil on VOD with out ever letting anyone know it was there. To say that VOD does not have the potential to replace the DVD market is rediculous. With the right interface and advertising it will dwarf DVD revenue once they figure out how to deliver it correctly to the fat guy on his couch. I know alot of people in the 20’s that On demand several movies a week. That’s the future. Margin Call just didn’t get a chance to fully test it out because of the restrictions in place. But somebody along the way is going to. The only concern is will it put theater owners out of business in the process?

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