This image released by Disney -Marvel Studios shows, from left, Danai Gurira, Lupita Nyong'o and Florence Kasumba in a scene from "Black Panther." (Matt Kennedy/Disney/Marvel Studios via AP)

Big-budget films can lose big at the box office if their storylines, casting and creative team lack authentic diversity, according to a new study that analyzed recent Hollywood films.

The UCLA-based Center for Scholars & Storytellers put out a report Tuesday that analyzed the diversity of more than 100 films produced between 2016 and 2019, and then cross-referenced them with their opening weekend box office earnings.

They found that a US$159 million movie will lose, on average, more than US$30 million during opening weekend if there is no racial, cultural, gender-based or other diversity among the cast and creative team, with a potential total loss of more than US$55 million.

Researchers didn’t need to prove that rich, diverse storylines were financially viable.

“The recent box office successes of high-profile films such as Coco, Black Panther, and Crazy Rich Asians showed that betting on diverse casts and key decision-makers can bring huge financial wins,” the report said.

But whether a lack of diversity results in a financial loss had not been investigated before, researchers said.

“We asked, what is the cost of lacking diversity?” the study’s senior author, Yada Uhls, an assistant professor of psychology, said in a press release.

“Hollywood is a business, and no business wants to leave money on the table.”

HOW DO YOU MEASURE AUTHENTIC DIVERSITY?

In order to properly evaluate the movies, researchers came up with a rating to clarify what they meant by authentic diversity, called Authentically Inclusive Representation (AIR).

This term does not merely account for the number of non-white actors cast, for example. For a movie to have AIR, it needed to have “individuals from diverse backgrounds (in terms of race/ethnicity, gender, sexual orientation, and their intersections) on the screen and behind the scenes,” meaning that the diversity of the creative team itself was taken into account.

“While increasing numerical representation behind and in front of the camera is critical, truly empowering people from diverse backgrounds is the key,” Uhls said in the release. “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.”

If the movie was diverse in terms of the actors and creative team, researchers then looked to see “whether the characters and story on-screen reflect genuine aspects of the culture being portrayed (i.e., instead of relying on and reinscribing stereotypes or tropes).”

These two things together -- representation in front of and behind the cameras plus a genuine, non-stereotypical story itself -- make up a well-rounded, authentically diverse story, according to the researchers. They are what give a movie AIR.

“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 and sacrifice dimension,” the report said. “And today’s moviegoing audience quickly recognizes when a story rings false.”

THE RESULTS

Researchers analyzed 109 films from 2016 to 2019, drawing on reviews from a website called Mediaversity Reviews, which focuses on inclusivity and intersectionality.

Films were rated “Above the Norm” or “Below the Norm” on the AIR rating scale to judge whether they were sufficiently authentically diverse. A film they counted as Below the Norm was the DC superhero epic, “Justice League” (2017), whereas DC’s “Wonder Woman” (2017) was judged to be Above the Norm.

Once the AIR of a movie had been assessed, researchers contrasted that with the film’s budget and performance in the box office.

They focused on the first weekend U.S. box office results “because these numbers most closely capture audience demand before word of mouth, reviews, and/or the release of newer films impact attendance,” the report explained.

The average budget of the films that were looked at was US$78 million, with researchers classifying films with a budget over US$159 million as large-budget films.

Large-budget films ranked Below the Norm saw the biggest loss in revenue, the researchers found. A film lacking in diversity that had a US$159 million budget was estimated to lose around US$32.2 million, around 20 per cent of its budget. Researchers also found that the potential total loss could soar up to US$130 million, more than 80 per cent of their budget.

Average-budget films ranked Below the Norm were estimated to lose around 18 per cent of their budget, around US$13.8 million for a US$78 million budget film. Their potential total loss was around US$55.2 million, 71 per cent of their budget.

Both large and average-budget films that scored Above the Norm vastly outperformed the Below the Norm films in their categories in terms of U.S. box office sales.

This disparity was illustrated in one example by contrasting Star Wars spin-off films.

Rogue One: A Star Wars Story (2016), which was rated Above the Norm for AIR, had a budget of US$200 million, and made back all but US$5 million in the opening weekend.

Solo: A Star Wars Story, which came out two years later, was rated Below the Norm for AIR. It was more expensive to make, with a budget of US$275 million, and made half of what Rogue One did in their opening weekend, pulling in a comparatively meagre US$84.4 million.

Researchers also found that when it came to how many movies passed the AIR test, small-budget films (with a budget under US$15 million) were overwhelmingly likely to score Above the Norm, with 81 per cent clearing the bar.

However, 52 per cent of both average and large-budget films were ranked as Below the Norm, meaning that projects starting out with more money were more likely to make the kind of creative choices that led to less diverse films -- and to, potentially, a bigger loss of revenue.

“Storytelling that lacks AIR in race, gender and sexuality can have immediate and significant costs,” Gerald Higginbotham, a psychology doctoral student at UCLA and lead author of the report, said in the press release.

The report stressed that although researchers wanted to highlight the financial consequences for ignoring a need for diversity, they also wanted to acknowledge the "moral case for AIR.”

In order to improve the AIR of films made in the future, the researchers made several suggestions for Hollywood projects and executives to take on moving forward.

These included reviewing the green lighting process for projects and ensuring BIPOC decision-makers are involved, hiring diverse casting directors, establishing Diversity, Equity and Inclusion (DEI) standards and consistently reporting on whether these standards are being upheld, and ensuring that projects have consultants with expertise relevant to the project’s cultural content at the beginning of the project, not just brought on to fix problems that arise, among other suggestions.

Researchers acknowledged that there were outliers -- some films that they judged as Below the Norm had still done well at the box office and/or received critical acclaim, including films such as Joker (2019), La La Land (2016) and Greenbook (2018).

But the bulk of the evidence showed that there was a price tag for leaving out other perspectives.

The myth that diverse stories are niche, or hard to sell to a wider audience in a big budget film, is just that -- a myth. And according to this study, clinging to this falsehood can be a financial mess for studios.