As a Learning and Development professional, I have an ongoing fascination with how best to measure Return on Investment (ROI). I was however surprised to find so much of interest concerning the pitfalls of ROI calculations when reading about Forbes’ latest list of the most overpaid Hollywood actors.
To compile its list, Forbes calculated a limited definition of each movie’s operating income by subtracting the estimated production budget from the global box office for each actor’s last three significant films. This operating income is then divided by the estimated total income for each star on the three movies to come up with the final ROI figure.
Using these calculations, the top ten list of overpaid actors includes such stars as Denzel Washington, Liam Neeson and Brad Pitt. Outstripping all of these however is the mighty Johnny Depp, returning a paltry $1.20 for every $1 invested.
At the other end of the scale, Chris Evans provides the best value, returning a whopping $181.80 per $1, followed by Mila Kunis, Scarlett Johansson and Gwyneth Paltrow. This appears to give a clear indication that Chris Evans is just over 150 times better value than Johnny Depp. Or does it?
Let’s look for a start at what exactly is being measured. Global box office is a convenient measure to use: it’s published soon after a film’s release and is widely-publicised. Is it however a reliable indicator of a film’s true value? What about the other lucrative forms of distribution such as subscription services, DVD sales and TV that may well serve some films better in the long term than others.
Although big names undoubtedly attract audiences, are they the only factor that influences the success or otherwise of a film? What role does the director have (or the script writers, producers, editors, cinematographers and so on)? Just how would Depp’s flop Mortdecai have fared with a different actor in the title role? Would it have been made at all? And are audiences really going to see Chris Evans in the many films where he portrays Captain America, or is it a reflection of an ongoing fascination with all things superhero? Just how lucky was Gwyneth Paltrow to have Iron Man 3 to offset her own contribution to Mortdecai?
ROI is of course an important indicator that’s taken very seriously by some (but not all) stakeholders. It is of course not the only measure. In Black Mass, a film that fell just outside the timeframe for Forbes’ list (and one that earned respectable but not outstanding box office returns), Johnny Depp put in a performance that has been greeted as a return to form, with suggestions that it could even receive an academy award nomination.
Calculating ROI, whether for Hollywood stars or for an organisation’s learning and development provision, is clearly complicated. Clarity about what you’re measuring and why is crucial. Among the many questions to ask are:
- Am I using the right measures?
- Am I using measures that are easy to apply, but which may not provide entirely accurate information?
- Am I measuring quick returns or longer term impact?
- What else might have influenced the outcome?
- Are there other measures that should also be considered?