New study finds Hollywood studios could lose money from movies that lack diversity

Dino-Ray Ramos

It’s been said before, but it is worth saying again: diversity pays — but not in terms of checking boxes and tokenism. In a new report from the UCLA-based Center for Scholars and Storytellers titled “Beyond Checking A Box: A Lack of Authentically Inclusive Representation Has Costs at the Box Office”, researchers found that bringing authentic diversity to film improves financial performance at the box office while a lack of diversity can result in losses for studios.

Films like the Latino-fronted Pixar animated pic Coco, Marvel Studios’ Black Panther and Warner Bros’ Crazy Rich Asians proved that racially diverse casts can bring in highly profitable grosses at the box office, according to UCLA’s Hollywood Diversity Report produced by a group of UCLA researchers including Darnell Hunt, dean of the College’s division of social sciences. However, when it comes to writing and directing jobs, underrepresented voices still have quite a way to go.
The report which was published today analyzed 109 movies from 2016 to 2019 and found that movie studios can expect to lose up to $130 million per film when their offerings lack authentic diversity in their storytelling. Researchers found that large-budget films (a budget of $159 million or more) are subject to a significant cost in the opening weekend box office for a lack of diversity.

They estimate a $159 million movie will lose $32.2 million, approximately 20% of the its budget, in first weekend box office, with a potential total loss of $130 million, 82% of its budget. For a $78 million budget movie will lose $13.8 million in its opening weekend for a lack of diversity, with a potential total loss of $55.2 million, 71% of its budget.
“We asked, what is the cost of lacking diversity? Hollywood is a business, and no business wants to leave money on the table,” said senior author Yalda T. Uhls, a UCLA adjunct assistant professor of psychology and founder and executive director of the Center for Scholars and Storytellers. “While increasing numerical representation behind and in front of the camera is critical, truly empowering people from diverse backgrounds is the key. For example, make sure the writers room is open to dissenting opinions, that a wide net is cast for hiring, and that younger, less-tenured voices are encouraged.”

In order to compile the data, the researchers used a metric for authentic and diverse storytelling called Authentically Inclusive Representation (AIR) that represents the inclusion of diverse voices, people and cultures both in front and behind the camera. Using Mediaversity Reviews, researchers ensured their ratings were comparable to another robust source of diversity ratings that captures numerical race and gender diversity in key cast members and writers, directors and producers. The researchers also compared Mediaversity ratings to the critical acclaim websites, Metacritic and Rotten Tomatoes and found Mediaversity ratings are highly correlated with those of Metacritic and Rotten Tomatoes.

To no surprise, small-budget films lead the charge when it comes to diversity, dramatically surpassing big-budget pics on AIR. The analysis looked at films such as Barry Jenkins’ Moonlight from 2016 (budget: $4 million, total box office: $26 million) and Greta Gerwig’s Lady Bird from 2017 (budget: $10 million, total box office: $48 million).
“Storytelling that lacks AIR in race, gender and sexuality can have immediate and significant costs,” said Gerald Higginbotham, a UCLA psychology doctoral student, and co-author of the report.

The researchers analyzed the first weekend U.S. box office results because these numbers closely capture audience demand before word-of-mouth, reviews and the release of newer films impact attendance. Uhls points out that the first weekend box office, particularly for wide releases, typically accounts for about 25% of total box office. Any reduction in box office in the initial weekend would typically impact the film’s total financial success.
“While our findings are specific to box office, we believe we captured broadly the more immediate costs of lacking AIR, which is relevant to other kinds of releases and types of content,” Higginbotham said.

In the study, researchers offer recommendations, including: Implement explicit norms and guidelines to ensure that all viewpoints will be shared.
Hire diverse casting directors who can bring in original and dynamic talent from underrepresented groups. Bring in expertise at the beginning of the development process, not as a band-aid later on.
Include counter-stereotypical, multi-dimensional characters. Avoid stereotypes by portraying characters of color with rich identities.

If there is a writers room, ensure that all voices, viewpoints and experiences are heard and welcome.
“In light of the national conversation around systemic racism, it is well past time for entertainment media creators to think beyond on-screen numerical representation as a marker of ‘inclusivity and diversity,’ Uhls said. “Diverse representation in race, gender, sexual orientation, disability, and their intersections, particularly behind the camera, is still lacking and slow to change. Without including a broader swath of voices on every level of a production, from set decorator or costume designer to director or actor, stories and characters will come across as stereotypical.”

Stephanie Allain, Founder Homegrown Pictures, said of the report: “I hope that executives will seriously consider these findings when deciding what to greenlight. I’ve spent my entire career supporting voices and content that are not often seen on the big screen. But it has always been a struggle and the budgets are typically smaller to validate the absurd fallacy that Black content doesn’t travel internationally.”

She added, “This study demonstrates that studios are leaving money on the table by not showcasing stories that are authentically diverse. Perhaps now is finally the time that Hollywood movies, which shape hearts and minds throughout the world, will start to reflect ALL of us in ways that resonate deeply with the multicultural audiences that make up the USA.”

As the film and TV industry — and the world for that matter — continue to have a reckoning when it comes to the lack of diversity and the silencing of underrepresented voices, the needle is moving when it comes to change and progress. It may be moving at a glacial pace, but it is change nonetheless. We are seeing steps to help achieve equity in film & TV with more programs for marginalized voices in front of and behind the camera as well as an increase in demand for accountability. One of the biggest attempts is from the Academy of Motion Picture Arts and Sciences which announced new standards of representation and inclusion for Best Picture that will gradually be put in place for the 94th (2022) and 95th (2023) annual Academy Awards, with the standards going into full effect beginning with the 96th Academy Awards in 2024.