Film Accounting Glossary
Break-even
What is break-even?
Also called cash break-even, artificial break-even, or rolling break-even.
Break-even is the point at which a title's revenue, as measured by a specific contractual definition, equals the cost it has to recover before profit participants are paid.
Every deal defines it differently, so cash break-even, artificial break-even, and rolling break-even can all coexist on the same picture. Because the definition drives who gets paid, break-even language is one of the most negotiated clauses in a participation agreement.
Example
The same picture can be at cash break-even having recovered $12M of hard cost, while still sitting $9M short of the artificial break-even a net-profit definition calculates after fees, interest, and overhead. Both are true; they answer different contractual questions.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Defined separately in each participation agreement, then applied on the distributor's statements. One of the most negotiated clauses in the deal.
Common mistake
Talking about break-even as if there is one. Cash, artificial, and rolling break-even can all apply to the same picture and sit tens of millions apart.
Related questions
- What is artificial break-even?
- A contractually defined break-even that includes deductions such as fees, interest, and overhead, so it is reached later than the point at which real cash was recovered.
- Why do two participants have different break-even points?
- Because each agreement defines its own deductions. Change which costs come off first, and the same revenue crosses break-even at a different moment.