The Guardian reported earlier this week:
The previously announced Batgirl film starring In the Heights actor Leslie Grace, Michael Keaton and Brendan Fraser will not be released at all, Warner Bros Discovery has unexpectedly announced, despite shooting already being completed and the film being in post-production.
Directed by Ms Marvel directors Adil El Arbi and Bilall Fallah, the film was initially greenlit in 2021 as part of a wider move at Warner Bros to create feature films specifically for the streaming service HBO Max. But the studio confirmed on Tuesday that the film would never get any release, either theatrically or on HBO Max...
The Hollywood Reporter said Batgirl’s budget was a factor in the decision, having risen to nearly $90m (£74.1m, A$130m) due to costs relating to it being shot during the Covid-19 pandemic. While the budget is lower than the average DC superhero film, it was reportedly decided that it did not have the “spectacle that audiences have come to expect from DC fare” and would not recoup its losses from being released.
However, the New York Post, which broke the story on Tuesday, cited an unnamed source who said the budget had actually exceeded $100m and that the film had performed so poorly during early test screenings that Warner Bros decided to cut its losses.
“They think an unspeakable Batgirl is going to be irredeemable,” the source told the New York Post.
Behavioural economics suggests that quasi-rational people are susceptible to the sunk cost fallacy. Sunk costs are costs that have already occurred and that cannot be recovered, like the US$90 million or more already spent on the Batgirl movie. Sunk costs should not affect decisions because, regardless of what the decision-maker chooses to do, those sunk costs have already been incurred. Since the US$90 million has already been spent, it has been spent if the movie is released, and it has been spent if the movie is not released. So, at the point of post-production the decision about whether to go ahead and release the movie should be made on the basis of costs and benefits that are to come. Essentially, Warner Bros was weighing up the further costs they would face (on additional post-production, marketing, etc.) against the benefits they would receive (box office receipts, and other revenue). The costs must have outweighed the benefits.
The sunk cost fallacy typically occurs because of mental accounting, which suggests that we keep 'mental accounts' associated with different activities. We put all of the costs and benefits associated with the activity into that mental account, and when we stop that activity, we close the mental account associated with it. At that point, if the mental account has more costs in it than benefits, it counts as a loss. And because we are loss averse, we try to avoid closing the account. If Warner Bros were affected by mental accounting, they may have released the movie anyway, trying their hardest to avoid banking a loss on the movie. Mental accounting is responsible for keeping us in unpromising projects for too long, as well as unhappy relationships, and bad jobs.
So, Warner Bros were not affected by mental accounting, and it appears that the viewing public will be saved from a terrible Batgirl movie. It's a pity that didn't happen to the truly horrible Moonfall (my movie ticket was a sunk cost on that one), or everyone's favourite superhero move to hate, Green Lantern.
[HT: Mark from my ECONS102 class]
I am surprised this doesn't happen more often. Seen enough bad movies come out. Absolute stinkers starring famous actors too.
ReplyDeleteI read somewhere that tens of millions of dollars of further work was required to put the film out in addition to promotion which is further tens of millions of dollars.
The extra costs to complete post-production, and the poor reviews suggesting low revenue, were no doubt the cause of the cancellation. However, I'm more surprised that they cancelled this one at all. So often decision-makers fail to ignore sunk costs.
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