Thursday, August 23, 2012

Crazy: How films make $400 million in one weekend!

What does it mean when the papers say a movie grossed $400 million on opening weekend? And what are non-theatrical releases? Since i have been asked this question a hundred times this week, especially as Kunle Afolayan's movie showed at the national theater, i am breaking down the whole thing down in simple terms looking at the different way movies make money. Wanna grab some?

A good film somethings turns a profit even before it is shown at cinemas! How? If a large film studio was producing the film with a-list stars in its, the studio would have already sold the distribution rights to cinemas across the globe. Even before that, some studios like to shoot there movie in countries where the government offers tax or cash refunds for shooting the film in their country, somethings this reimbursements are up to 50% of all expenses.

 …The box office number we see in the news is usually the gross revenue from tickets sold to the film in the United States. Only a percentage of that is paid to the studio releasing it. The total the studio receives is called the theatrical film rental, and it’s subject to negotiation and takes myriad factors into account, including the buzz surrounding the movie. A major studio is usually paid between 40 and 45 percent of the box office. For a hit, that rate may climb as high as 55 percent. An independent distributor may receive as little as 33 percent. And the percentage usually decreases the longer the film plays in theatres/cinema.

What about all the revenue from those $10 bags of popcorn and $8 gummy bears? One hundred percent of that goes to the theatres/cinema. Sorry, Warner Bros. 1994 was the first year that foreign theatrical revenue was actually greater than domestic theatrical revenue. These days it’s not uncommon for a film to generate more money overseas than in the U.S. Studios utilize foreign subsidiaries or subdistributors to distribute their films in other countries, and because of this middleman, the studio often receives a smaller percentage of the gross from foreign theatrical distribution than from domestic.

Then come revenue from merchandize, advertising, and ecetera.We havent even touched distribution to homes through DVDs and Direct to Home Satellite TV channels like DSTV.

What do you think?

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