Do most movies make money

Unless movies make money, the money to make movies would dry up pretty quickly. But where does this money come from? It comes, almost entirely, from you and me and people like us. The real question should be how does this money get from our back pockets and into the coffers of the big movie studios. Some of the pathways are incredibly obvious, some perhaps a little less so. I had just started working in a cinema when Jurassic Park was released.

These days, it seems like it is all about the small screen. So which entertainment sector is more profitable: movies or TV? You might be surprised by the results. For many people, it is tough to justify spending forty or fifty bucks to see a movie , when you factor in popcorn and drinks with the hefty ticket price. Hollywood studios have been churning out more big-budget tentpole films films whose earnings are expected to bolster the company financially , 3D movies, and action-adventure tales since audiences are more likely to splurge on a flashy, explosion-heavy movie than they are on a small, intimate drama. Filmmaking is also a very risky investment, since most movies, even those small, intimate dramas, take several million dollars to make. Not a bad payday, all things considered. It is important to take a look at independent films as well. Obviously, though, not all indie films are moneymakers. When the theatrical run of a film ends, studios earn money from home video, streaming, and video on demand VOD. Warner Bros. These studios deal with box office bombs, but a few wild successes mean huge profits, despite the flops. So which medium is more profitable, movies or TV? Competition with Netflix Inc. NFLX and Amazon. HBO is one of the most recognizable, stable, and respected brands in entertainment. It is consistently earning Emmy nominations and Golden Globe nods for the shows they produce. But are they as financially successful as a Disney or Paramount? The company did not disclose how many HBO Now subscribers it has gained, but it is estimated that they have as many as 1. Netflix reported that domestic subscribers soared , to The decrease was in large part due to the costs of buying and creating content and the value of the dollar on revenue generated outside of the U. Business Leaders. Company Profiles. Top Stocks. Your Money. Personal Finance. Your Practice. Popular Courses. Movies vs.

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How could that be? There must be an easier way to make money. Why is anyone in the film industry? All business requires guessing, but future predilections of moviegoers are especially opaque. If a large company wants to introduce a new car, it can at least base its predictions, in part, on factors like where oil prices are headed. Movie executives, on the other hand, come up with a host of new theories each summer about what audiences want — 3-D tent poles, 2-D tent poles, vampires, comics, board games and so on — then, sometimes over the course of a weekend, ricochet toward a new theory. Who knows. Unlike other decades-old industries, Hollywood not only has a hard time forecasting, but it also has difficulty analyzing past results. Because it had a built-in audience? Because it starred Jennifer Lawrence? Because it was released around spring break? The business is filled with analysts who claim to have predictive powers, but the fact that a vast majority of films fail to break even proves that nobody knows anything for sure. This self-mythologizing has real economic impact. The reason a majority of movie studios still turn a profit most years is that they have found ways to, as they say, monetize the ancillary stream by selling pay-TV and overseas rights, creating tie-in video games, amusement-park rides and so forth. And the big hits, rare as they may be, pay for a lot of flops. Still, the profits are not huge. Matthew Lieberman, a director at PricewaterhouseCoopers, expects growth over the coming years to be somewhere around 0. Hollywood is, somewhat surprisingly, a remarkably stable industry. Over the past 80 years or so, its basic model — in which financiers in New York lend money to creative people in Los Angeles — has been largely unaltered. Worse, every one of their projects is a short-term collaboration between a bunch of independent agents. They know how to get Tom Cruise to do a film, how to get it into theaters around the country and whom to call to set up a junket in Doha. Even big hits often take years — sometimes a full decade — to break even. People have predicted the demise of the film industry since the dawn of TV and, later, the appearance of VHS, cable and digital piracy. Eighteen of the all-time top-grossing movies adjusted for inflation were sequels, and more than half of those were released since Predictability might win the weekend, Perretti says, but it could eventually make people weary. Maybe TV is finally going to kill movies after all.

Remember: Box office totals reflect how much people have paid theaters for tickets for a movie.

What do these three films have in common? Each was a blockbuster, among the first or second highest grossing films of the year. All three were also unprofitable. These films are not a cautionary tale about how wasteful spending can turn a commercial success into a net failure. They had perfectly average production budgets and expenses for movies of their scale. Their lack of profitability, in fact, is typical. Reading this statistic, we agreed with Darth Vader that this seems implausible. Where is his pot of gold that lures businessmen and investors to Hollywood? Buried in paperwork. Instead of cooking the books to hide losses and inflate profits, Hollywood accountants inflate costs to ensure that even smash hits stay in the red. Superhero Studios then overcharges Spider-Man 10 Inc for every aspect of making, marketing, and distributing the movie. As suggested by the example of a cheated Darth Vader, the purpose of the charade seems to be hoarding profit shares promised to actors, writers, and other individuals or organizations. If anyone asks for a share of the profits of Spider-Man 10, the producers can point to Spider-Man 10 Inc. Since it is still paying off its debt to Superhero Studios, there are no profits to share. Since Forrest Gump is still not profitable, he did not receive any share of the profits. The survival of these accounting practices may be the most magical thing about Hollywood. In , Stan Lee, the man behind Spider-Man and X-Men, won a similar lawsuit as did two individuals suing over their share of television show profits in People have predicted the demise of Hollywood accounting after each lawsuit, but the practice has endured. Insiders describe the true costs behind any picture as practically unknowable and public production budgets a malleable fiction. This lack of transparency, however, is a boon to another group: Hollywood actors. As insiders, they understand Hollywood Accounting and can insist on a share of gross proceeds rather than net profits. But they may seek out a share of net profits to exaggerate the size of their contract. If a Hollywood star — Epstein explains — cannot find a studio willing to pay them a rate as high as for their last gig, their agent may prefer a share of net profits. In an industry where salary is synonymous with star power, a contract that exaggerates your compensation is almost as valuable as one that actually pays richly. But writers and actors like the one who played Darth Vader would probably prefer to simply be paid transparently. This post was written by Alex Mayyasi. Learn how to create content marketing that performs. Turn your company data into content marketing people actually like. In Data We Trust.

Low Budget Movies That Made Millions

Hollywood has a negative reputation when it comes to transparency and financial openness. I will be mpvies with three datasets, each providing a unique perspective on the matter…. I have frequently struggled to explain Hollywood economics to smart business types as they are often unwilling to be as flexible on certain terminology. For example, it modt be completely legitimate for a number of stakeholders in the same movie di have different contractual maje of profit. In a recent articleI went through at length all of the types of costs and income connected to making and releasing a Hollywood movie. These include…. This pattern of seems to be the common understanding of movie economics among the insiders I spoke to. When the final profit or loss is expressed as a percentage of the original production budget we can see how the majority of films make or lose a figure close to moneh original budget. While it is helpful to know the percentage return, another important factor is the scale of the production. There will always be some outliers such as those movies which made unexpectedly high amounts on VOD or those which gross well but have very high costs to recoup but overall these will be lost in the crowd of movies following the expected do most movies make money. All of these movies have been studied on the request of producers or investors who are investigating movies comparable mmake a project they are considering getting involved. As the selection of films is not random, we cannot draw any lesson from the overall figures, but we can use the data to look for patterns which would allow us to infer profitability in Hollywood en masse.