THE HOBBIT Movies Cost $745 Million, But That’s Okay Because They’ve Already Made Nearly $2 Billion

     October 22, 2014

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Calculating the budget of Hollywood films is a tricky business.  Rarely is the “official” number the actual amount that a movie cost, and even if a movie seems to have made more than its reported budget, that doesn’t factor in the cost of marketing and distribution; roughly, a movie has to make about one and half times its budget to become profitable.  The cost, obviously, goes up with sequels, as studios put more money into a film that now has a much higher probability of becoming profitable thanks to brand recognition based on the first film.  In the case of The Hobbit franchise—a series of prequels to one of the most popular and successful film trilogies of all time—one can imagine the amount of money Warner Bros. spent to bring them to fruition.

But now one doesn’t have to imagine that number, as it is being reported that the cost of the three Hobbit films has now totaled $745 million.  That’s, uh, a lot of money, but even still, it’s looking like most of what the final installment, The Hobbit: The Battle of the Five Armies, makes in theaters will be profit.  More after the jump.

the-hobbit-the-battle-of-the-five-armies-poster-bilboWhile the budget of a film is notoriously difficult to confirm, AP discovered the budget of the Hobbit trilogy in financial documents filed this month in New Zealand, which reported the cost of the trilogy thus far at $745 million.  That number doesn’t include the final eight months of production costs on The Battle of the Five Armies so the final tally will probably cross the $800 million mark, but that’s a huge number.  The Lord of the Rings trilogy, for example, cost around $281 million not adjusting for inflation.

But it’s not hard to see how The Hobbit movies budget could approach $1 billion.  Costs have risen in the decade since Lord of the Rings hit theaters, and Jackson has been experimenting with new technology on The Hobbit trilogy, shooting in 3D at 48 frames per second.  Moreover, there’s a far greater amount of CG in use in these films, as Jackson ditched the “bigatures” and miniature models that he employed to convey the scope and scale of The Lord of the Rings in favor of crafting the environments digitally.

Most interestingly, though, is the fact that even at a cost so high, the trilogy is already close to breaking even.  The first two Hobbit films combined made nearly $2 billion worldwide, so that means that whatever The Hobbit: The Battle of the Five Armies makes in theaters will be mostly profit.  And that’s not even factoring in the merchandising.

This is all somewhat surprising given the subdued reaction to these films in comparison to The Lord of the Rings trilogy.  None of the Hobbit movies thus far has managed to gross as much domestically as any Lord of the Rings film (the lowest, Fellowship of the Ring, totaled out at $315.5 million domestic versus An Unexpected Journey‘s $303 million), and yet internationally the films continue to play like gangbusters.  It’s an interesting dichotomy.  Here in the States, anticipation for the Hobbit films has been fair, but it’s never quite recaptured the “phenomenon” level of the LOTR trilogy.  In fact much of the overall reaction to the prospect of this last Hobbit movie seems to be rather tepid or unenthusiastic.  And yet, globally this franchise is huge.

the-hobbit-the-battle-of-the-five-armiesIt just goes to confirm what we’ve already known for some time: the U.S. is no longer the prime target for the large-scale, franchise feature films that Hollywood studios put out year after year.  Internationally is where these movies make their money, and so if a studio is going to invest a huge chunk of cash to make one of these tentpole pictures, they’re going to do so with an eye towards international audiences.

Is this a good thing?  A bad thing?  I’m still a little on the fence.  On the one hand, movies should be for everyone.  But on the other hand, the idea that studios want spectacle and streamlined, easy-to-comprehend plots that can translate easily to other cultures over more intricate, character-driven storytelling is troubling.  Sure something like Guardians of the Galaxy or Edge of Tomorrow can dig a little deeper while still remaining big and fun, but then we have movies like The Amazing Spider-Man 2 and the Transformers franchise that are just plain dumb.  I think studios continue to underestimate the intelligence of their audience.

What do you think about all this, folks?  Have you seen a dramatic shift in the way tentpole films are made now that they’ve become one of the U.S.’s biggest exports?  Or do you think things are still mostly the same?  Sound off in the comments below.

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