Why it's so hard for summer blockbusters to make a profit

This summer has not been kind to its would-be blockbusters. Hangover Part III, After Earth, and Pacific Rim have all failed to attract the kinds of audiences they need to make up for their enormous budgets.

And Tuesday, the Walt Disney Co. admitted it expects to lose between $160 million and $190 million on The Lone Ranger, the Johnny Depp vehicle that cost some $250 million to make.

However, Lone Ranger made $29 million on its opening weekend in the U.S. and Canada, and has so far grossed $177 million globally. Disney says it's on track to bring in $280 million in theaters globally.

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On the surface, this doesn't add up. If a film rakes in $30 million more than it cost to make, how does it end up losing as much as $190 million?

The answer is twofold. First, on top of the $250 million production budget, The Lone Ranger cost another $175 million in marketing fees — which include the trailer, posters, giant ads in Times Square, etc.

In addition, box office numbers represent total ticket sales, not the total the studio gets to keep. From a $16 ticket, for example, the theater will take something like 20 to 25 percent for the first couple weeks, 45 to 50 percent for the next few weeks, then up to 80 percent for the weeks it remains in theaters. On average, for a blockbuster, the studio/theater split is about 70/30. (For indies it's often closer to 50/50.)

So if you compare The Lone Ranger's numbers to those of The Conjuring, a sleeper hit that has made more than $138 million worldwide on a $20 million budget, you might wonder why studios keep spending such enormous sums on blockbusters, instead of making more smaller movies.

It comes down to the "tent-pole" model — meaning big-money projects expected to bring in enough income to cover the expenses of a studio's other efforts.

"There has been a lot said, I know, about the risk of basically high-cost, tent-pole films," Bob Iger, Disney's CEO, told reporters. "We can certainly attest to that given what happened with Lone Ranger." However, he went on, "We still think the tent-pole strategy is a good strategy. That one way to rise above the din and the competition is with a big film, not just big budget, but big story, big cast, big marketing behind it."

Last year, for example, Disney's The Avengers grossed $1.5 billion globally off a $220 million production budget, and a $100 million marketing budget — leaving enough to bankroll some other huge-budget films, which is more, at this point, than The Conjuring can say.

And for a hit like The Avengers, a global theater run is just the beginning. After that comes DVD sales (which are slowly turning into licensing fees for streaming services), then Pay Per View television fees, subscription television fees, and finally licensing fees to air a film on television.