How do movie creators make money?

We often see figures about successful movies grossing millions and millions of dollars. That seems like a big amount to show for, generally, less than a year of work. But a lot of factors affect these numbers. And to make a hundred million dollars, the risk is also sizeable. There is never a guarantee, like any other business. So let’s find out how the film industry makes its money.

First, let’s talk about budgets. Even decent-sized movies would cost $1M-$15M, just to be produced. According to estimates, Marvel’s The Avengers cost around $220M to produce! Then the advertising budgets tack on. If you want audiences to walk in to watch your movies, you need to get ads across through TV, magazines, newspapers, digital media, etc. All this can even double the total cost put in.

Coming to sources of revenue. The obvious one is ticket sales. Generally what happens is that a portion of movie hall ticket sales goes to theatre owners, with the film studio and distributors getting the rest. The deals are made so as to benefit both studios and theatres at different times. For example, a major part of the opening weekend sales could go to the studio while a major part of the sales from later weeks of the movie running would go to the theatre.

Foreign Sales also bring in a good chunk of revenue. Especially for movies with greater star power. For example, actors like Christian Bale would have a huge following anywhere in the world. So would a famous director like Christopher Nolan. Put them together and you get 3 Batman movies whose foreign sales are into the hundreds of millions each, in addition to the hundreds of millions on their home turf.

Merchandising Revenue adds to the money famous movie series’ would attract. Well-known franchises like Toy Story, Star Wards, Marvel Comics, and DC Comics would bring in retail sales since they appeal to kids and adult fanatics both. “Star Wars: The Force Awakens” itself brought in $700M in retail sales in 2015!

With the advent of streaming, Television, Streaming and Video-On-Demand (VOD) Rights also add to the equation. Once upon a time, this was DVD sales but those are now attractive to very few people. For popular movies, these deals could easily mean millions more added to the revenues. These deals are at no extra cost to the studios since all the advertising would have already been done before release and now the movies created have a chance to be running for possibly decades after they leave the theatres.

Product Placements can also add to a film’s revenues, or reduce expenditures. For example, for a race scene, maybe instead of directly paying money, a company like Tesla lends its sports model to the film. Something like this.

Now you understand how your favourite movie made money for its creators. And this is not a comprehensive list. There could be many more small sources of revenue used by movie creators, the ones listed in the article are the big ones.

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