What Do Movie Producers Get Paid?
Have you ever wondered how much money producers make from movies? Let’s talk about all the ways movies make revenue and how producers as well as studios profit.
First off, let’s be clear that all producers do not make their profits by the same means. The average producer could be paid a salary that is baked into the production budget of a movie, while big time producers like J.J. Abrams or Jerry Bruckheimer may negotiate upfront deals as well as a percentage of the film’s profit. If the producer shares in the copyright of the movie, then this gives them even more leverage to profit in streaming, television rights and even more.
Most producers typically will get 20% of their production fee upfront, 50% during principle photography and whatever else they are owed will come afterwards. How much the average producer will get on a studio movie will be heavily based on their track record, how much the studio is willing to pay and the producer’s track record.
The more leverage a producer has, the more they can demand and how they will be paid. Since studios make their money form movies in various ways, it’s not like they have to pay producers from the same source.
How Do Movies Make Money?
When it comes to Hollywood movies that are released in theaters anywhere from the $10 million to $100 million and up, there’s several ways studios are able to get a return on their profit.
Hollywood producers, advertisers, and marketing teams are experts at squeezing every penny out of a movie. They use all sorts of gimmicks to make audiences pay for the movie multiple times. You’d be surprised at how much you contribute to Hollywood as an audience. Let’s dive into all the ways audiences help movies make their money back.
Movie Tickets During Theatrical Releases
When a movie gets released in theaters, the profit it makes from ticket sales are known as gross income. After the studios pay taxes on that sum it is considered net income. They then split the net income profit with the theaters or sub-distributors of that movie. This split could be anywhere from 50/50 to a 25/75 split depending on their arrangement.
In the past, it used to be a rule that each week the ticket sales split agreement between the studios and theaters work on a sliding scale. So on week 1 it would start as high as 90/10 in the studio’s favor, week 2 it would drop 60/40 and week 3 it could be an even lower split. As of the early 2000’s though, theater chains just get a basic cut of the whole revenue and it doesn’t matter which weekend it is.
Now you can understand why there is so much effort to get audiences to go see a movie in theaters the very first week it is released.
If a studio made a movie that costed them $100 million to make and by the end of its theatrical run it made $300 million, then that is a good sign the movie is doing well and by the time it hits the remaining window releases (streaming, dvd releases, television networks, etc) things should be uphill for the most part.
However, you can also see how if a studio spent $100 million on a movie and it either broke even or made less than that during its theatrical run — it’s most likely considered a flop and will have a harder time making a return on the investment (if it can at all).
Marketing on Airlines
Marketing the movie on airlines is a great way of additional income. The movie will appear on all international airlines and Pay Per View (PPV) services are used by hotels and lounges too.
These services generate income for Hollywood studios and movie producers even after the release of the movie.
DVD and Blu-Ray Sales
Studios and producers used to enjoy the fruits and labor of the DVD market once a movie left the theaters, until it began declining gradually after 2005. Before streaming services like Netlfix and Amazon came on the scene, DVD sales used to account for close to $16 billion and were somewhere around 64% of the U.S. home video market.
In today’s climate, the DVD market is less than 10% of the total market share and total sales landed somewhere around $2,2 billion in 2018.
Blu-Ray sales were close to $2.37 billion at its peak and landed somewhere around $1.8 billion as of 2018.
Television and Online Streaming Revenue
We all have been couch potatoes streaming our favorite movies late night on Amazon or Netflix binging on that bag of popcorn.
Generally, after the theatrical run, a Blu-ray is created of the movie and sold (to those of us who still buy DVDs). This used to be a very big source of income for studios and producers, but not these days.
Once that is out of the way, the movies are offered to run on premium paid channels. Once this is done a movie licensing deal is signed with services like Netflix and Amazon. These avenues bring good money to the producers if the movie has steam.
Producers can make big money by selling the domestic rights (or international rights) for television and streaming purposes. They will get paid a licensing fee from Amazon or Netflix in exchange for rights.. These movies can be streamed unlimited times or a standard period of time until the license is renewed.
Consumer Products and merchandising for each film earn the movie a huge deal of money.
Studios licensing the rights for characters and items of the movie. Product Placement where the movie gets payments to place products and brands in the movie.
You would be surprised to know that sometimes big Hollywood blockbusters can get half their budget back just from creative and marketable merchandising gimmicks.
Multiplex Food Stands
Multiplex theaters have a lot of overhead and a movie ticket itself would not be able to cover all the incurring costs of the film. Although this one isn’t how a studio or producer makes money from their movie, it is how the theaters themselves make a bulk of their money by showing movies.
Just selling films and tickets in a multiplex would not generate big business and would end up in a loss-making fiasco for the theaters.
So, what is the answer to this problem? Food and Concession Stands.
Yes, you heard it right!
These overcrowded stands become incredibly important for generating the additional required income for the movie. Most of the food items are overpriced. From the popcorn to the sodas, the stale bags of delicious nacho chips, and stacked up juices and coffee.
All this junk is sold at high prices and helps the cinema in a money-making enterprise.
Incidentally, if you want to bring in your own, more realistically priced food from the outside, it’s unlikely your cinema will even try to stop you these days.
So, what exactly is the concept of Four Walling a movie?
Sometimes, the distributors refuse to share the ticket price with the movie exhibitors, or sometimes cinemas are not interested in taking a standard booking for a particular film.
In such cases, the distributors buy out the screens and pay the cinema producers a flat fee for the running of the movie. The movie gets a flat lump sum and the distributor keeps 100% of the profit generated from the film
This method works when the movie never expected to make good money but with the four-walled arrangement, a good profit can be generated for the distributors and cinema both.
Adaptations from Novels and Books
Adapting movies from novels and books and also making video games of popular films is really becoming a brand-new trend. This increases a lot of popularity of the movie among the young generation
When a movie director really nails any movie adaptation from a comic or book the same can-do brilliant business as a game as well sold on any mobile platform, windows platform, or Mac store.
Star Wars, DC, Marvel, Lord of the Rings, Harry Potter are some of the brilliant Comic and novel adaptations that we have seen on a big screen. Most of them have graphic games out which are also selling as merchandise. These movies become a brand by themselves and can drive a lot of sales in different fields.
Movie adaptation sets and rides have always been immensely popular sites for luring tourists and getting them excited.
Both Disney and Universal have amazing theme parks and loads of movie sets spawned rides and celebrity attractions everywhere.
The movie production teams earn a good deal of money from these fancy sets and movie-inspired rides. Jurassic Park, Transformers, Puss in Boots, and many more are some amazing rides we all have been a part of.
Movies for the Education Sector
The education sector generates a great deal of money for movies.
To get a License for playing films in the classroom can cost a good amount of over $50 per title.
This is a good money-generating business for all old and new films.
What Does Everyone Else Make On A Movie?
The answer to this question would make this article about a two hour read, so here’s a cool video that comes at least in the same ballpark when it comes to rates.