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Building the Perfect Bomb: The Numbers Behind Box Office Flops

The Lone Ranger (2013)

The biggest "box office bombs" of all time, much like the biggest hits, are not always the ones you're expecting them to be.

Back in December of 2014, I was hanging out at a Christmas party when the subject of movies came up -- which, with me around, it invariably does. A friend of mine mentioned Waterworld (1995) and referred to it, in no uncertain terms as "the biggest flop of all time". I moved to correct this fact, indicating that Waterworld was nowhere near the biggest flop of all time, and that there are much bigger box office failures out there in the ocean of Hollywood. Before I even finished my sentence, she stated again, even louder, "It was the biggest... flop... of alltime!"

This is, of course, a common misconception based largely on anecdotal evidence, so I let it go. Still, the conversation did make me think about what really constitutes a hit, and what really constitutes a bomb.

The fact is that Waterworld, the "biggest flop of all time", doesn't even make the list of the top 50 biggest box office bombs. That is because -- brace yourself -- Waterworld was, in fact, not a flop at all. The post-apocalyptic Kevin Costner vehicle made $264 million worldwide against an estimated budget of $172 million, making the film a worldwide profit of over $89 million. Industry estimates set the total budget, with after-production costs included, at $235 million. But if that claim is true true, it still leaves Universal Studios with almost $30 million in profit alone.

So what caused this rumor?

Bad Words Disguise Big Receipts

The cause was mostly negative word of mouth, surrounding the fact that the initial $100 million budget soared to a brobdignagian $172 million due to a series of setbacks and production issues that made Waterworld immediately the most expensive movie ever made, not just by Universal but by any studio at that time. The Hollywood press circled like sea vultures over the presumed shipwreck of Waterworld, predicting its demise and cleverly calling it "Fishtar" (in reference the notorious 1987 flop Ishtar) and "Kevin's Gate" (in reference to Michael Cimino's 1980 film Heaven's Gate, the budget overruns and small box office of which sunk United Artists as a studio). Thus, Waterworld was a joke before it was released, but the joke did not keep patrons from going to see it. The resultant profits, while respectable, still were not enough to outweigh the impression the press had made.

Heaven's Gate (1980)

It takes a titanic film to get out of a press mess like that. Coincidentally, Titanic (1997) was similarly mocked in the press for its budget overruns, release delays, and surefire failure status. One enormous flop was predicted by all. Instead, the $200 million Titanic became the first movie to net a billion dollars, and it kept going to the point that its gross box office profits alone are now over two billion. The predicted failure became the most successful movie of all time, a title it held for 12 years until Avatar (like Titanic, also directed by James Cameron) took that crown.

Waterworld is most assuredly no Titanic, but that doesn't somehow make it a flop either. (Ironically, 1980's Raise the Titanic made seven million against a $40 million budget and sunk its studio.)

So that leaves, what, Ishtar and Heaven's Gate as the biggest flops of all time? Interestingly, no. While, both films did lose money, neither of them made the top 50 bombs list either.

Finding the Right Formula

What exactly makes a movie a hit and what exactly makes a movie a flop? That question is virtually impossible to answer, because there is no "exact" formula. This is, in part, due to the fact that studios do not really want us to know the exact expenditures and earnings for any given film. As we discussed in the Next Reel article "Hollywood Creative Accounting", technically just about every movie can be a financial failure on paper.

Aside from the difficulty of getting one's hands on exact budgetary numbers, there is no universal definition of a "box office bomb" or even "box office hit", for that matter. There are also different standards of bomb versus hit virtually for any movie. So how can we calculate success and failure?

Inflation has made simply counting ticket sales an inexact science. Adjusting for inflation, Gone with the Wind (1939) is the best-selling movie of all time, although it made $390 million as compared to Avatar's $2.7 billion. Similarly, The Fall of the Roman Empire (1964) is the sixth biggest box office failure of all time when one adjusts for inflation (less than two million earned against a $20 million budget), but doesn't even break the top 50 without adjustment.

We cannot simply count the amount of money a film earns at the box office alone. The budget must also be taken into consideration. One doesn’t compare Star Trek (2009) to Bottle Shock (2008) and expect a comparable box office or budget. Sahara (2005) was a big box office money-maker with a gross of over $120 million worldwide. (Incidentally, it features the same main character as Raise the Titanic.) Most films would kill for success like that, but because Sahara cost $160 million to make, the film is one of the biggest bombs of all time. Final estimates indicate that after marketing and distribution, Sahara actually lost around $100 million. By way of comparison, 2012's The Devil Inside didn't come close to Sahara's box office receipts, having finished its run at just under $102 million, but because the film cost $1 million to make, the latter film is considered a huge hit.

Most everyone knows that a film's "production budget" is not the final word on how much a film costs. There are distribution charges, marketing fees (and more) that combine to expand a film's price tag even after the final cut. Furthermore, exhibitors take their cut of the proceeds, and there could be any number of interested parties with percentages of the gross before the film's net profits can be calculated. Jack Nicholson, for example, received a percentage of the gross proceeds from Batman (1989), meaning that he made money whether the film did or not. Therefore we cannot simply count the amount of money a film pulls in against the reported budget. Take the excellent Martin Scorsese film Hugo (2011), which cost about $160 million to make and earned over $185 million. Including marketing and advertising costs, Hugo doesn’t even break even and is regarded as a box office failure. According to the film’s producer Graham King, Hugo would have needed to make $450 million to be profitable, especially considering the money Paramount spent to market the film.

To elaborate, Avatar (2009) has raked in the most actual profits of any film. According to, a website that factors in total sales versus total cost for movies, Avatar earned over $2.7 billion against a budget (including after costs) of $425 million. That's a 655 percent return, with $2.3 billion standing as nothing but profit. However, percentage-wise, Avatar is not the most profitable film ever made. While the low-budget Paranormal Activity (2009) amazed analysts by recouping over 43,000 percent of its budget, the biggest winner happens to be the little porno movie that went mainstream, Deep Throat (1972), which sucked in around 100,000 percent of its tiny budget.

Unsurprisingly, that fact doesn't make a whole lot of lists.

There are some movies with bigger marketing budgets than production budgets. Small horror movies and romance films often generate larger dollars (fueled by advertising) than their budgets would suggest. The Blair Witch Project (1999) cost barely $22,500 to make, but was promoted as a “real” documentary with a viral advertising campaign. Artisan Entertainment spent a little over $1.1 million to acquire the film, and about $25 million for that amazing marketing scheme that is still studied to this day. That far outweighs the meager production budget, but the film was still a hit, pulling in almost $250 million. Similarly, My Big Fat Greek Wedding (2002) cost a mere five million to make, but it became a sleeper hit and was heavily marketed after its release, helping the film to earn over $368 million.

Additionally, there are the “prestige” films that studios release and advertise with more hopes of awards and notice than actual box office returns (although both would be nice). One example is The Shawshank Redemption, which was a box office bomb. That hiccup didn't stop it from gaining the notice of critics, earning seven Academy Award nominations, and winning two Golden Globes. The Shawshank Redemption was a financial failure, earning $16 million against a budget of $25 million. Heavy marketing during Oscar season prompted more interest in the film, which ultimately earned a total of $28 million in the USA, followed by an additional $30 million internationally. That marketing continued and helped The Shawshank Redemption earn $80 million more on the home video market. And thus, the bomb exploded, and became a hit.

International Receipts and the Rule of Thumb

Of course, even “worldwide box office” is not as simple as it seems. Internationally released movies make for bigger box office, but more confusing accounting due to local currencies that fluctuate against the dollar on a daily basis.

While there is no constant and exact formula for calculating a bomb versus a hit (and due to contracts, every movie is different), analysts commonly cite the rule of thumb that a film's final cost (after marketing, distribution, shipping, print-making, etc.) is about 200 percent of its budget. Therefore, a film must make twice its original production budget just to break even, let alone make a profit.

By that logic, let's take Superman Returns (2006), the film whose sequels were cancelled after poor box office results, paving the way for the saga reboot in 2013's Man of Steel. So how much did Superman Returns actually lose? Nothing... on paper, at least.

According to that 200 percent rule of thumb, Superman Returns needed to make $408 million against its $204 million budget, and the film made $391 million. To casual observers, the film made $187 million in pure profit (before the aformentioned "Hollywood Creative Accounting" comes into play), which should have warranted sequels, but according to the “rule of thumb”, Superman Returns actually lost about $17 million. This is before merchandising and DVD sales, all of which made Superman Returns profitable. However, Warner Bros. was counting on those figures anyway, so the box office returns were disappointing.

The Insider's Formula

Of course, the “200 percent rule of thumb” is just shorthand, and immediately inaccurate because neither worldwide gross nor production budgets are constant numbers. These are always variables in the cost and profit makeup. The “rule of thumb” is considered a somewhat reliable calculus for how much a film needs to make to “break even”, not a calculation of profit or loss.

Therefore, a more accurate calculus is what we will call the “Insider’s Formula”. This Hollywood formula (often cited as the calculator for a film’s success or failure) is still problematic (as the post-production spending is also variable), but it does give us a good estimate of a film’s losses, by guessing at the after-production costs like marketing and distribution in comparison to the budget. This Insider’s Formula is “Gross receipts divided by two minus production budget” (or, G/2 – B), the result of which estimates your film’s total losses.

The two formulas match up when you use perfectly round numbers.

Let’s say you’ve got a Studio, Inc. film known as “Example: The Movie”, which costs exactly $100 million to make and earns exactly $200 million at the box office. According to the “rule of thumb”, the film breaks even to the penny, as it made exactly 200 percent of its production budget. Using the “Insider’s Formula”, we see the numbers match. Half of the box office gross of $200 million is $100 million. Subtract your $100 million production budget and you get exactly $0. The film breaks even both ways.

When real world (meaning, not-so-round) numbers come into play, things get a bit more complicated.

For instance, let’s look at the 2004 bomb Alexander, which cost $155 million and made $167 million worldwide. We know by now that a film can make $12 million over its budget and still be considered a bomb. Using the Insider’s Formula of “G/2 – B”, we cut that $167 million gross in half, giving us roughly $83.5 million. Subtract $155 million from that and we get a loss of roughly $71.5 million. This means Alexander needed to pillage about $226 million to be successful. That’s around 146 percent, and a far cry from our 200 percent rule of thumb, which suggests a need of $310 million. That $84 million difference is hardly chicken feed, and with other films, the divide can be much greater.

Alexander (2004)

Town & Country (2001) made $10.3 million against a $90 million budget. For those of you without a calculator, that makes for a loss of almost $85 million (based on half the gross minus the production budget), meaning that Town & Country needed to make 194 percent of its budget (or roughly $175 million) to break even. That is a lot closer to the 200 percent rule of thumb, which sets Town & Country’s forecast at $180 million, though the film’s losses were a lot greater than Alexander’s.

Then again, for those of us hanging out at parties and discussing movies without an abacus and slide rule in our pocket, that 200 percent idea makes for some easy (if unreliable) mathematics, which fall so trippingly from the tongue. With a few mojitos being passed around, it certainly beats running up to a white board and “entertaining” your friends with algebra. After all, even the more accurate formula is problematic, as all of the numbers we are allowed to see are, in fact, rough themselves.

By any formula and any adjustment, many of the best-known box office bombs also tend to make the top flops list, even though some of the exceptions prove to be surprises. While Heaven's Gate is only the tenth biggest bomb when one adjusts for inflation (and, again, doesn't even make the top 50 without it), Sahara makes the list at number eight regardless of adjustment for inflation or not. The also infamous Cutthroat Island (1995) and Final Fantasy: The Spirits Within (2001) were both edged out of the top ten of all time, but make the inflation-adjusted third and seventh spots, respectively. Before you ask, no, Ishtar is not on either list.

Another film that makes both lists, quite sadly, is The Lone Ranger (2013). With a budget of $225 million, The Lone Ranger is unquestionably the most expensive flop to date. At an estimated $275 million with after-production costs (again, not all estimates follow the same formulas and every production is different), the film stands as the fourth most expensive movie ever made. Did audiences stay away in droves? Actually, no.

The Lone Ranger made about $260 million at the box office. Those blockbuster numbers still couldn't keep the studio in Silver, as the estimated loss on the film tops out at over $15 million. While that is a tragedy, The New York Times estimated that The Lone Ranger's production and marketing costs actually topped out at around $375 million, making this pale rider an even bigger loss, falling far short of the $650 million it would take to break even. Both the rule of thumb and the Insider’s Formula suggest that the figure needed to break even was under $500 million. Either way, The Lone Ranger reportedly lost between $94 million and $120 million. The film stands as the fourth biggest bomb of all time without inflation adjustment, also clocking in at number nine on the inflation-adjusted list.

While The Lone Ranger may be the most expensive movie ever to lose money, it isn't the biggest money loser (including marketing) of all time, nor is it the only high-profile failure for its studio, Disney.

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