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How exactly Movies Make Money?
From the distance, the movie’s business seems overly glamorous, where celebrities, producers, and director play their part to bring life to a story. But in the midst of enjoying the movies they come up with, we forget to gauge the amount of money they use to bring their creation in front of their audiences.
But the real question arises, from where does this much money come from. Truly speaking nobody knows about it. The film industry has always been a risky industry. There are chances for the film not to make the cut. And this is the reason why the film industry has started venturing new fields to earn from the movies, not sticking with the sale of the movie tickets only.
In addition, today, most people don’t like to watch movies in theaters. This is the reason why streaming sites are getting popular these days. Reduce in the audiences has resulted in shutting down of several theaters all around the world.
Movie Budget and Costs
Generally speaking, nobody will say the exact amount of film production. Because the amount is so huge, nobody will actually believe. For instance, let take “The Avengers”, the whole production cost of the movie was considered around $220 million. But if we add the cost of the marketing and advertisements, the total amount instantly skyrockets.
Print and advertise for the movies are very important, without the right to advertisement and marketing, nobody will ever know about the movies. There are times when the cost of print and advertisement exceed over the cost of the productions.
Ticket price Revenue
The theater has seen an inclination decrease in attendance. This has affected the filmmaker’s profits. Earlier, the profits were equally divided between the filmmaker and the theater owners. Usually, more than 50% of the ticket sales revenue goes to the theater owners.
These percentages are divided by the contract. Every movie has its own contract and set of profit percentages. These contracts help the filmmaker to make profit when the film might have a chance to flop in the theaters. To make sure people watch these kinds of movies, filmmakers give a huge chunk of a percentage to the theater encouraging them to gather more audiences.
This method came into existence with the Star Wars. Star Wars, which make it appearance on the theater in 1977, became famous among the kids. This made the production house come with a plan to further increase their revenue.
To date, Star Wars have made billions from selling the toys alone. In 2019, they made more than $700 million.
However, this method cannot be used for every film launched. You cannot see action figures in every movie. In addition, action figure can make the sale if they are liked by the kids. Obviously, you cannot expect adults to buy action figures for themselves.
When the produces layout the groundwork plan for the film, it is very important to sell the license of the film. Some of the producers even treat the movie as a company and sell the shares to the interested investor and Bitcoin cycle. This help the producer to raise the fund for the movies.
Producers even make their wish list before investing in the movies and will ask well-known figures to invest in the movies. This way, producers keep themselves safe when the movies are not performing in the theaters.
The Bottom Line
As we all know that nobody has the slightest idea of how the film industry earns money. But we all know that sales of the tickets have not remained the only mode of income eof the movie industry. Today, most of the filmmaking companies, use merchandise, VOD, Streaming rights, and foreign sales to make a profit out of the films.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes