Ways to make money from movies
Give you a more professional detailed analysis:
The birth of a film mainly includes three aspects: production, financing and distribution. Producers need to consider the commercial forms of these three aspects. Generally, there are four possibilities, but it should be noted that this classification is not absolute. Many films will integrate the characteristics of different categories, so the contract of each film may be an "innovation".
The first: step by step. The funds are paid in several steps. The contract stipulates that when certain conditions are met, such as the completion of the script and the selection of CASS, the funds for the next step will be paid automatically. The second kind: package trading and commodity trading. The producer or agent first combines the elements of the film, such as determining the script, main actors, shooting plan, etc., and then finds a film company to get their investment. Once the other party agrees, sign the contract, and then take the contract to find other funds, including bank loans. When the film is finished, the film company will pick up the goods (take the negative). The third kind: pre-sale or selling flowers. Before a film is shot, the distribution and projection rights of the film are sold by category. However, the money spent on selling the film is generally not cash, but promissory notes. Therefore, the producer needs to go to the bank to exchange it for cash at a certain discount. The success rate of selling flowers depends on the lineup of the production team and the market. Generally, a film can get about 60% of the production cost by pre-sale. Fourth: private fund-raising. Generally, it is only applicable to low-cost films, which are financed by producers through private channels and need to establish a limited partnership.
The amount of capital and the difficulty of financing are inversely proportional to the producer's control over the film. The higher the budget, the funds are arranged by big Hollywood factories, which often means that the producer must give up artistic rights such as the finalization of the script, the choice of CASS, and the final editing right. If the film company is responsible for the development and distribution of the project, the producer is just an employee. The true degree of independence of the so-called "independent producer" varies from person to person and from project to project. The more the producer plans and raises funds, the higher his degree of independence will be. With the increase of producers' work "ability" and functions, the importance of film companies is relatively weakened. Among the various roles assumed by film companies, the key is not production, nor financing, but distribution.
Distribution sounds simple. Most cinemas in the West are controlled by several cinemas. Isn't it that publishers call fixed customers, introduce products, and then advertise in newspapers and TV? Indeed, distribution is nothing more than a few things, but if you don't enter that circle and one of the eight film companies, you can't do these jobs at all. Publishers and screeners have always had contradictions, but their rivalry seems to be a quarrel between an old husband and wife. No one else can take the opportunity to intervene.
In the North American market, there are two ways for exhibitors to deduct a commission: one is to charge a fixed rent, and then raise a smaller proportion; The other is not to charge rent, but to raise a large proportion. In addition, the proportion of withdrawal increases with the passage of time. According to the rules of the industry, the publisher's Commission in the North American market is 30% and that in the overseas market (outside North America) is 40%. Note: the distribution Commission here does not include advertising expenses, which are calculated separately. Moreover, according to the current rules, for a commercial blockbuster, the publicity fee is scheduled at about 50% of the production fee.
So far, let's calculate a typical Hollywood blockbuster. The production cost was US $50 million, and the North American market sold us $100 million at the box office. Did it make $50 million in one fell swoop? No. First of all, the $100 million box office reported by the media did not reduce the income of exhibitors. Let's use the formula introduced earlier, that is, the publisher gets back $70 million in revenue. Then, the publisher needs to withdraw 30% of it, and the rest is $49 million. The $50 million production cost also needs to be added with $25 million (50% of $50 million) of advertising and publicity expenses. When this is calculated, it becomes $75 million expenditure minus $49 million revenue, which becomes a loss of $26 million. What about? Are you stupid?
Peripheral income is the cash cow
Hollywood does not rely on the box office to make money has long become a research topic for economists. Edward Epstein, a famous Hollywood economist in the United States, broke the management way of this art holy land in his research: today's Hollywood is no longer a "dream factory", in essence, it has become a service organization - an exchange for dreams.
Hollywood has a new way of survival. Because every family has TV, the huge home entertainment market is waving to film companies. Now, less than 2% of Americans go out to watch movies in the evening and 95% stay at home to watch TV. Disney was the first company to get the right to broadcast its film and television works on TV. By the 1960s, every studio had this card. Next, the rise of video recorders gave them a new way to make money. By the 1980s, their gains in the video market quickly exceeded the box office of cinemas.
What's more gratifying to the film companies is that the young audience they target is also a loyal audience of video games. As a result, film companies make profits from these areas. Movies have become creative props. TV programs, cartoons, videos and video games derived from them have been sold all over the world, and their revenue far exceeds the box office of cinemas. In 2005, the profit of box office revenue of film companies was less than 15% of their total revenue, but the money they made from family entertainment projects such as TV, cable TV, DVD and video accounted for 85% of their total revenue.
Nowadays, the main task of Hollywood is not to bind famous directors, movie stars and all shooting resources together to produce films, but to "save" the money earned from intellectual property rights and then distribute it to different places, including those who create, distribute and invest in intellectual property rights. Hollywood is becoming America's "Art Wall Street".
Revenue = box office - exhibitor's Commission (box office) × Commission ratio) - publisher's Commission [(box office - exhibitor's Commission) × Publisher's royalty ratio] - production fee - advertising fee (production fee) × 50%)