Have you ever wondered how the money we pay for movies gets distributed and how the deals made affect that? We’ll take a brief look at the financials of
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In general the distributor of a film gets a take of about 25% of the box office revenue; the theater gets the rest. There are exceptions to the rule when the film is known to be a blockbuster, like Lord of the Rings and others like that, which can command up to 50% of the total.
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Every theater owner in the country has a figure that they know that will need to be reached to break even on the film. Once that figure is reached then the distributor of the film will have their share go up to 50%. So in the beginning of the films release most of the money will go to the theater itself. Then at the break even point, the distributor starts to get their portion. Now in addition to this the distributor usually will get a commission of up to 5% of the total take.
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Will the film profit sooner if it does well right out of the gate? Probably not, for if it does that well, additional money is then funneled into increasing the films exposure through more advertising and adding more theaters to the mix, which again increases costs.
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Last but not least there is the budget of the film itself to pay off. This is where things can get very complex. If you are one of the investors you’ve really got to look out for things and make sure your high up in the pecking order.
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The biggest cash investors will negotiate to have their money paid back first before all others. Some, for example, government or art subsidies will many times be less aggressive on when they will see their investment returned to them; the reason being that they don’t have profit as their primary motive for investing but rather the promotion of the contents of the film is their purpose.
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What these various interests produce is a complex type of sliding scale or rates that are negotiated by various parties. There is never any deal made that is ever the same as the saying goes. This is the major reason why it takes a minimum of 3 months to literally sign off on the entire contract once all the parties involved have agreed to invest in the film.
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When everything is taken into account, the basic bottom line is that a film usually has to take in approximately three times what its budget was at the box office before they start seeing a profit.
This helps you to understand why the great majority of distributors pre –sell the TV rights. Many times the movie itself is really a showcase for the ensuing DVD and TV sales that are where, in many cases, the real money and profit are made.
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