In this activity, you’ll use formulas to calculate the profits and returns on investment, or R-O-I, for each movie.
Then, each group member will calculate the average profitability for genres, directors, or actors.
The ROI tells you how much money was made relative to the amount spent.
It is calculated as a percentage.
To find the return on investment, take the profit, or how much money the movie made, and divide it by the budget, or how much money was spent to produce it.
For example, maybe you produce a movie for 100 dollars and it has a box office revenue of six hundred dollars.
To find the return on investment, first calculate the profit.
Subtract 100 -- the amount it took to produce the movie -- from six hundred--the amount the movie made.
Next, divide the movie’s profit by the movie budget: 500 divided by 100.
That equals 5.
Finally, multiply that number by 100 to get a percentage.
This movie’s return on investment was 500%.
This is great!
You spent $100, and grew that amount 500 percent!
Compare this to a movie that has a budget of 200 dollars and box office revenue of 700 dollars.
The profit is the same: 500 dollars.
But the return on investment is not as good: only 250 percent.
The second movie has a lower return on investment.
It is not as profitable as the first.
Movies that cost less to produce but make the same amount at the box office have a higher ROI, and are therefore more profitable.
Movies with a negative ROI cost more money to produce than they made at the box office.
They didn’t make any profit and, in fact, lost money.
If a movie has zero ROI, it made exactly as much money as it cost to make the film.
The producers made zero return on their investment.
Different factors influence a movie’s return on investment, including the actors, genre, and director.
Each group member will calculate the average ROI for data in one of these categories.
For example, you might explore whether one movie genre has a higher average ROI than another.
You and your group will use these calculations to choose a movie you think will produce the highest return on your investment.
To start, open the movie data spreadsheet you worked on in the last activity.
Then move on to the next video where you and your group will find the profit for each movie.
Now it’s your turn: Open the movie data spreadsheet you worked on in the last activity, then move on to the next video.