How Hollywood Movies Make Money
So how much money does Hollywood make? That’s one of the most common questions moviegoers ask themselves as they watch these beautiful stories unfold in front of them. It’t quite as simple as asking how many tickets people buy, however!
There are several reasons for this. For one, it takes a lot of time to calculate the true profits of the film industry. Plus, not every part of the business is publicly traded or organized into separate departments that report their earnings separately.
That means there are lots of shady tricks used to keep revenue under wraps. The thing about these secrets, though, is that you have to work really hard to find them. And when you do, you might not get the full picture of what goes into making a movie truly successful.
Here we will go over some important points about how movies earn their money and where those dollars come from. After reading this, you’ll know just like me what steps Disney took to win an Oscar, and why Marvel Studios makes such a ton of cash.
Movie theaters
A movie theater is an incredible way to enjoy a good film. The experience varies depending on what type of theater you go into, how much money you are willing to spend, and who your favorite actors or actresses are.
There are two main types of movie theatres: traditional movie theaters that have big screens and tall leather chairs, and premium movie cinemas that offer more upscale experiences.
The difference between the two is how they make their money. In order to watch a movie, you must pay either for the ticket price, which can be anywhere from $10-$20 per person, or in case of premium movie theatres, additional fees for snacks and drinks.
Traditionally, movie theaters depend heavily on these add-on items to keep people coming back. They may also use expensive furniture or interior decorations to create an intimate feeling.
Product placement
A product placement is when a movie includes references or interactions with brands that promote their products or services. It’s very common in films to see cars, phones, and clothes from famous companies being used for setting scenes or acting as characters.
Product placements can be done for business purposes or just because an advertiser wants to get exposure. For example, if you are ever watching a car action film where the cars look really cool, you will probably notice some type of model car brand name attached to the vehicle. This is usually sponsored by the company who made the car!
The same thing happens with cell phone brands; there have been many movies featuring popular mobster characters which use a specific smartphone line or feature prominently in the plot. Obviously, these things are paid for by the sponsor!
This article will talk about 15 ways movie makers make money through product placement. But first, let us discuss what constitutes as a valid placement.
Footage is recycled
There are several ways that movie studios make money beyond just selling tickets to their films. One of these strategies is called footage recycling. This happens when an empty segment or scene from a previous film is re-shot with new settings and/or characters, modified slightly, and inserted into a newer production as part of a longer clip or episode.
You may have noticed this before while watching TV shows like The Office or Brooklyn Nine-Nine where a one minute long scene is expanded upon in a different way. That’s footage recycling!
A great example of it happening at the studio level comes right off the silver screen itself: Back To School.
That’s the title of a trilogy of movies (with two more planned) written by Jill Corman and directed by Jonathan Estrada. They are actually three separate feature length stories all connected by a common theme and storyline. Each individual story is set around a week during a student’s first day of high school.
The main character in each movie is different, but they share some important similarities. They are both students at their schools’ open house events, and they encounter…something. Something unexpected.
Something weird
It could be someone wearing clothes outside of weather conditions, someone talking with strange slang, something scary, etc. All of those things add up and create a feeling in the viewer.
That feeling is “this person doesn’t belong here.
Pay or play
For years, movie studios relied heavily upon two main sources of income: box-office revenue and royalties for media properties they own (aka “royalty checks coming in”). However, over the past decade this has begun to change.
With technology making it easy to create and distribute content, not just professionally but also easily accessible via mobile apps and YouTube channels, people are now watching movies online and free!
This changes how we look at money from films. No longer do we have to rely solely on attendance and royalty checks - instead, we can use another source: advertising.
By having advertisements before or during a film, or even paying audience members to watch a specific film, you can make money off of cinema by charging advertisers to promote their products and services.
This is what most large companies do to get around the word of mouth effect: an advertisement that works is one that someone else had already paid to see, so they will too.
Selling merchandise
Merchandise is one of the most important components in how films make money. A movie can generate huge revenue with just the sale of t-shirts, hats, or other decorations featuring their main characters’ or film scenes’ designs. These products are often manufactured by companies that have advertising contracts for the product.
This article will discuss some examples of this and what contract types these companies use to advertise for the product. There are two major types, direct advertisement and indirect advertisement. Direct advertisements do not add any descriptive content about the advertised item, while indirect advertisements do!
Some examples of movies using merchandise as an income source include: The Hunger Games, Harry Potter Films, Avengers Movies, and many more!
Movie marketing strategies typically focus on buying TV commercials, billboards, or street signs to promote the movie. Some even invest in online ads or magazine covers to gain attention and influence potential audience members to watch or buy the movie. However, investing in merchandise is another way to spread the word about your movie without too much cost.
Buying distribution
So how do these companies buy that ticket to market? They purchase distribution, which is where your movie can be shown to people. This is typically done through big media corporations such as Netflix or Amazon, but it also includes things like YouTube, Facebook, and VHS stores (yes, they are still around! Ha ha).
The more places you have your film available, the wider your audience will be, which is what really matters in the end. Distribution is very expensive, however, so most films don’t have much money invested in this area unless they already have large backing.
That being said, there are ways to make extra money by investing in distribution for your own film. There are many ways to start doing this, and some of them even pay well! If you feel motivated, try looking into some of those. It’s not only an interesting way to make money, but it’s good for your career too.
I hope this article has inspired you to look into the different ways movies get distributed and how to go about investing in that process for your own creative project.
Theatrical release
After filming, most films will wait for their theatrical release to be completed before they are distributed to movie theaters. This is because it takes time to organize everything!
The distribution process begins with the studio holding an event called a “premier” or “screening.” Filmmakers and film industry professionals attend this event where people can watch the movie.
After the premier, the distributor sends out press kits to media outlets that cover the movie. These include materials such as stills, videos, and interviews from the making of the movie.
Then, the distributors hold more events like open houses or screening tours where anyone can see the movie. At these events, the movie has advertising sponsors so attendees get discounts or free drinks while watching the movie.
Eventually, after enough exposure the movie enters into festivals where everyone gets free admission to check out the movie. During a festival, the movie may play for several hours so people have time to enjoy it.
Home media release
After filming is completed, what most filmmakers will do next is to take their movie into various home entertainment formats. This can include creating a soundtrack or leaving it raw with no music at all. A filmmaker may also choose to create an interactive feature where they add songs or other components to make the film more engaging.
Interactive features are usually done through apps or software that have been designed to connect to the TV screen so people can contribute by adding lyrics, songs, games, etc. These applications have royalty free music in them, which usually does not require permission for use. The app or program is then used to cover the cost of the license fee for using the music!
These types of movies are very popular because almost anyone can enjoy them, even if you don’t know the song or language. There are many sites that offer free soundtracks and/or translation services so you can listen and understand what is being said even without knowing the original language!
Movie trailers sometimes contain spoilers, so be careful about watching them before going to see the movie.