Entertainment and film is the most glamorous industry of all. We always see the popular stars on red carpets, in the news, in publicities, and in controversies as well. But one thing – they are never out of focus. The film industry carries a huge following behind it. But at the very core, it is a huge and complex economy.
It is a high-risk and high-reward industry. This is because there is no straight formula to earn money. Its success depends on factors like the reception of the audience, critics, and release dates to name a few. There are too many and not-so-straightforward risk factors and opportunities involved in filmmaking.
Where is money spent on filmmaking?
The three-hour film that we see has an effort of months and years to put in front of the audience.
Pre-production
Pre-production is the initial phase of filmmaking that occurs before the actual movie shooting. It is the process where the groundwork for the film production to start is laid. It involves script development, hiring key members (like directors, and actors), hiring the rest of the crew, finalizing shooting locations, budgeting, and getting the permissions for shoots.
Production
This is the actual shooting of the movie. The cost during this phase is spent on salaries, rents, set building, and location expenses. The types of costs vary depending upon the type of movie. For eg; a historic film might spend relatively more money on building the sets of the historic era whereas a multi-starrer film will spend most of the production money on the salaries of the actors.
Post-production
Once the actual filming of a film is completed, the next steps are editing, and adding visual effects, and sound effects to the film. It’s the phase where the raw material is turned into a polished product. This is where a film gets finalized and is the version that the audience sees. The money is spent on salaries for the artists, engineers, and equipment rentals.
Marketing and distribution
Like any product, marketing is a crucial part of filmmaking. This investment is critical for creating awareness and attracting audiences, especially for wide releases competing in a crowded market. Marketing involves campaigns like paid promotion, advertisements, TV show appearances, etc.
How do films earn money?
Films have multiple sources from which they earn revenue.
Box office
This is the revenue collected from the sales of tickets. It is the most known source of earnings in general. The revenue from the ticket sale is distributed between the cinema owner and producers
Streaming rights
OTT platforms like Netflix and Amazon Prime Video have changed the way audiences view content. Prior to this, cinemas and televisions were the most common medium to view content. But OTT has become an essential part of the entertainment ecosystem. OTT platforms pay the producers to purchase the film and show it exclusively on their platform. This trend has risen more since the Covid-19 pandemic. Many films are actually only made for OTT platforms and it is their primary source of income
Television rights
Television channels pay to film for broadcasting rights. Like OTT, these are exclusive rights. Television channels pay the films to showcase on their channels eventually to attract and retain audience.
International distribution
Not all films earn through international distribution. Films released internationally generate revenue through box office sales in various countries. The rights to broadcast the films are sold to the distribution houses of those geographies. This is the case for popular and big-budget names. Consider a movie like Marvels’ Avengers. It has an audience all across the globe. These kinds of films earn through international distribution.
Merchandising
Successful and widely popular films earn through merchandising. They can be by the sale of t-shirts, toys, gift accessories, etc. Like international distribution revenue, this revenue is not earned by all the film. Generally, popular film franchises have merch sales associated with them.
Endorsements
Have you ever seen a brand shown in a popular scene or a song in a movie? That is the endorsement the movie is doing for the brand. Companies pay for their products to be featured in the movie, which can generate additional revenue.
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