'The Sheep Detectives', starring Hugh Jackman, has rave reviews, but breaking even could be a trial. (Photo by Jamie McCarthy/Getty Images)

Getty Images

Hugh Jackman's new movie The Sheep Detectives debuts on Friday and is Amazon MGM Studios' attempt to crack the family market. It has big boots to fill.

The adventure comedy comes hot on the heels of Amazon's sci-fi smash hit Project Hail Mary. Like that movie, The Sheep Detectives is filled with visual effects as it blends live action performances with photorealistic digital animals. This makes it the spiritual successor to beloved Universal Pictures production Babe which grossed $254.1 million at the box office in 1995. That's $550.6 million in today's money and if The Sheep Detectives hauls in anything close to that number it will be a cash cow for the studio.

Based on a 2005 novel, the film follows a flock of sheep in Ireland who set out to investigate the death of their shepherd, played by Jackman. The book became an international bestseller and has been translated into more than 30 languages making a movie adaptation almost inevitable.

Capitalizing on its popularity, Amazon has signed up an A List cast with Jackman joined by Emma Thompson, Patrick Stewart, Bryan Cranston and Nicholas Galitzine. They aren't just in it for the money but also for the chance to be part of a production which could become a cherished film franchise.

The book became a success thanks to its charming story which sees the shepherd raising his sheep just for their wool and caring for them like children. Every night he reads them a murder mystery without realizing that not only can they understand it but they argue for hours afterwards about whodunnit.

Thanks to this training, the sheep instantly suspect that their master has been murdered when he is found dead under mysterious circumstances. What’s more, the furry friends think they stand a better chance of solving it than the local cop who has never cracked a serious crime in his career. In true 80s adventure fashion they leave their meadow for the first time but soon find that the human world isn’t as simple as it seems in the mystery books.

Creating computer-animated talking sheep doesn't come cheap and, thanks to Amazon's eye for authenticity, there's no doubt about how much it cost.

True to the source material, the movie was filmed in the United Kingdom with principal photography taking place from June to July 2024 in the leafy landscapes of Buckinghamshire, Hertfordshire, Oxfordshire and Surrey. Production primarily took place at Shepperton Studios 18 miles south west of London which shines a spotlight on the spending.

Studios filming in the U.K. get a reimbursement of up to 25.5% of the money they spend in the country provided that at least 10% of their core costs are incurred there. In order to demonstrate this to the authorities, studios set up separate companies to produce each film in the U.K. and they are obliged to file legally-binding earnings releases.

The Amazon subsidiary behind The Sheep Detectives is called Grand Leo UK Productions in a nod to MGM's roaring lion logo. The company filed its first earnings release in September last year and it revealed that over the year to December 31, 2024, $82.1 million (£65.4 million) was spent on the production which "was in line with the budget."

One of the biggest single costs during this time was the $4.5 million (£3.6 million) spent on staff with the company having a monthly average of 80 employees.

That doesn't even include freelancers, contractors and temporary workers as they aren't listed as employees on the books of U.K. companies but often represent the majority of the crew on a film shoot.

That's not the end of the story as the government reimbursement gave Amazon a helping hand. The filings reveal that the company banked a $17.8 million (£14.2 million) reimbursement bringing its net spending down to $64.3 million. However, this is set to surge in its next earnings release as it will cover the 2025 calendar year when the studio did the bulk of the post-production work including the costly creation of the computer-animated creatures.

The $64.3 million also doesn't include marketing costs as they are spent by the studio rather than the production company. The $64.3 million is just the net production cost of the movie by the end of 2024 so it needs to gross at least that much in theaters in order to break even at the box office.

The share of the box office that theaters pay to studios is known in the trade as a rental fee and an indication of the typical level comes from film industry consultant Stephen Follows who interviewed 1,235 film professionals in 2014 and concluded that, according to studios, theaters keep 49% of the takings on average.

Assuming an approximate 50-50 split means that The Sheep Detectives needs to gross $128.6 million at the very least for Amazon to cover its costs at the box office. That's assuming there were no post-production or marketing costs which clearly isn't the case. So if the movie makes less than $128.6 million in theaters there's no doubt it would make a loss.

An early indication of the appetite for the film came recently from BoxOffice Pro, the reference publication of theatrical exhibition. It predicted that the movie could earn just $10 million to $20 million in its domestic opening weekend due to the book being relatively unknown and Amazon being fairly new on the film scene. The report compared its forecast to the domestic openers of similar films such as Clifford the Big Red Dog at $16.6 million and The Garfield Movie at $24 million.

The title admits that its range is "on the low side" though it is in line with a separate report from BoxOfficeTheory. It estimates that The Sheep Detectives will only earn at most $16 million in its domestic opener and $75 million across its entire domestic theatrical run.

The film will of course have a second chance of success when it hits Amazon's Prime Video after its theatrical run has ended. Subscribers don't pay to watch specific movies and instead get access to all of them, along with the other content on Amazon Prime, which makes it difficult to say how much streaming revenue, and therefore profit, is generated by individual productions.

"Given the structure of the streaming model it is almost impossible to robustly attribute profitability to any single piece of content," says Tom Harrington of media researchers Enders Analysis. He explains that the only ways to do this would be to prove that the specific production led to "a massive volume of incremental sign-ups" or if there is a clear link between viewing and other revenue streams.

Harrington adds that the inability to prove whether a film or a show is financially successful for Amazon may not actually matter as the exclusive streaming content is simply a "a hook to get viewers there in the first place."

This is why Amazon is ensuring that key genres are covered with exclusive content. James Bond gives it a renowned spy thriller while action adventures are covered by a live-action film based on beloved 1980s toy He-Man as well as a big budget reboot of The Thomas Crown Affair. Project Hail Mary is Amazon’s sci-fi spectacular and American author Don Winslow’s novella Crime 101 is its detective drama with Chris Hemsworth, Mark Ruffalo and Halle Berry in the lead roles.

Tom Forte, media analyst at Maxim Group, adds that "overall, we see Amazon’s video strategy as similar to its e-commerce one. The company is focused on the long term and building a large business and willing to invest and lose money, on a short- and near-term basis." The objective is long-term profitability as the studio's library gets bigger. "To the extent these tentpole efforts increase its ability to be, ultimately, successful they should be deemed risky, but successful initiatives," he adds.

In short, The Sheep Detectives shouldn't be judged on its box office haul but on the fact that it gives Amazon exclusive content in a key genre. In that respect the studio is already reeling in the returns from it.