From afar, the movie business might look pretty glamorous. Celebrities and producers glide down red carpets, clutch their Oscars and vacation in St. Bart’s… just because they can. While there’s a lot of money to be made in the film industry, the economics of movie making are far from simple.
Something you’ll likely hear if you walk through the halls of any movie studio is, “nobody knows anything.” And it’s true. The public can be fickle, the industry is in flux, and any movie is an extremely risky investment, even a film starring big names. According to the Motion Picture Association of America’s (MPAA) Theatrical Market Statistics for 2016, U.S. and Canadian box office was $11.4 billion a 2% improvement from 2015. Globally the box office for films hit $38.6 billion in 2016.
It’s nowhere as straightforward as the early days of cinema when a movie would come out in theaters, make the vast majority of its revenues via ticket sales, and then essentially disappear. 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.
Follow us: SEBCONCEPT FILMS on Facebook
First, the Budgets
In general, major studios don’t disclose the full budgets for their films (production, development, and marketing/advertising). This is in part because it costs far more to make and market a film than it seems. For example, the production budget for Marvel’s “The Avengers” is recorded as $220 million, but if you factor in marketing and advertising costs, that number spikes. (For more, read: What Drives Summer