2017-03-26

First, the Budgets

In general, major studios don’t disclose the full budgets for their films (production, development, and marketing/advertising). This is in part because it costs far more to make and market a film than it seems. For example, the production budget for Marvel’s "The Avengers" is recorded as $220 million, but if you factor in marketing/print and advertising costs. that number spikes. (For more, read: What Drives Summer Blockbuster Movie Profits? )


Indeed, for many films, the Print Advertising (P A) costs alone can be extremely high. A $15 million film (which, funnily enough, is considered a small budget in Hollywood) might have a promotional budget that's higher than its production budget. This is because films that don’t have a built-in audience (like those based on bestselling books like “The Hunger Games ” or even “50 Shades of Grey”) need to get people into the theater. Romantic comedies or some children's films need to promote themselves via billboards, TV commercials and subway ads, and those costs add up quickly. For a film budgeted between $40 and $75 million, its P A budget might be $20 million.


For any type of film, whether a blockbuster or an indie production, things like tax incentives and revenues from product placements can help pay down the budget. If they're given an incentive to shoot a film in Canada or Louisiana or Georgia, producers will usually hustle to do so.


Going back to the “nobody knows anything” mantra, occasionally there are surprise hits like the indie “Little Miss Sunshine,” which is a Cinderella story when it comes to film finance. Its budget was around $8 million, it sold to distributor Fox Searchlight for $10.5 million at the Sundance Film Festival, and it made $59.89 million in U. S. theaters, which is almost unheard-of for an indie. By contrast, you have the Walt Disney (DIS ) movie "John Carter," which had an estimated budget of $250 million, but only made $73 million at the U. S. box office.


So there's no sure path for a film to turn a profit, since factors like brand awareness, P A budgets and the desires of a fickle public come into play. Still, there are a few tried and true ways that films can attempt to make money.