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EntertainmentIndustry.name
Each print of a film costs approximately $1,500. This figure fluctuates depending on the length of the film and the current film stock costs (which can be affected by the price of silver, one of film’s key ingredients). Thus, for a 3,500-print studio wide-release, print costs alone can total $5.25 million.
Add to the cost of simply making prints of the film for exhibition, a nation-wide advertising and promotion campaign with ads in major city newspapers running anywhere from $1,000 — $10,000, and the average cost to launch a studio film is $47.7 million. That’s above and beyond a film’s production budget. That’s up almost four times from just over a decade ago when it was $14.1 million.
A common studio model is a 1:1 ratio of film production budget to prints and advertising (often called “P&A”). Assuming that approximately 50% of the box office receipts are returned to the distributor, an average Hollywood film must now make $80 million at the box office just to break even.
This pencil-pushing strategy has resulted in some massive losers but it has also paid off with blockbusters. While the losers inevitably outnumber the winners, the winners are so wildly successful that Hollywood’s overall profit margin remains high — thus, the strategy continues.
Before the audience can buy a ticket or buy or rent a video, the movie has to get off the producer’s desk and into the movie theaters.
This is called “Distribution.”
All industries have wholesalers. Whereas in other industries, the wholesalers are customers for the manufacturers who buy inventory product at discount prices, add a price mark up and then resell at a higher price; in the entertainment industry, these intermediaries are studios (in the case of films they have not produced themselves) and/or independent distribution companies.
While the major studios usually distribute their own product, independent producers license these rights to the studios or to independent distribution companies. These rights may be for domestic or international theatrical distribution, for home video, pay-per-view, cable or syndicated television or any combination of media and markets.
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