How War Machine flopped at box office and made big money for producers

The Australian-made sci-fi action movie War Machine is a raging success by almost any standard. It was the number one movie globally on Netflix for two weeks, has been in the top 10 in 93 countries, number one in 87 of them including the United States, Australia and Canada, and has chalked up more than 118 million views in its first five weeks on the platform.

For context, that’s 20 million more views than Guillermo del Toro’s big-budget triple Oscar-winning Frankenstein managed in its first eight weeks last year.

But in one regard, the interplanetary war movie was a dismal failure. It tanked at the box office.

War Machine had a reported budget of around $113 million ($US80 million), about $73 million of which was spent in Australia. But at local cinemas, it took just $82,000 in five weeks. In its final week on release, it earned just $180 in ticket sales.

But behind those stark figures there’s a far more complex story, one in which that cinema release unlocked millions of dollars in government incentives, and one in which a loophole transforms that box office narrative from one of abject failure to a massive windfall.

Though it has an American star (Reacher’s Alan Ritchson) and centres on an American military training program, War Machine is very much an Australian movie.

Writer-director Patrick Hughes is Australian, his co-writer James Beaufort is Australian, several of the producers (including Wolf Creek’s Greg McLean) are Australian, and co-star Jai Courtney is Australian. And because it ticks the boxes of having Australians in four of the key creative roles (writer, director, producer, lead actor), it qualifies for a 40 per cent rebate on Australian expenditure through the producer offset, which is administered by Screen Australia on behalf of the Tax Office.

But there’s a rub. To access that 40 per cent rebate, the film needs a cinema release. Had it been classified as a movie made for streaming or television, it would qualify only for a 30 per cent rebate.

That’s no small difference. In fact, the extra 10 per cent on the Australian spend of $73 million amounts to $7.3 million returning to Lionsgate, the Hollywood studio that financed the film.

And that’s the true value of its five-week cinema run in Australia – $7.3 million, rather than the $82,000 in ticket sales.

Typically, only about one-third of box office would flow back to the studio, with the distributor (Roadshow) and exhibitors (the cinemas) taking the rest. By contrast, the full value of the rebate goes to the producers.

Back in 2021, the Coalition government was determined to simplify the tax rebates offered to the screen production sector, with a flat 30 per cent regardless of whether content was made locally or by Hollywood, for the big screen or small.

While simplicity and a level playing field were the great attractions of that plan, there were legitimate fears that Australian feature films would be unfairly punished. And at the 11th hour, after meeting with a delegation that included actors Bryan Brown, Simon Baker, Justine Clarke and Marta Dusseldorp, the government backed down. Australian feature films made for the cinema would still get a 40 per cent rebate.

There is nothing illegal about the producers of War Machine accessing the 40 per cent producer offset. That is how most movies are financed in Australia. But it does highlight an unintended consequence of the distinction between movies made for cinemas and other platforms, most notably streaming – and the incentive producers might have for putting a movie into cinemas even when they have no real interest in how it performs there.

To be clear, War Machine was originally developed with a cinema release firmly in mind. Patrick Hughes came up with the idea in 2017, it was first announced in November 2021, and in January 2022 he and production partners Beaufort and McLean launched their Melbourne-based production company Huge Film, with ambitions to make big-budget action movies for the global stage. War Machine was on the slate, along with The Raid, a remake of Welsh director Gareth Evans’ 2011 Thailand-set heist movie that Hughes has been trying to get off the ground at least since I lunched with him back in 2014.

“Our intention was to make it theatrically,” Lionsgate executive Erin Westerman told The Wrap last month, of War Machine. “And then when our sales team went out to start conversations with the international buyers, the streaming market was just so frothy that … we all chose together to go to Netflix.”

That deal was in place by September 2024, when the start of filming in Victoria’s High Country (where Hughes made his debut feature, the modern-day Western Red Hill, in 2010) and at Docklands Studios Melbourne was announced (the production also shot for a couple of weeks in New Zealand).

“War Machine will be distributed theatrically in Australia by Roadshow Films and released internationally by Netflix,” the official release stated.

Australia is, in fact, the only country in the world where War Machine has had any kind of cinema release. But even here, it appears to have been something of an afterthought.

Though Roadshow’s release schedule issued on January 7 included titles up to the end of the year, War Machine was not listed. But just five weeks later it was in cinemas.

The film was released on just 52 screens, a staggeringly small number for a movie with blockbuster ambitions. There was nothing much by way of advertising and promotion.

On February 23, Netflix began promoting the film on its social media channels, with a streaming date of March 6.

Clearly, no one had much incentive to make War Machine work at the box office. And unsurprisingly, it didn’t.

And yet, that $82,000, five-week run might just be the best return the film’s producers could ever have hoped for.

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