Movie production is usually expensive with profitability coming from total income minus expenses. A producer is usually in charge of taking care of all expenses needed to make the movie a success. These costs include paying crew members, video shooting expenses together with promotion costs. It is important for the producer to hype his product so that they can create an influx of demand in the market. The more people willing to watch the movie, the more revenue that will be made to cater for all costs incurred during production. A simple context of demand and supply will apply as the movie will likely cost more with the increased demand.
One of the major sources of income for movies today is selling broadcasting rights to movie channels and TV stations. Availability of an array of stations such as Netflix and Show max provide a ready market for hot productions. These channels charge their subscribers a certain amount of money for them to gain access. This has resulted to being a lucrative money generation avenue for major movie production companies across the world. Some movie production companies sign exclusive broadcasting contracts with for an agreed period of time in which they become obligated to provide content per the agreed frequency. Such agreements may stop a production company from selling to any other party.
Collection of fees from theaters is also a way money is made in this industry. Movies are first released to theaters to prevent illegal internet downloads that greatly affect sales negatively. A certain percentage of the ticket value goes to theater owners with the rest going to movies producers. Usually, the percentage varies as the movie remains in circulation since demand will have depreciated and people will be having access from other sources now. Initial sharing may be 60% for producers with the rest going to theater owners. Distributors some time may decide to buy out screens in cinemas by paying them off a flat rate and enjoying full sales made on tickets sold.
Legal digital download sites pay for the movies to be available for their clients to download in their tablets or computers. This is however affected by increase in illegal sites that rob producers of millions of dollars. Sale of DVDS still offers movie producers with revenue allowing people to play them in their CD drives wherever they are. This method has faced a big hit as time passes since they are being phased out by the availability of reliable streaming services.
Companies are receiving handsome revenue from merchandising services. This refers to where a certain cut of sales made on items branded for the movie. The method has turned out to be working well because it provides revenue together with being a reliable marketing method. Toys, Clothes and other fancy things are branded in movie’s images to be sold to audience turning the movie into a platform of making sales. People tend to be enticed into either looking for a movie branded in a friend’s shirt or go looking for the show. Both ways the movie guys are going to profit increasing available revenue streams. It is through this franchising technique that video games are produced for movie’s fan base further broadening income sources.
Private companies pay for their products to be featured in movies for marketing purposes. A movie provides a wide audience not only for domestic markets but even a well-defined global outreach. Many businesses will be willing to pay well for such an assured marketing strategy. This can further cut costs where the producer uses provided merchandise such as vehicles to run his show.
After a movie is released in theater, the next place you will access it is in airlines and hospitality venues. These places pay for them as their line of work attracts visitors who need to be entertained. Five-star hotels will pay for premium viewing providing extra income source. Governments offer tax incentives to attract movie shooting in their countries due to large investments usually made. This helps cut on expenses increasing the chances of profit making. Tourism has also been exploited with some companies creating entertainment parks such as Disney which gets millions of local and international tourists. Other sources of additional profit are still being exploited as the market gets more competitive.