Movie business seems to be glamorous and dream world for us sitting here. Seeing our favorite stars and celebrity walking over the red carpet attending premiers and award functions like the iifa, Oscar etc. can make as a wonder that how film industries make money allowing celebrity stars, producers live a lavish life that we can only dream to have.
Every month with a new big movie launching and getting success. All the news and social media will come up with the facts and figures calculating that movie profit. But do you know what formula they use to calculate the actual profit gained by a movie? They generally target on the total budget of the movie and total net collection giving out the total profit but it is not exactly how do movies make money. When we delve into it further on how movie earn money is far more then we assume.
People are cautious to know that how movies make money so they assume such approaches for their understanding. But mere, calculating the collections and budget is not enough to give the exact amount of earned money by a film. Now producers are looking for more income sources and revenue finding new technique for how movies producers make money without depending on the success of the film.
Now with the new business model of How do movie makers make money. The producers and filmmakers are avoiding the risk involved with the success of the film. That means the success of the film and profit gains by the filmmakers doesn’t exactly depend only on the total box office collection. Meanwhile it involves various other factors with it including pathways such as selling up all the lined up movie rights like satellite, box office, home video for DVD/ Blu Ray, Music, internet, DTH for all domestic as well as international rights too and these are some of the many ways How do filmmakers make money.
How Do Films Make Money?
Now with the new business model entertainment industries has showered with a lot more funding and investors options that were never seen before, because it has reduced the failure risk factor to near zero. It allows producers to pay back their loans to banks and investors prior to the film release as producer sells rights to distributors and promotion partners of the film. So this is how do cinemas make money prior to its release.
When a movie is made it is the producer who tackles the expense of the movie on his shoulder including payment of the cast and crew, promotion expenses, and outdoor shooting expense as well as charges of the studios. They fund and invest in the film under a brand name say “Bhansali production” by Sanjay Leela Bhansali. This is all about how much producers spend on a film. Now, coming back to how do filmmakers make money?
How Do Film Producers Make Money?
There are many ways on how movie producers make money? The most effective way is money from distributors. Producers sell movie rights to a distributor which in return pay him with the minimum guarantee fee prior to the release of the movie. The movie rights allow the distributor to distribute the movie in a particular territory of the country. Thus the producers retrieve about 30% of his money by selling the film right to distributors. If the movie runs good and distributors get additional revenue above what was given to producer. Then the exceeding money got divided between the two.
Another source of income for the producer is selling the international overseas right where they gained up to 25%, satellite right earning about 20%, music and home video market gives them another 20%. Last income source for a producer is by selling intellectual property rights to the T.V. channel.
So this is how do filmmakers make money. Producers often sell these rights to the individual company for funding purpose before the movie production.
How Do Film Distributors Make Money?
As we know a distributor in order to buy a distribution right of a film for a territory, offer the producer a minimum guarantee fee. Other then this fee, the distributor also spends money on print and publicity of the movie by taking commission up to 20%. Any additional revenue generated after the guarantee fee and commission will get distributed between producers and distributors. Thus the earning of the distributor depends on the distribution of movie to theaters or individual screens from where it recovers its expenditures and margins.
How Do Movies Theaters Make Money in India
The third body in the movie business model is no other than the exhibitors. Exhibitors are a multiplexer or the theater owners and we very well know how movie theaters make money. The distributor distributes the movie to these multiplex and theaters of the area and territory they have distribution right off. But the best thing here for exhibitors is here they needn’t pay any prior fees to distributors meanwhile they share the net earned collection between them avoiding the risk involved if the film doesn’t go well in theaters.
For the 1st week of the movie the shared ratio is of 50:50 among exhibitors and distributors, for 2nd week distributors to exhibitors ratio gets 40:60, the 3rd week distributors share get cut to mere 30% and if the movie reaches the 4th week the distributor part reach to 25%. So it is the complete business model of Indian cinema on how do movies make money at box office.
With the new business model, the income source for the producers has changed a lot. It is not the same as what we have seen How Bollywood movie earn money in olden times. Earlier the success of the movie depends entirely on the box office collection. Means if the movie fails to appeal to the audience with its content and doesn’t hit the theaters then, it will the loss of the entire film industry. But now the definition of how movie make money has changed giving profit to all bodies in the chain from producers to exhibitors.
But in recent years we have seen major changes in the film industries business model, where every production house is keen to open their movie distribution wing. Like Shahrukh khan’s red chilies entertainment is a production as well as a distribution company. Although this step has greatly changed the way How movie producers make money? As for now, producers will not get the advance fund from distributors they get by selling the movie rights. But this change will allow them to decide how much print to be made, publicity requirement and where to show the movie.
Hence our blog conclude How movies make money with the fact that the success of the movie for filmmakers is not constraint only to the content it carries. It is basically the total budget as a high budget film seems risky when it is not welcomed by the audience with great excitement. As this can automatically decrease the margin gained. In short, a low budget and rich in the content movie is always a winner giving great business to everyone from producers to exhibitors.