Movies how much money

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 the saying goes, nobody knows anything in Hollywood. In Hollywood, there are no guarantees. Investopedia latest. A History Of U. Monopolies 2. Consumer Staples 3. Duopoly 4. Utilities Sector 5. The Top 10 Technology Companies 6. Fast Fashion 7. Vertical Market 9.

The starting point for working out the final costs of releasing a movie is to look at how much it cost the studio to shoot the film i. This includes….

Budgets have been rising in recent decades, well above inflation. In the following ten years this rose to The studios found themselves in an ever-increasing spiral whereby blockbusters were getting more expensive to make, meaning that they needed to spend more on marketing to offset the risk, which meant they needed to ensure their films are the biggest of the season, which inflated the budgets and the circle continues to turn.

The information available online is normally a mix of true figures which have leaked and educated guesses by industry experts.

The studios often try to hide the true cost of a movie, in order to make themselves seem thriftier, smarter or more in control than they actually are. I performed a quick check for the 29 blockbusters I have inside data on compared with their budgets listed on Wikipedia. Releasing a Hollywood blockbuster involves far more than just creating 90 to minutes of footage.

Some of the other costs involved in making and releasing a film include…. To give you a little more detail and context, below are some notes on each of the main cost areas…. Judging the correct number of prints and units to manufacture is a key part of the planning done by the studios. If they order too few then cinemas and stores will have to turn away customers in the all-important first few weeks of release.

If they over-order then their costs increase and they are left with annoyed cinema owners and large quantities of unsold units. Giving these people a share of the income is a good way for the studio to hedge against poor box office performance and it also defers the moment they have to pay up.

On the flipside, studios have got rather good at using creative accounting techniques to show that they made a loss on paper in order to get out of paying such fees. Fortunately, Hollywood is rather good at squeezing every penny out of a movie, ensuring that the target customer is given many chances to pay to see it. Movies may start in cinemas but they are far from the only place they earn money. Each stage at which a movie reaches a new type of platform i.

Of the 29 Hollywood blockbuster movies I studied, 14 generated a profit and 15 lost money. Note: The following discussion of profit uses this formula: all revenue received by the studios from a particular movie minus all costs they internally attribute to that production. The smallest movies within my dataset i. Would you have made a smart investment? And I am sure this is a fairly low return for that kind of cash.

The only problem is — how do you spot the hits? Hollywood currently employs the smartest, best informed and most profit-focused people in an effort to exclusively make profitable movies and yet half of their movies lose money. In fact, their combined best efforts only produce a 3. Yes, but only by a very small margin. The average Metacritic score i. Similarly, IMDb audiences rated the profitable films an average of 6. Likewise, if they think they have a real turkey on their hands they could dial back the marketing spend so as not to throw good money after bad.

However, we can say that, yes, movies with the biggest marketing budgets do seem to gross the highest amounts at the box office. Hollywood makes blockbusters for global consumption and in recent decades the share of the money the studios have received from countries outside the US and Canada has grown considerably.

In theory, increased international business comes with increased charges as much of the international film business is conducted through third parties, which adds cost and complexity. Added to this, studios are less likely to make missteps on their home turf as they can be on-hand to scrutinise everything to a greater extent.

Well, it depends on which part of the process you look at. Below you can see the origin of revenue and costs for the blockbusters in my dataset. As you can see, the majority of the money collected at the box office does indeed come from countries outside of the US and Canada. However, studios spend a higher proportion of their marketing money in North America. This could be for a number of reasons including the higher cost of advertising in America, the temptation to spend more in the country which studio execs actually live in and because the US is often the first place a movie is released and the media enjoy reporting on huge opening weekends and decrying massive flops.

Together, they mean that only 12 of my 29 movies made money at the domestic box office, whereas 20 made money at the international box office.

Alongside this, the losses at the domestic theatrical market were much worse than internationally. So Hollywood looks to the international market with glee because…. Q4: Is there a rule of thumb for guessing which Hollywood blockbusters are in profit? They reached this conclusion by studying the full financial records of the movies they were involved with and also checking their hypothesis with independent professional film financiers.

Using this rule, I was able to correctly identify all of the profit-making films and correctly identify ten as loss-making, however, this system incorrectly marked five loss-making movies as being profitable.

In short, the rule works in around four out of five cases. Not as reliable as one might have liked and way below the accuracy the BFI found when the rule is applied to smaller films but certainly interesting. So there you have it — a rather long sorry! The biggest question some readers may have at this stage is — how did he get this data? I was also helped by a few well-placed friends in the industry who were able to fill in the blanks and confirm the veracity of some of the data points.

I am completely confident that the information in this article is a true representation of how these Hollywood blockbusters make money. The purpose of this site is educational and my sole intention is to help explain how our industry works. In the past, I have been contacted by lawyers for various companies, trying to prevent the sharing of key data points relating to their business. So far, I have managed to avoid lawsuits and also to avoid having to take any articles down, but if I were to offer the full figures as a download or details of how to do the same piecing together I have then I suspect I would get the wrong kind of attention.

So, if you want to know any more about these movies, please add your question in the comments below. Very informative and great info as always. Thank you, Stephen for some scintillating reading. When is someone offering you a book deal? Great work Stephen — thank you. And related to this can you demystify the roles, contributions and compensation for these various kinds of producers? Very helpful. Re the query on books since , our volumes Global Hollywood and Global Hollywood 2 are more recent than the one.

They are also available in Chinese, Turkish, and Spanish. Stephen, please, please put all of this marvellous stuff in a book. Thank you for this amazing work! Can you clarify here? Thanks again. Marketing and avertsing are not included, save maybe for the on-set photographer and a publicist who shows journalists around the set.

This is particularly important for things like tax incentives, which almost never include publicity and distribution costs when calculating how big the budget is. Both have a reasonable claim to be correct.

The budget is a real document created in pre-production which covers the cost of physically making the film. Before internet streaming as we know it now, Pay Per View PPV was commonplace, in hotel rooms and on encrypted satellite and cable channels.

As VOD has grown up, the newer services have become their own new window but the old way of accounting for the older services were retained. So strictly, the idea of digital delivery of video on demand to the viewer appears within three windows! Just two questions about the average costs graph: 1. Instead of being included in costs? The opacity occurs for a number of reasons but most are to do with hiding embarrassing or unattractive practices, because they can and because there is no benefit from being open.

Wow Stephen. Scary stuff. I want to break down the costs and show how they differ between products. Thank you Steve for your informative article. The research that went into it must have been enormous as it covered so much of the movie business including distribution. I was really interested in the DVD sales figures and the overseas theatrical markets as the advertising would be less.

Thank you for your info!!! Michael L Edwards. Can you say the swing on that? Stephen, thank you for your informative detailed article.

This is the sort of thing the internet would ideally be used for, instead of widespread trolling. Keep up the good work. Thank you for the information and the analysis you have performed.

The real numbers are never released, nor should they. Nobody in the industry pays those numbers. At the end of the day, the important numbers and analyses come from what the windows revenue figures are and their relationships. As for profits… do magicians reveal their tricks?

Hey Adrian. Glad you found it useful. This allowed me to compare the true cost to that of the public figure in this case from Wikipedia. Hi Stephen, thanks for the excellent analysis.

Do you have any data to support or contradict these numbers? And yes, sometimes theatrical income can be less than the cost of the release. That said, splitting a profit margin between income streams is tricky as there are lots of non-release based costs you need to assign somewhere, such as the production budget.

Stephen; James Spader was interviewed on Charlie Rose. I believe your article explains why that is the reality but really are things that bad in the movie industry that television is where actors, writers, and directors go to make money?

This was fantastic and certainly the most systematic treatment of any small class of pictures I have ever seen. Many thanks. I am quite new to the World of Film Finance, and I found your stats rather confusing, and I wondered what was your angle from posting them. This means that the box office gross is far greater than the amount which makes it back to the filmmakers or studio. It can be counted as either there is much debate but often the quoted budget figure has already taken this into account.

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways While there's a lot of money to be made in the film industry, the economics of movie-making are far from simple. Theater attendance in the U. Ever since Star Wars, merchandising has played a major role in revenue for films that appeal to children. Television rights, video-on-demand, and streaming services are increasingly important sources of income for movie studios.

Some American films make more money internationally than they do in the United States. Article Sources. Investopedia requires writers to use primary sources to support their work.

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