The HollywoodFilm Industry

Traditional Distribution

Key Companies

Profit making

The Production Cycle

• Production Company

Distribution Company

Exhibitors

Audience

Profit finance Returns

TV/ DVD sales

The Conglomerate

Film Production CyclePre production

ProductionPost Production

Distribution

Exhibition

Marketing!

Distribution

• The Invisible Art – process known only to those within the industry, barely written about and also imperceptible to everyone else.

Producers AudienceDistribution

What is it?• Releasing and Sustaining a film in the market

place• Worked best when the three key stages

(Production, Distribution, Exhibition) are linked or controlled by the same company – Vertical Integration

• UK system has more focus on marketing and sustaining a film in the local market

• Independent Studios don’t ‘do’ vertical integration

Independent Films

• Independent Studios don’t ‘do’ vertical integration

• No formal connection between Producers, distributors and exhibitors

• Collaboration – need to get a major company on side

• £££££££££££££$$$$$$$$$$$$$$

Distribution Companies

• Determine how many copies (prints) of a film to make

• Why might this be important?

• What might be some issues surrounding this?

Who are the big distribution companies?

• Viacom - $12.86 billion• Paramount – one of the oldest (1912)• United International Pictures (UIP) – covers 60

‘territories’• Time Warner – have over 5700 films• New Line Cinema – ‘independent’ and foreign

films, home distribution• Fox Entertainment Group – worth over $17.2

billion, 83% is owned by News Corp

Who are the big distribution companies

• The Walt Disney Company – another very old company

• Miramax – one of Americas largest internal distribution companies

• Buena Vista International – distributes all Disney films outside America

• Universal Studios Group – owned by the European version of Time Warner (who made their money from privatised water)

• The Sony Corporation – massive interests in electronics

Seems like a lot but…..

• Viacom owns Paramount and 33% of UIP

• Time Warner owns New Line Cinema

• Walt Disney owns Miramax and BVI

• Fox• Universal/Vivendi• Sony

• Horizontal Intergration

Distribution = Power

• Films can not be financed without the help of distributors

• They have clout with theatre owners (or are often the owners)

• Brand name recognition

• Own copyright

• Access to capital

It’s all about Money!

• Distribution Company and their conglomerate owners are profit driven so they must feel confident that they can make sufficient return on investment

• Films are expense to make

The CostUnbreakable

•Story rights and Screenplay: $5,000,000•Producers: $1,878,260•Director (M. Night Shyamalan & Assistant): $5,081,749•Cast: $ 31,903,987

– Bruce Willis: $20,000,000Samuel L. Jackson: $7,000,000Robin Wright Penn: $2,500,000

– Rest of Cast, Casting, Stunts, & Travel: $5,568,388•Production costs: $26,214,709

– Visual effects: $1,000,000– Music: $2,253,456

•Total: $73,243,106

Lara Croft Tomb Raider: The Cradle of Life•Story rights and screenplay: $4 million•Producers: $4 million•Director (Jan de Bont): $5 million•Cast: $17.25 million

– Angelina Jolie: $12 million Extras: $250,000– Other (inc. Angelina's perks): $5 million

•Production costs: $67 million – Set design and construction: $17.8 million

•Visual Effects: $13 million•Music: $3.3 million•Editing: $3 million•Post Production costs: $1.5 million•Total: $118 million

Terminator 3: Rise of the Machines•Story rights (Carolco and Gale Anne Hurd): $19.5 million•Screenplay: $5.2 million

– John D. Brancato & Michael Ferris: $1 million•Director (Jonathan Mostow): $5 million•Producers: $10 million•Cast: $35 million

– Arnold Schwarzenegger: $29.25 million + 20% gross profits– Arnold's perks: $1.5 million– Rest of principal cast: $3.85 million– Extras: $450,000

•Production costs: $58 million•Post-production costs: $4 million•Visual effects: $20 million•Music: $2 million•Other costs: $33.6 million•Total: $187.3 million[3]

Spider Man 2•Story rights: $20 million•Screenplay: $10 million•Producers: $15 million•Director (Sam Raimi): $10 million•Cast: $30 million

– Tobey Maguire: $17 million– Kirsten Dunst: $7 million– Alfred Molina: $3 million– Rest of cast: $3 million

•Production costs: $45 million•Visual effects: $65 million•Music: $5 million

– Composer (Danny Elfman): $2 million.•Total: $200 million

Other Costs

• Promotion – often higher than Production costs for a small $20 mill film but dies become less for a higer budget film

• Very hard to get accurate data

• Megamind cost between $130 - $145 m and estimated Promotiom budget of $65m

How do they make money?

% of revenue from tickets

• Front Loaded Deals – on the decline (bankruptcy and new revenue sources)

• ‘Standard Cut’ – but what that cut is depends on the muscle of the distributor

• Around 50 – 55%

Other sources of money

• DVD’s – can add up to $100m and a higher % goes back to the company

• TV Rights

• Merchandising

• But in 2009 theatrical box office revenue was bigger than home video revenue – piracy, Netflix, cost of 3D tickets.