Most of people want to know how film industry earns money. Let’s discuss this in detail-
basic ways -
Here you can make lot of money in the film
industry, the economics of movie-making are far from other industry.
There's no fixed path for a film to turn a
profit since factors like brand awareness, P&A budgets, and the desires of
a fickle public come into play.
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| How Film Industry Earn Money |
Theater entry in the United States and
other countries has been challenging over recent years, making it even more
important to earn money in foreign theaters.
Films like Star Wars, merchandising has played
a major role in revenue for films.
Video-on-demand, television rights, and streaming services are increasingly important sources of income for movie studios.
Film
Budgets and Initial Capital -
Major production houses don’t reveal the
full budgets for their films, budget which includes production, development, marketing,
and advertising.
Mystery
arises in part because it costs far more to make and market a movie than most
people expect. For example, the production budget for a summer blockbuster like
Marvel’s "Iron Man" is estimated as $220 million.
Indeed, for many films, print and advertising (P&A) costs alone can
be terrifically high. A $20 million film, which is considered a small-budget
movie in Hollywood, might have a marketing budget that is higher than its
production budget.
How film industry earn money
Many
films that don’t have a built-in audience need a way to get people into the
theater. Romantic comedies or some children's films need to promote via TV
commercials and advertisements, and those costs add up rapidly.
If
you see any type of film, whether a blockbuster or an indie production, things
like tax breaks and revenues can help pay the required bills. If they're given
an incentive to shoot a film in places like Canada or Louisiana, producers will
hustle to do so.In this way
We have some surprise hits which are Cinderella story when it comes to film finance. Their budget could be around $9 million, and it sold to distributor for $11.5 million at the Film Festival.
Box Office Ticket Revenue
Theater entry has been challenging over
these days, making it even harder for distributors to profit from films.
Usually, a part of theater ticket sales goes to theater owners, with the studio
and distributor gets the rest money.
As usual larger load went to the studio
during the opening weekend of a film. As the weeks went goes on, the theater
operator's percentage comes down. A studio/distributor might make about 60% of
a film's ticket sales in the United States, and around 20% to 40% of that on
overseas ticket sales.
Box office Tickets
An amount of revenues an exhibitor gets
depends on the contract for each film. Many contracts are intended to help a
theater against films that flop at the box office.
That is done by giving theaters a larger
cut of ticket sales for such films, so a deal may have the studio getting a
smaller percentage of a weak performing film and a higher percentage of a hit
film's take.
You
can see the securities filings for large theater chains to see how much of
their ticket revenue goes back to the studios.
But studios and distributors generally
make more from domestic revenue than from overseas sales because they get a
larger percentage. Despite this arrangement, foreign ticket sales became more important in
the early 21st century.
That is the reason why you see more sci-fi,
adventure, fantasy, and superhero movies. Action and special effects require no
translations.
They’re easy to understand, whether
you’re in India or Russia. It is much harder to build a foreign audience for an
indie comedy.So this can be one of many ways by which
Foreign
Revenue or Over cease Market –
When
a producer gets together the budget for a film, selling the distribution rights
in foreign territories is horrible.
It
helps to cover the film’s budget and hopefully brings in revenue. Independent
filmmakers can make more money if they have a great foreign sales agent who can
sell their movies in key overseas markets.
Producers will often make list when casting a
film and the list will typically be full of well-known names that travel overseas.
If you have Leonardo or Brad Pitt as your star, you’re much more likely to find a partner willing to buy the rights in China and France.
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| Over cease market |
That isn’t a guarantee
that the film will make millions (or billions), but it's about as safe a bet as
you can get in this business.So this is one of many ways through which
Streaming
Platforms or Television Rights
There was time when it was all about DVD
sales. Now, it’s far more about television rights, video-on-demand (VOD), and
streaming.
For
producers, things like selling TV and international rights are a source of
profit because the producer doesn't have to pay for marketing and P&A
costs. Films have to leave the theater at some point, but they can remain
evergreen on TV.
In
case of VOD, revenue from these deals should add hundreds of millions to a
studio's. For indie films, there are several VOD release strategies:
day-and-date (movies released simultaneously in theaters and VOD),
day-before-date (VOD before theatrical), and VOD-only.
In the case of films which don't have the special effects and big-name stars to lure people to the theater often profit from this model.
Also Read - Highest Paid Bollywood Actors Till Date
Now streaming video is a new source of money for
film industry. These revenues tend to dry up after a few years, but movie studios
can still make money from older films by licensing them to Netflix or Amazon
Prime.This is one of way through which
However,
the success of original film on the streaming services also takes audiences
away from traditional movies.
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