From afar, the movie business might look pretty glamorous. Celebrities and producers glide down red carpets, clutch their Oscars and vacation in St. Bart’s… just because they can. Yet while there's a lot of money to be made in film, the economics of movie making are far from simple.
Something you’ll likely hear if you walk through the halls of any movie studio is, “nobody knows anything.” And it’s true. The public can be fickle, the industry is in flux, and any movie is an extremely risky investment, even if Tom Cruise is your star. According to the Motion Picture Association of America’s (MPAA) Theatrical Market Statistics for 2017, U. S. and Canadian box office was $10.4 billion, down 5% from $10.9 billion in 2016. The 3D box office ($1.4 billion) comprised 14% of total box office, two percentage points less than the previous year. And global box office for films hit $36.4 billion in 2017, up 1% over 2016’s total, due in large part to increased sales in the Asia Pacific region.
It’s nowhere as straightforward as the early days of cinema, when a movie would come out in theaters, make the vast majority of its revenues via ticket sales, and then essentially disappear. Major studios and indie filmmakers alike now spend much of their days looking for new sources of revenue. because ticket sales are no longer the be-all and end-all for films.
