Box-office Up, But So Are Production Costs
While box-office revenue rose both domestically and internationally, the increased revenue was partially offset by a significant rise in the costs of production and distribution and by a rise in overall film output, according to the MPAA's state-of-the-industry report issued Tuesday. The report indicated that the average movie cost $65.0 million to produce last year against $63.6 million in 2005. Reporting on the rise, Daily Variety commented today (Wednesday) that it "may be a result of the rivers of private equity flowing into Hollywood over the past year as investors and hedge funds showed up with bushels of money to underwrite studio pictures." The MPAA said that marketing costs dropped slightly in 2006 to $34.5 million per picture versus $36.1 million in 2005. The number of new movies increased to 607 compared to 549 in 2005.