How Much Will Scrapping 'The Interview' Cost Sony?
Sony Pictures will take an estimated $90 million financial hit as a result of its decision to scrap the release of “The Interview,” TheWrap has learned.
The studio’s decision to forego a release of any kind — no streaming, video-on-demand, DVD or Blu-ray – means it won’t see a penny in returns on the Seth Rogen-James Franco comedy, according to individuals with knowledge of the situation.
With no box office grosses or ancillary returns, it’s all about the cost, and Sony is looking at a write-down comprised of the following:
>> A production budget of about $45 million;
>> A domestic marketing budget of $35 million;
>> An overseas marketing budget estimated between $10 million to $12 million.
Approximately $5 to $6 million of the marketing can be cancelled and probably recouped in the days ahead of the release. But given the late date, it would more likely have to be returned in a trade-out, on “Annie” ads, for example, according to individuals with knowledge of Sony’s functioning.
The studio had penciled in expected domestic grosses of $80 million for “The Interview,” and $130 million worldwide, those individuals said. It’s harder to estimate the home entertainment returns, but given the spotlight the hacking scandal put on it, they may have been considerable.
Sony has taken heat on social media and from the Hollywood creative community for pulling the movie, and not at least offered the film on VOD. One media report suggested that a total write-off was required to qualify for an insurance claim.
Still, “this could have been the biggest VOD title in history,” said an executive at a rival film company, who estimated it might have doubled the $8 million-$10 million that recent on-demand hits like “Snowpiercer” and “Margin Call” took in.
It had major DVD potential too, said B. Riley analyst Eric Wold.
“There are good reasons to skip digital on this one,” he said. “Who needs North Koreans hacking into their emails? But this would have been a real positive for Sony Pictures Home Entertainment in the first quarter.”
To make matters worse, the losses on the film itself will pale in comparison to the toll the hacking and data dumps will take. Lost production, revenues and the liability the company will face from the release of employees records by the hackers could well push the toll into the hundreds of millions of dollars. The 2013 Playstation hacking was much smaller in scope, but still cost Sony $170 million.
And that’s not factoring the cost that Sony will pay down the road as a result of relationships damaged by the release of sensitive data on creative talent and business partners.
Sharon Waxman is the founder and CEO of the Hollywood and media business news site The Wrap. She is an author, journalist and blogger who has been a correspondent for The Washington Post and The New York Times.
Company Director at Asprey Fatgas Energy Company Limited
9yI don't think that there is much more to say! Some people were vindicated in their thoughts. Is this the future for releasing new films? Is the red carpet being fitted in some pub in time square. Or given to North Korea as a token gesture of their cooperation.
Growing New Zealand's Digital Landscape | Opinions are my own
9yThe ad hominem style in which Joe Saitta mentions in the above comment that countries the ones listed above are involved in Hacking is simply hilarious. Man, get a life. The people from these countries are not "infiltrating" companies, they're just better at what they do. Please, don't try and make comment that people can regard as an affront. Thank you.
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9yAll this over a bunch of fart jokes. Sony demonstrated why using your IT dept. as a corporate dumping ground for cronies and nepotism is stupid. Today's systems are almost plug and play, so very tempting to use low paid H1-B's and others with little experience is fine during normal activities. Since 1998 I've worked in IT depts where more than half of the native born engineers were replaced by foreign nationals from Russia China, Korea, Pakistan and India, just to improve bottom line for investors, with no thought if new hires are moles trying to infiltrate. Now these countries are involved in hacking, DOS attacks and intellectual property theft. Corporate greed is the root of all evil.
Polymathic Digital Native; Thorny Issue Specialist
9yHappy that Sony did not give in and we were able to watch this movie.
wiNZurf, Eastbourne Community Board, Windsurfing NZ
9yI have to agree with those who have commented this is a great marketing campaign - North Korea are probably angry that they have been used to market the movie, not because of the content