Kevin Costner’s self-financed movie was a box-office flop. Experts say he’s ‘going to lose a lot of money.’

After years of development at Warner Bros., which once considered sending the movie directly to its streaming service Max, Costner threw caution to the wind and decided to self-finance not just one “Horizon” movie, but potentially four.

To get “Horizon” made, the former “Yellowstone” star mortgaged his property in Santa Barbara and invested $38 million of his own money. (It’s unclear if that number refers to the cost to make the first two installments, which were shot back-to-back, or just the first film.) Costner and his other undisclosed financial backers are also covering the film’s marketing, which Variety estimates cost $30 million, though it’s unclear if that’s an additional sum or included in Costner’s own $38 million estimate.

With Warner Bros. working strictly as a distribution partner, Costner has bet on himself: According to the trade, Warner is only taking 8% of the movie’s box office gross.

But will the self-finance route pay off for the star? One industry insider told Business Insider they were skeptical: “He won’t lose his house, but he’s potentially going to lose a lot of money.”

Foreign presales helped reduce Costner’s risk

Thank god for Cannes.

The South of France is home to one of the most famous film festivals in the world. It’s also a massive film marketplace that, if used properly, can help directors and producers navigate the murky world of movie financing.

The objective is to entice international territories to agree to distribute a movie long before they see a single frame of it. This is called presales, and it involves a lot of connections and a recognizable face to sell the project convincingly. Who better than Costner to pull that off?

Costner began this process at the 2023 Cannes Film Festival when he brought on German-based sales firm K5 International to handle the foreign sales for “Horizon” Chapters 1 and 2.

By the time Chapter 1 of “Horizon” had its world premiere at Cannes in May 2024, the firm had sold out most of the international territories, according to Variety.

A producer familiar with foreign sales who asked to speak anonymously told BI that that money more than likely recouped Costner’s $38 million investment in the movie.

But if that $30 million marketing price tag Costner and his backers are on the hook for is separate from the $38 million figure, Costner isn’t out of the woods yet.

Costner gets a major chunk of the movie’s box office

Foreign presales are great, but because this movie is an American Western, a genre that historically doesn’t translate well overseas, Costner can’t expect huge box office returns internationally. That’s why he has to make sure to get the bulk of the domestic grosses.

With Warner Bros. reportedly only taking 8% of grosses, the studio essentially has a service deal with Costner: Costner gets his cut of the box office grosses starting the first day the movie is out, as opposed to once the film turns a profit. Doing the math, that means that for every $10 million “Horizon” makes at the box office, Costner and his investors see $4.6 million back.

That means to recoup the $30 million Costner invested in marketing the first “Horizon” movie, it will have to make north of $65 million domestically. (Right now, it’s made $11 million.)

We haven’t even started talking about profit yet.

Costner needs a huge “Pay 1” deal

Costner believes in the long game. When he made the box office bomb “Waterworld” back in 1995, which was the most expensive movie ever made at the time, it took ancillary deals like paid cable and DVD sales to finally break even. And that took years.

DVD sales have fallen off the map since the mid-1990s, so Costner can’t lean into that. Instead, he’ll have to land a major deal with a streamer or cable company for the movie’s post-theatrical release.

This is known in the industry as “Pay 1.”

Pay 1 deals kick in after a movie is through with its Video-On-Demand option. Deals can range from a couple of years to as high as six.

While pay varies, the producer who spoke to BI said Costner could negotiate a deal in the tens of millions because of his star power, especially if it’s for the “Horizon” franchise and not just the first film.

What sweetens the pot for a streamer is that Costner is a fixture in Westerns. As the face of “Yellowstone,” (at least, until he quit), fans of that show love him. A streamer could be convinced that the true “Horizon” audience didn’t show up to theaters and, due to its three-hour runtime, is waiting for the movie to hit streaming.

It’s a windy road, but there’s a path for Costner to come out of “Horizon” without a major loss. The only problem is that there are more installments on the way, which means more money needs to be spent first: “Horizon: Chapter 2” opens August 16, “Chapter 3” has begun principal photography for a May 2024 release, and “Chapter 4” is in development.

Business Insider contacted reps for Warner Bros. and Kevin Costner to comment on this story but did not receive a response.