Over the last two days, we have analyzed both the budget and box office performance for Oscar nominated films. So what about the combination of the two variables? Below we show all the nominees and winners for Best Picture over the last decade.
First, notice that the vast majority of nominees and winners have Box Office sales in excess of budget. This is a strong predictor of the profitability of a film, although it doesn’t account for meaningful costs such as marketing. Box Office blockbuster Avatar has the greatest absolute magnitude difference between Box and Budget, despite it’s $280 million cost to produce. But the largest percentage difference between Box and Budget was indie breakout Juno, which earned $143.5 million with a budget of $7.5 million.
An Oscar nomination itself is a good indicator of “Profitability” (Box less Budget). For every $1 in budget, an Oscar nominated film earns around $1.62. This universe is variable, however, with an R-squared of 0.564.
It is interesting to look specifically at Best Picture winners, where there appears to be a tightly correlated line of best fit. For every $1 in budget for a Best Picture winner, the film earns around $2.36. The R-squared here is 0.549. However Departed is a bit of an outlier. But the rest of the winners seem to indicate that for every $1 in budget, an Oscar winning film’s likely box office is $3.65. And, this is one tight-fitting line, with an R-square of 0.833. Those are compelling economics, which identify a real value for an Academy Award win.
There is no better way to celebrate a TGIF than a little statistical fun!
And if you are looking to learn how to make a best fit line of your own, we suggest Mathbits.com #2 methodology: “Using a strand of spaghetti, position the spaghetti so that the plotted points are as close to the strand as possible.”