When you think of the most profitable movies at the box office, you probably think of the Hollywood blockbusters - films that grab headlines because of their huge budgets and equally huge profits, like "Avatar," "Titanic" and "Pirates of the Caribbean." However, when it comes down to it, these aren't the movies that bring in the most return on investment for their respective film studios.
Most of the time, movies with smaller budgets provide studios with the most bang for their buck, if the film reaches a profitable state. We'll take a look at the top 20 movies that have provided the biggest return on investment (ROI) (according to industry info website, The Numbers), and the ones that have been the biggest Hollywood flops, to find the movie genre that consistently provides the best returns. After the dollar value of the international gross is divided by the movie budget, this value is divided by two to obtain the percentage return; this extra step is conducted in order to determine the approximate funds that are returned to the movie studio.
It should be noted that The Numbers' statistics are rough estimates of budget and box-office income, and DVD sales and rental income are not included. (Do the characters in these classic films reflect what it's like to work on Wall Street? Find out in Financial Careers According To Hollywood.)
- Action Adventure
Action adventure movies make the big headlines with the record-breaking ticket sales. However, huge ticket sales are usually matched by huge budgets, which means that these movies bring in a lot of money, but not the best ROI. For instance, to date, "Avatar" has made over $2.7 billion, yet its ROI is "just" 500%, as compared to lower-budget action film "Mad Max" (1979), which returned 24,837.5%. In the top 20 movies that have the best ROI, you won't see any of the blockbusters you'd imagine, and "Mad Max" is the only film of its kind in the top 20.
However, in the lowest ROI, there are a couple of action movies that come up. "Southland Tales" with -98.93% "Outlander" was -98.75%, "Boondock Saints" at -98.21%, "D-Tox AKA Eye See You" at -98.36% and "I Come With The Rain" at -98.26%. So, although action, adventure and fantasy movies can be huge money-makers, when it comes to box office sales, they don't provide the best return.
- Drama, Romance and Comedies
Dramas and romance don't typically have huge budgets for special effects and sets, so when one really takes off, it can make an incredible ROI. The movie "Once" was made on a shoestring budget ($150,000) and took off, gaining Oscar nominations in the music category and taking in nearly $19 million. Overall, it has the 10th-highest ROI at 6,232.39%. George Lucas' second film, "American Graffiti" is number nine on the list at 8,909.01%, "Napoleon Dynamite" is at 12 with a 5,667.62% return on its $400,000 budget, and the classic "Gone With The Wind" is at 15 with an ROI of 4,906.73%.
However, it's not all bright spots for dramas, romance and comedies – there are also a lot of box office failures. The Matt Leblanc war-comedy "All The Queen's Men" stands as the movie with the worst ROI of all movies, with a -99.92% return – do the math: it got back .08% of its budget. Other dramas didn't fare much better: "Imaginary Heroes" had a limited release and saw an ROI of -98.55%, costing $10 million and taking in $290 thousand at the box office; the star-studded bust "Winter Passing" is at -98.37%, and joins five other box-office busting dramas in the top 20 worst ROI. (Common mistakes can prevent even the smartest investors from beating the market. Find out how in Brains Don't Always Bring The Bucks.)
- DocumentariesWith little in the way of cast, crew, special effects or big name stars, documentaries can often be made for a tiny fraction of what it costs a big-name Hollywood film, and when these films become popular, the ROI is astronomical.
The film "Tarnation," which is pieced together from videos the filmmaker recorded throughout his whole life, had a reported budget of $218. However, take that "budget" with a grain of salt, as it is the amount that it cost the filmmaker to make the movie, but does not reflect the amount for marketing and distributing the film. Still, taking that number as a rough estimate of the film's costs to create, the ROI is 266,416.97%. This film is only beat out by one on the ROI list. Following "Tarnation," in fourth spot, is the anti-McDonald's film "Super Size Me," which cost $65,000 and had a return of 22,614.90%. There are no docs in the bottom 20 for ROI.
- Horrors and ThrillersHorror is another genre with a lot of huge ROI hits and few misses. The number one movie for ROI is the hit "Paranormal Activity," which was made for $15,000 and had a box office gross of $161,830,890 for a return of 539,336.30%. "The Blair Witch Project" gave the studio a lofty 20,591% return. "Night of the Living Dead" comes in at six with an ROI of 13,057.89%, "Friday the 13th" is (coincidentally?) at 13, with 5,332.24%, "Open Water" follows at 5,110.09%, "Saw" comes in at 18 with 4,195.68% and "Evil Dead" closes out the list at 3,820.00%. Horror makes a much smaller appearance in the bottom 20 for box office ROI. (In 1983, an expert trader decided to coach 14 novice traders. The results were astounding - read them in Turtle Trading: A Market Legend.)
Bottom LineThough The Numbers might not be precise, it gives a good estimation of the movie genre that can provide the best ROI at the box office. Some of these films did get limited release and went on to make a lot of money through sales and rental, but many of them simply lost their respective film studios buckets of cash. Overall, horror movies consistently have the most films in the top 20 for ROI and the least in the lowest 20 ROI, while drama is the exact opposite, having just two in the top 20 and dominating the bottom 20. Documentaries can take off, and even if they don't, they won't have the incredible losses that come with big Hollywood names and big Hollywood budgets. (The glitz and glam of Hollywood could help put some more glitz in your pocket. Find out how in Analyzing Show Biz Stocks.)
If you're still feeling uninformed, check out last week's business highlights in Water Cooler Finance: Auto Hope, Bubbling Oil and Obamanomics.