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Y. study finds R-rating lowers movie profits

Published: Thursday, Oct. 28 2010 6:15 p.m. MDT

BYU students Jared Shores and Craig Palsson

Kenny Crookston, BYU

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PROVO — Drop a few f-bombs, depict a gory battle and show several scantily clad figures, and movie makers can kiss hundreds of thousands, if not millions, of dollars goodbye. A new BYU student-led study found that in films with similar content, if the film is rated R instead of PG-13, it will make 25 percent to 35 percent less at the box office.

"Even if we take our lower estimate of 25 percent, and you want to make $100 million off your movie, you're losing $25 million by playing into that R rating," said Craig Palsson, a junior studying economics at BYU. "Just the sheer magnitude of the loss is significant and surprising."

Palsson had been studying the evolution of ratings when BYU economics professor Joe Price invited him to team up with fellow student Jared Shores, a senior in economics, who was researching the financial success of family films over adult films.

Together, the two created a unique content index for nearly 3,000 movies since 1995 thanks to help from movie review websites like "Dove Foundation," "Screen It" and "Kids-in-Mind." Those websites provide parents a detailed look at the violence, profanity, sexual content and adult themes — or lack thereof — in a movie.

With their content index, Palsson and Shores could identify "edge" movies that were rated PG-13 but had content similar to that in an R-rated movie.

The students quickly learned that profanity is one of the strongest factors for a higher rating, more so than violence or sexual content.

"And that's interesting to me," Shores said. "Because it seems so inconsequential to the plot of the film and so easily removed."

Once the movies had a content score, regression analysis allowed for revenue comparison. After controlling for budget, time of release and genre, they discovered that a lower-than-R rating meant greater profitability — massive for PG-13 compared to R, though smaller for PG to PG-13.

For PG-13 movies; however, the more adult content it contained, the more money it made.

"What that tells us," Palsson said, "is people are looking for movies that push the envelope without actually going over the edge, because then it gets an R-rating."

Take "Titanic," he said, which had more nudity and adult themes than most PG-13 movies, and performed well at the box office.

Shores said he's noticed that over the years, PG-13 films have gotten heavier and contain more intense content, like one film he saw recently with two surprise f-words and heavy drug use. Producers of those movies know they can attract some of the R-rated movie watchers, yet still appeal to those who feel safe because it's "only PG-13."

"These assumptions that we have ... as a populous of what a PG-13 movie consists of, we're becoming more and more accustomed to change," Shores said, "or more and more surprised."

Yet, the PG-13 versus R results weren't surprising to Utah theater officials.

"It is simple," said Blake Andersen, Megaplex Theatres senior vice president and general manager. "The guests at Megaplex Theatres vote for movies by purchasing tickets. Based on our years in business, guests overwhelmingly vote in favor of G, PG, or PG-13 rated films over R-rated movies."

There are some R-rated films that do well, he added, but the big successes come from movies like "Pirates of the Caribbean," "Avatar," "Dark Knight" and "Harry Potter."

In fact, for several movies, the five Utah Megaplex locations have finished at or near the top of all national theaters for the opening weekend revenue, Andersen said.

Yet, the students emphasized that their study relies on national data, meaning that their results are representative of people across the country, not just in Utah.

"If the movie industry could see that they're losing 25 to 35 percent of their revenue by not tailoring to this demographic, by releasing a film that had less of the content but still preserved the story and the art that they want to express, they could make a lot more revenue," Palsson said.

e-mail: sisraelsen@desnews.com

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