I have heard people on both sides wax lyrical about how they have the raw end of the deal. The second question of how much money ends up with the filmmakers presents a different challenge: namely that the economics of each film are unique. However, most films go through the same basic steps of recoupment, meaning we can trace the common route between box office income and profit for the filmmakers and investors. It might help us to look at the second question first, i. Income comes in from a variety of sources and the money is then handed back to the filmmakers via a number of third parties. Along the way, these third parties can recoup the money they spent up front promoting the film and also charge a pre-agreed fee for their work. In many cases, investment deals can be slightly more complicated, such as:. The final recoupment waterfall for a real film will rarely be as neat as my example. Some complicating factors could include:. This is who makes more money distribution or production comapny before we get our hands on box office income, there are two big deductions. Some countries also apply other taxes, e.
From a distance, the movie business might look pretty glamorous. Celebrities and producers glide down red carpets, clutch their Oscars and vacation in St. Barts…just because they. The public can be fickle, the industry is in flux, and just about any movie is an extremely risky investment, even a film starring big name actors and actresses. Major studios and indie filmmakers alike now spend much of their days looking for new sources of revenue, because ticket sales are no longer the be-all and end-all for films. This is in part because it costs far more to make and market a film than it. Romantic comedies or some children’s films need to promote themselves via TV commercials and media advertisements, and those costs add up quickly. For any type of film, whether a blockbuster or an indie production, things like tax incentives and revenues from product placements can help pay down the budget. If they’re given an incentive to shoot a film in Canada or Louisiana or Georgia, producers will usually hustle to do so. Still, there are a few tried and true ways that films can attempt to make money. The percentage of revenues an exhibitor gets depends on the contract for each film.
Many contracts are intended to help a theater hedge against films that flop at the box office 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 poorly performing film and a larger percentage of a hit film’s. You can see the securities filings for large theater chains to see how much of their ticket revenue goes back to the studios. Studios and distributors generally make more from domestic revenue than from overseas sales because they get a larger percentage. Still, overseas ticket sales are incredibly important, especially today.
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Running a production company is a lot like raising a child — some days, you may wonder why you even decided to do this in the first place. When you factor in competing for projects, distribution, and actually getting the project made, starting a production company can drain you both emotionally and financially. Do you ravenously consume indie documentaries? Does organizing a music video shoot get you out of bed in the morning?
2. And…what are you good at?
Telephone Email Other Request. How an independent filmmaker chooses to make a movie is often dictated by access to money more than any aesthetic sensibilities. Without the proper funding, a feature film never gets made or made the way the filmmaker wants to. There are a number of strategies to use to finance a movie.
1. What do you love?
A film distributor is responsible for the marketing of a film. The distribution company is usually different from the production company. Distribution deals are an important part of financing a film. The distributor may set the release date of a film and the method by which a film is to be exhibited or made available for viewing; for example, directly to the public either theatrically or for home viewing DVD , video-on-demand , download , television programs through broadcast syndication etc. A distributor may do this directly, if the distributor owns the theaters or film distribution networks, or through theatrical exhibitors and other sub-distributors. A limited distributor may deal only with particular products, such as DVDs or Blu-ray, or may act in a particular country or market. The primary distributor will often receive credit in the film’s credits , one sheet or other marketing material. If a distributor is working with a theatrical exhibitor, the distributor secures a written contract stipulating the amount of the gross ticket sales the exhibitor will be allowed to retain usually a percentage of the gross. The distributor collects the amount due, audits the exhibitor’s ticket sales as necessary to ensure the gross reported by the exhibitor is accurate, secures the distributor’s share of these proceeds, surrenders the exhibitor’s portion to it, and transmits the remainder to the production company or to any other [intermediary], such as a film release agent. The distributor must also ensure that enough film prints are struck to service all contracted exhibitors on the contract-based opening day , ensure their physical delivery to the theater by the opening day, monitor exhibitors to make sure the film is in fact shown in the particular theatre with the minimum number of seats and show times, and ensure the prints’ return to the distributor’s office or other storage resource also on the contract-based return date.
Bring on the numbers…
From a distance, the movie business might look pretty glamorous. Celebrities and producers glide down red carpets, clutch their Oscars and vacation in St.
Barts…just because they. The public can be fickle, the industry is in flux, and just disfribution any movie is an extremely risky investment, even a film starring big name actors and actresses. Major studios and indie filmmakers alike now spend much of their days looking for new sources of revenue, because ticket sales are no longer the be-all and end-all for films. This is in part because it costs far more to make and market a film than it.
Romantic distrlbution or some children’s films need to promote themselves via TV commercials and media advertisements, and those moer add up quickly. For any type of film, whether a blockbuster or an indie production, things like qho incentives and ,akes from product placements can help pay down the budget.
If productiln given an incentive to shoot a film in Canada or Louisiana or Georgia, producers will usually hustle to do so. Still, there prlduction a few tried and true ways that films can attempt to make money. The percentage of revenues an exhibitor gets depends on the contract for each film. Many contracts are intended productuon help a theater hedge against films that maes at the box office by giving theaters a larger cut distributino ticket sales for such films, so a deal may makex the studio getting a smaller percentage of a poorly performing film and a larger percentage of a hit film’s.
You can see the securities filings for large theater chains to see how much of their ticket revenue goes back to the studios. Studios and distributors generally make more from domestic revenue than from overseas sales because they get a larger percentage. Still, overseas ticket sales are incredibly important, especially today. Independent filmmakers can actually make money if they have a great foreign sales agent who can sell their film in key overseas markets.
Once upon a time, it was all about DVD sales. Films have to leave the theater at some point, but they can remain evergreen on TV. As for VOD, revenue from these deals should add hundreds of millions to a studio’s bottom line. As the saying goes, nobody knows anything in Hollywood. The film industry is in flux, and ticket sales alone don’t drive revenue. In Hollywood, there are no guarantees.
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The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Articles. Alternative Investments How to Invest in Movies. Partner Links. Product placement is a form of advertising in which branded goods and services are featured in a video production that targets a large audience.
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How Do Movies Make Money ? — Film Industry Business Model — Hindi
The process of film distribution is incredibly interesting and somewhat complex. The very first step in the distribution process is selling the rights disttribution your film. You should have a deal in place with a producer before rolling on a single camera. With big movie productions, the film rights are secured by a major studio before production even begins.
The recoupment waterfall
In some cases, even before pre-production. It is vitally important to note that the majority of filmmakers establish their own production companyusually an LLC. This production company holds the copyright to the intellectual propertythus allowing the creator some control over how the property gets. At this point the filmmaker would sell the rights to a producer, who would give the filmmaker an option fee. There is no standard option fee. It was through this company that he handled all intellectual property copyrights for films like E. The next step in the distribution process is securing a licensing agreement with a distributor who will work toward getting prduction film into theaters all over the world. Even mini-majors like The Weinstein Company and Lionsgate will develop the distribution for their own films.
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