Have to make MoneyMust earn money
Exactly how do films make money?
Whereas there is a great deal of money to be made in the cinema business, the economy of filmmaking is anything but easy. Audiences can be volatile, the business is changing, and almost every picture is an ultra high-risk venture, even one with famous comedians.
For 2017, according to the Motion Picture Association of America's (MPAA) Theatrical Market Statistics Report, the U.S. and Canada cashiers came to 11.1 billion dollars. Worldwide, the cash register for movies reached 40 dollars. Nowhere is it as easy as in the early beginnings of cinemas, when a film enters the cinemas, generates the major part of its income through the sale of tickets and then disappears.
Large cinemas and independent directors are spending most of their day looking for new ways to earn money, because selling tickets is no longer the be-all and end-all for movies. Generally, large studio companies do not give the full budget for their movies (production, processing and marketing/advertising). Part of the reason for this is that it takes a lot more to produce and sell a movie than it seems.
As an example, the estimated $220 million manufacturing cost for a big box-office like Marvel The Avengers is a big one, but if you take into account your selling and promotion expenses, that figure rises. In fact, the printing and promotion expenses (P&A) alone can be very high for many movies. An $15 million movie (considered a small movie in Hollywood) could have an ad spending higher than its own manufacturing spending.
After all, many movies that don't have a built-in public (like those with bestsellers like "The Hunger Games" or even "50 Shades of Grey") have to get audiences into the theatre. Romance cartoons or some children's movies have to be advertised through TV spots and advertising material, and these expenses quickly accumulate.
His P&A estimate for a movie between $40 million and $75 million could be over $20 million. Things such as fiscal stimuli and income from placement of products can help to preserve the money for any kind of movie, whether it' s blocbuster or indies-only. When they are given an inducement to make a movie in Canada or Louisiana or Georgia, the producer will usually do so.
Back to the mantras "Nobody knows anything", there are some surprising songs like the indiie "Little Miss Sunshine", which is a Cinderella storyline when it comes to financing movies. It had a $8 million fund and was distributed to Fox Searchlight for $10.5 million at the Sundance Festival.
It made $59.89 million in US theatres, which is almost outrageous for an independent. On the other hand, you have the Walt Disney (DIS) feature "John Carter", which had an estimate of $250 million, but earned only $73 million at the U.S. treasury. There is no sure way how a picture can make a win, because things like market recognition, P&A budgeting and the wishes of a volatile audience come into it.
Nevertheless, there are a few proven ways in which movies can try to make money. Visiting the theatre has been a challenge in recent years, making it even more difficult for recording and distribution companies to benefit from film. Usually, part of the theatre ticketing goes to the theatre owner, while the recording and/or distribution department receives the other part.
It is traditional for the majority of films to go to the studios on the opening weekends of a movie, while the proportion of cinema operators increased over the years. For example, a recording studios could sell about 60% of the tickets of a movie in the USA and about 20% to 40% of them abroad.
As a rule, studio and rental companies earn more from home turnover than from foreign turnover because they receive a higher share. Nevertheless, the sale of tickets abroad is still very important today. That' why you see more sci-fi, adventure and fantastic flicks and why super hero flicks are such a phenomena. Star Wars: The Force Awakens" generated $700 million in retailing revenues in 2015.
Of course, this doesn't work for every movie (action characters for a cartoon like Amy Schumer's "Trainwreck" probably wouldn't make billions), but for big-budget movies that appeals to children and comic-con junkie as well, merchandise is a money-cow. Watch Disney's Toy Story Franchise, which has generated millions of dollar in retailing revenue.
For example, when a director puts together the $25 million stand-alone movie budgets, the sale of marketing assets in unfamiliar territory is critical to covering the movie's budgets and hopefully generating revenues. In fact, freelance moviemakers can earn money if they have a large international commercial representative who can market their films in important international countries.
Broadcasters often make their "wish list" when auditioning a movie and the wish lists are usually full of well-known people who " travel" abroad. When you have Tom Cruise or Jennifer Lawrence as your celebrity, you are much more likely to be selling the right to China and France. It' not a surety that your movie will make a million (or billion), but it's about as sure as a wager you can get in this store.
There was a point about DVDs being sold. The sale of paid TV and foreign copyrights is a major revenue stream for some broadcasters, as the broadcaster does not have to bear market and P&A overhead. Movies have to quit the theatre at some point, but can stay on television forever.
And how many scrolls have you made through the channel and come across "The Notebook" or "The Shawshank Redemption" again? There is also money to be made, 32,000 foot in the skies, since the airline companies are paying high amounts for on-board maintenance. There are several VOD publishing options for indies: date and date (movies published in cinemas and VOD simultaneously), date before date (VOD before the theater), and VOD only.
A lot of movie productions that don't have the big name star and effect to attract audiences to the theatre often benefit from this mode. Although the volume of DVDs has drastically decelerated, it is not yet a case of being left behind - at least for some titles. "Moana " in 2017 sells 1. 74 million units on disc, so if a real estate is burned or has a massive built-in crowd, the DVD/Blu-Ray sale could still be quite hefty.
There is a changing movie business and selling tickets alone is not profitable. They include merchandise, VOD and stream on-demand sales, overseas and a variety of other marketing opportunities that can help movie makers, directors, editors and studio owners make a living.