The way we measure box office success is completely broken

A ticket to a 3D movie can cost $15. Tickets to a Friday night showing cost $10.50 at one theater and $12 at the cineplex down the block. A seat for a matinee costs $5. That's quite the variation! But if tickets do not cost the same from time to time and from theater to theater, why measure movie success in terms of money? Let's take a look at how box office gross is reported, some alternative metrics of movie success, and the growing importance of the international movie market.

The way we measure box office success is completely broken

How are ticket sales reported?

The average North American ticket price flirts around $7.96 at the moment. Most cinemas reports sales totals on a per-theater basis using a service from the Rentrak Corporation, with many North American sales logged and communicated as soon as the ticket enters your hand.

Weekend movie projections are made using a variety of parameters. Pre-release projections take into account the rating, actors involved and awards won, and the time of year.

Weekend projections take into account sales thus far (particularly Friday and Saturday sales), with Sunday often an extrapolation of the previous two days.

The Old Standard: Domestic Box Office Gross
The domestic box office gross is what we are accustomed to hearing on Monday morning (or late Sunday night, if you keep up with weekend projections) — the total cash sales for tickets. Using domestic box office gross as a measure, the top ten movies of 2011 are:

1. Harry Potter and the Deathly Hallows: Part II: $381 million
2. Transformers: Dark of the Moon: $352.4 million
3. The Twilight Saga: Breaking Dawn, Part 1 : $280.5 million
4. The Hangover 2 : $254.5 million
5. Pirates of the Caribbean: On Stranger Tides: $241.1 million
6. Fast Five: $209.8 million
7. Mission: Impossible - Ghost Protocol: $202.8 million
8. Cars 2 : $191.5 million
9. Sherlock Holmes: A Game of Shadows: $182.4 million
10. Thor : $181 million

Harry Potter and the Deathly Hallows: Part II and Transformers: Dark of the Moon clearly surpass the rest of the top ten, but is revenue important if it is not analyzed alongside the cost of the movie?

Why not report ticket sales?
Individual ticket and unit sales work as a metric for sporting events and DVDs, so why not apply it to the box office? If an average value of $7.96 is applied to the top ten domestic gross for 2011, the number of tickets sold is easily calculated.

1. Harry Potter and the Deathly Hallows: Part II: 47.8 million tickets sold
2. Transformers: Dark of the Moon: 44.2 million tickets sold
3. The Twilight Saga: Breaking Dawn, Part 1 : 35.2 million tickets sold
4. The Hangover 2 : 32 million tickets sold
5. Pirates of the Caribbean: On Stranger Tides: 30.2 million tickets sold
6. Fast Five: 26.4 million tickets sold
7. Mission: Impossible - Ghost Protocol: 25.5 million tickets sold
8. Cars 2 : 24.1 million tickets sold
9. Sherlock Holmes: A Game of Shadows: 22.9 million tickets sold
10. Thor : 22.7 million tickets sold

The way we measure box office success is completely broken

Harry Potter & the Deathly Hallows Part 2 brings in close to 48 million people – that's more than the cumulative number of tickets sold for all NFL games in 2011. The tenth best grossing movie of 2011, Thor, brings in 22.7 million admission – a lot of tickets sold, but a significant drop off in sales from 1 to 10.

The aversion to report movie success as a function to tickets sales is likely rooted in the fact that older movies dwarf modern movies in ticket sales. For example, Gone With the Wind sold 226 million tickets through its several re-releases, while The Ten Commandments and Snow White and the Seven Dwarfs both topped 125 million admissions.

Many more movies are released per year in our world, with each movie competing for our box office love. Also, if we miss a film at theater, we know can see it on cable or rent it at our convenience. This was not the case in the early 20th century.

Dollars spent in production per ticket sold
An easy-to-understand metric of film success is the number of dollars spent by the studio to sell one ticket. This measure is calculated by dividing the production cost of the film (or the production cost plus marketing) by the number of tickets sold.

Using this measure of spending efficiency, Harry Potter & the Deathly Hallows Part 2 is narrowly beat by Hangover 2, with Warner Brothers spending $2.50 to sell one ticket of Hangover 2 versus $2.61 to sell a ticket to Deathly Hallows Part 2. Harry Potter & the Deathly Hallows Part 2 is a bit of an anomaly, as Warner Brothers split the production cost across two films, bringing the cost down to the unusually low value of $125 million. Here is the domestic top 10 re-arranged to reflect dollars spent in production per ticket sold:

1. The Hangover 2 : $2.50 per ticket
2. Harry Potter and the Deathly Hallows: Part II: $2.61 per ticket
3. The Twilight Saga: Breaking Dawn, Part 1 : $3.12 per ticket
4. Transformers: Dark of the Moon: $4.40 per ticket
5. Fast Five: $4.74 per ticket
6. Sherlock Holmes: A Game of Shadows: $5.46 per ticket
7. Mission: Impossible - Ghost Protocol: $5.59 per ticket
8. Thor : $6.60 per ticket
9. Pirates of the Caribbean: On Stranger Tides: $8.25 per ticket
10. Cars 2 : $8.31 per ticket

Two major disappointment are quickly made apparent among the top 10 domestic film using this metric –- Cars 2 and Pirates of the Caribbean: On Stranger Tides both cost 75 cents more than the average ticket price to create.

In this case, the studios "lost" money when only the domestic market is considered, as the international market and DVD sales are not yet taken into account.

The growing foreign market
The majority of theatrical gross revenue is now garnered outside of North America, with every movie in the top ten grossing a minimum of 56% (Hangover 2) from international ticket sales. Below is the worldwide gross for the top ten movies of 2011:

1. Harry Potter and the Deathly Hallows: Part II: $1.3 billion
2. Transformers: Dark of the Moon: $1.1 billion
3. Pirates of the Caribbean: On Stranger Tides: $1 billion
4. The Twilight Saga: Breaking Dawn, Part 1 : $702 million
5. Kung Fu Panda 2 : $666 million
6. Fast Five: $626 million
7. The Hangover 2 : $582 million
8. Mission: Impossible - Ghost Protocol: $580 million
9. The Smurfs : $564 million
10. Cars 2 : $560 million
14. Sherlock Holmes: A Game of Shadows: $476 million
15. Thor : $449 million

Thor and Sherlock Holmes: A Game of Shadows fall out of the worldwide top 10, replaced by The Smurfs and Kung Fu Panda 2. When international ticket sales are taken into account, several 2011 movies benefit disproportionately.

The Smurfs, Pirates of the Caribbean: On Stranger Tides, and Kung Fu Panda 2 sold at least 75% of their total tickets in the international market. Obtaining up-to-date sales data in some international markets is difficult, as some theaters are not equipped with a point of service sales communication system like Rentrak.

The Adventures of Tintin is one of the interesting worldwide sales stories of 2011. The movie is considered a domestic flop, grossing $74 million. However, international sales made up 80% of the movie's worldwide gross, allowing the movie to make $361 million worldwide and vaulting it to number 17 in 2011's top grossing movies.

The way we measure box office success is completely broken

Is it all in the money?
Will we ever move away from total dollars grossed as a measure of theatrical success? I'm not sure. We expect to hear that a blockbuster movie made $120 million in its opening weekend — is a report of 15 million tickets sold not as impressive? Gross revenue is what we are accustomed to, but it's far from the best measure.

Dollars spent per ticket sold is a little difficult for the average viewer of Entertainment Tonight to grasp, but it does provide a better insight into how well a movie is performing. A better metric would include worldwide ticket sales, but the average ticket price in many parts of the world is a moving target. For the time, we'll settle for movie gross, but know that there are several better ways to measure box office success.

Movie grosses and production costs from Box Office Mojo, with additional sources linked within the article.