![]() ![]() Pre-production – Building a team and planning the shoot.Development – Getting to a final script.In the industry, this is often called the ‘Negative Cost’ as it’s the cost of producing the very first version of the film (which used to be a film negative). The starting point for working out the final costs of releasing a movie is to look at how much it cost the studio to shoot the film (i.e. Ok, enough terminology – let’s start our journey into what Hollywood blockbusters cost and what they make back. Pay Per View (PPV) – An old form of VOD which is still active in some places involving the viewer paying to watch an encrypted, scheduled transmission of the movie.Video on Demand (VOD) – Online streaming services (such as iTunes, Netflix and Amazon Prime).In the UK this includes the BBC and in the US ABC. Free TV – Free to air television, typically either public service broadcasting or ad supported.In the UK this includes Sky Cinema and in the US cable networks such as HBO. Pay TV – Subscription television channels.Home Entertainment (or “Home Video” or “Home Ent”) – The release of the film on DVD, Blu-Ray, previously VHS and online streaming services.Theatrical – Relating to the cinema release (i.e. ![]() For example, Paramount have the rights to distribute The Adventures of Tintin domestically while Sony controls the international rights. In some cases, studios will only have the rights to release a movie domestically, with another company picking up the international rights (or vice versa). ![]() International – The release of the film in the rest of the world combined.Domestic – The release of the film in America and Canada, also known as “North America”.What’s the average cost of making and selling a Hollywood blockbuster?īefore we can get to the numbers, here are some key phrases you’ll need to know to understand Hollywood economics… ( Note: The images and posters used in this article do not relate to the movies in my dataset – I’ve picked them because they’re nice images which seem to fit in well with the text). For now, just know that these figures are real-world, correct and relate to Hollywood movies released in the past ten years which cost over $100 million to make. The financial figures come from a few different sources within Hollywood studios, which I discuss in the Epilogue section at the end of this article. But after they recouped the original budget, how much of the remaining $1.52 billion turns into profit?įor today’s data, I am using a dataset of 29 Hollywood blockbusters, all of which cost over $100 million to make. Last year, Jurassic World earned a whopping $1.67 billion in cinemas worldwide quite a haul for a movie which cost $150 million to make. As the films have grown, so too have the spoils on offer. Modern blockbusters are often referred to as ‘tentpole movies’ as they represent the most important products in a studio’s release calendar. In the past few decades, Hollywood studios have sought to perfect the model, and in so doing have massively increased the cost of making and promoting such movies. Its wide national release supported by blitz advertising created the first ‘event movie’ and became the template for later blockbusters including Star Wars (1977), Raiders of the Lost Ark (1981) and E.T. The film broke box office records and created the modern summer blockbuster as we know it today. However, the first ‘blockbuster’ in the modern sense was Jaws (1975). Movies like Gone With The Wind, Ben-Hur and Cleopatra attracted large cinema audiences with a promise of cinematic spectacle. “We’re going to need a bigger boat”Īlmost as long as there have been movies, Hollywood has relied on huge-scale productions to bring in the big bucks. In the coming weeks, I’ll look at movies with smaller budgets but let’s start with the big ones – Hollywood blockbusters. Therefore, in an effort to demystify the film recoupment process I’m going to write a few articles looking at how movies make a profit. While I understand why people fall for such over-simplifications, they have no real connection with how movies actually make money. Another popular fallacy is that when a movie with a $100 million budget crosses $100 million at the box office it is considered to have “recouped”. ![]() For example, “ Paranormal Activity cost $15,000, grossed $193 million and so made a profit 1,286,566%“. These lists normally use the budget of the movie and the amount of money it collected in cinemas worldwide to conclude how much “profit” the movies made. It’s a lengthy one, so grab a cup of tea.Įvery six months or so, someone on my Facebook feed will share a list of “The Most Profitable Movies of All Time”. I finally had a moment to sit down and crunch the numbers – I hope it helps in the understanding of Hollywood economics. This is an article I have wanted to research and write for a long, long time. ![]()
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