How do Films make money?
When looking at how Films make money it’s important to consider all the different revenue streams that may arise from a film’s production. However, there is always one common denominator when it comes to generating revenue and that’s the consumer.
Revenue can come from a number of avenues, including buying a ticket to the cinema, clicking download on Video on Demand or subscribing to a platform such as Netflix or Amazon, all of which is done by the consumer.
However, the various revenue streams can be broken down into various categories:
Theatrical Release ticket sales
Releasing a film at the cinema can be a costly part of releasing a film for producers. Promotional activities and advertising costs to create awareness around the films’ release in order to attract the audience can be very high. However, done correctly this can be a huge source of income to a film producer. In most cases only the biggest budget films get to be released theatrically and in more recent times, Coronavirus has forced producers to release films direct to streaming platforms, with many cinemas closing down.
Physical packaged sales
The DVD market was at one stage the biggest source of income to any film producer. Over 250 million discs were sold every year in the UK in the early 2000’s. Although the market has seen a huge decline due to economic downtown and a digital revolution, DVD is still very much a big market across the world. Many consumers still enjoy visiting the supermarkets and browsing through the latest selection of DVDs to take home and enjoy.
Streaming Services and Video on Demand
Streaming services such as Apple, Netflix and Amazon have seen a huge spike in demand in recent months. As an example, in March 2020 Netflix registered a 50% increase in online subscriptions for mobile usage. Streaming services now account for 43% of the world’s total revenue from film production. This is due to a huge shift in viewing habits and usage, combined with an increased demand for content. The global video streaming market was estimated at around 42 billion in 2019 and is expected to rise to 54 billion by 2021.
Another avenue for generating revenue from film production is through the airlines. Long haul flights always require the need for entertainment and a new selection of films is the best way to keep customers entertained throughout a long unconfutable flight. Generally, deals are done through a third-party distributor, where the films are licenced to the airplane carrier for a period of time for a fixed fee.
Merchandising has always been a huge part of the film industry, which grows bigger every year. Brands like Star Wars transformed the way in which people thought about buying film merchandise. Toys, T-shirts, Duvet covers, and all types of different products can bring in revenue post a film’s success. This will generally only apply to the big block buster movies; however more and more smaller budget producers are tapping into this lucrative market.
Product placement in films grows year on year with the market worth over 20bn in 2019.
Large brands often pay huge sums of money to be featured in a film where their brand is recognised and therefore picked up by the consumer. One of the most famous examples of this is the use of Ray Ban sunglasses in Top gun in 1981, where the brand sold over 360,000 units directly after the film’s success. Films producers can command big payments for product placement in their films.
At Films4U we Specialise in bringing a Film from the conceptual stage, right through to a film’s completion and distribution. We act as a one stop shop taking care of every part of the film’s life cycle. We are unique in that we are able to access all the distribution and revenue channels above due to our 30-year experience in the industry. If you would like to find out more please contact us at 08082 750 904.