As a viewer, the cinema appears to be incredibly glitzy, as though celebrities are gliding down the red carpet, clutching their Oscars, and enjoying their holiday. We have the impression that the film industry is similar to what we see on social media. However, reality differs from your imagination; it is not as simple as you believe. Have you ever thought about how movies earn money? Stuck! We’ll reveal it in this post, so don’t worry. Without further ado, have a look at the main revenue streams and the costs that must be efficiently controlled for cinema is still viable today.
Let’s dive into it:
Throughout the decades, the economic model has generally been based on movie theatres. In addition, there are other ways for a film unit or producer to earn money. However, the business has begun to adapt to change and new methods of film presentation.
Sponsorship
Several brands of autos, consumer goods, beverages, outlets, and other products can be seen in movies. As a result, product vendors pay money to filmmakers for their products to be shown on the big screen. This is how they sell themselves, and the producers bill them for it; yes, they must pay for product placement.
Merchandising
Merchandising varies from film to film. T-shirts, toys, cookies, gift boxes, and other forms of merchandising are available for some films. This is a very popular culture in foreign films, particularly animated, science fiction, fantasy, and epic historical films. How we forget that “Walt Disney” Mickey Mouse toys are still available on the market. As a result, selling these items will provide them with additional funds.
Production Companies
The production companies market the picture and collaborate with other distributors to bring it to the public. Before the movie’s release date, these companies sell their distribution rights to distributors. For instance; Avatar was produced by Dune Entertainment, Lightstorm Entertainment, and Ingenious Media but distributed by 20th Century Fox.
Distributors
These distributors chain with the part of ticket sales and the theatres are given to distributor by the theatre management. This tie-up is usually done in bidding. For instance, if your film’s budget is 5 crores, a distributor can buy it from you for 15 crores. Consider a benefits package worth 10 crores rupees. The distributor will promote the film on their own. They will sell the digital and satellite rights. However, if the film is a huge hit and grossed more than 100 crores, you cannot ask for any more money from them. They can’t ask for their money back if it’s a flop, either. Because you will always sign a deal with the distributor before selling the film.
Ticket Sales
Remember that the first few days of a movie’s release in India will have pricey tickets. This is also one of the methods for generating more revenue from the initial release. This is why the majority of films rely on first-day ticket sales to fund their production.
Books, novels, and video games
This style is not that much popular in India, but it is still employed in other markets by filmmakers looking for a quick buck. In foreign countries, the film is promoted as a novel or a book. They also produce video games based on their films. This will greatly assist a film in generating cash.
Online streaming services and Television rights
This is the most efficient way for film producers to make money. It is becoming very popular nowadays. They use money from internet streaming services such as Netflix, Amazon Prime, and Hotstar to expand their film library. Likewise, they take money from TV channels to broadcast their film.
Streaming services typically pay a premium over the film’s production budget, allowing studios to make slightly more over the break-even point. For high-profile projects, streamers mainly have to shell out upfront to compensate megawatt talent, producers, and directors for lucrative back-end deals that are built into contracts for would-be commercial smashes.
Foreign Sales
Producers can also collect the money for an independent film, selling its distribution rights in foreign territories. It helps to cover the film’s budget and hopefully brings in great revenue. Independent filmmakers can earn money simply by establishing a good relationship with any kind of foreign sales agent who can sell their movies in key overseas markets.
Producers will often make their “wish list” when casting a film and the list will mainly be full of well-known names that “travel” overseas. If you have Shahrukh Khan or Priyanka Chopra as your star, you are much more likely to find a partner willing to buy the rights in any country. Not sure about it the film will make millions (or billions), but we assure you it’s about as safe a bet as you can get in this business.