Box OfficeThe artistic value of film cannot be denied; for instance, the works of Luis Bunuel, Ingmar Bergman, and even the violent and bloody images of Quentin Tarantino are profound explorations of the human condition.  However, the success of a movie is ultimately dependent not on the reviews of the critics but on its performance in the box office. Film, after all, is an industry. Money is needed to make movies, and movies need to make money so that more of them may be made.

Money makes the world go ‘round

A movie’s financial connections are evident right from the very start, during the pre-production stages. The moment the producer comes across a big idea, the first order of business usually includes drafting a budget proposal for the film production and packaging the big idea in the most appealing way possible to convince an investor to purchase the rights to the film. Only when the finances have been secured can the film production move forward.

Much has been said and written about the intricacies of film production. The road to the wrap of a film is indeed tough and complex. What comes after, when the shoot has been completed, is an even more grueling battle. It is time for the movie to make money.

First, a deal is made with a distributing company. The production team must assure the distributor that the film in question will be lucrative. The money and time involved in film distribution, after all, can be considerable. Usually, having an established director at the helm or a star-studded cast convinces the distributor of a good return on investment. Distributors often purchase the rights to a film largely on the basis of the director or star behind it.

During the peak of Alfred Hitchcock’s career, for example, he was able to secure the support of distributors even when he did not yet have a film to show. He was Alfred Hitchcock, and that was sufficient. For filmmakers who are just starting in the industry, of course, things are not as easy. Up-and-coming independent filmmakers usually take advantage of film festivals in order to attract distributors. Such was the case of the breakout indie film Little Miss Sunshine in 2006 and the movies of Steven Soderbergh.

The financial agreement between the studio and the distributor could go two ways: leasing and profit sharing. The leasing agreement requires the distributor to pay a fixed amount for the rights to the film. Everything the movie makes thereafter goes into the distributor’s pocket. Such an agreement is a gamble for both parties. Should the movie make less than the distribution fee, the distributor loses. Should the movie make significantly more than the distribution fee, the studio has sold their movie short by playing it too safe. The profit-sharing agreement, on the other hand, works on a system of percentages. The distributor is entitled to a percentage of the movie’s net profits. Again, such an agreement is a gamble for both parties. It all depends on the movie’s performance at the box office.

Staging the perfect opening

The distributor’s task is to give the movie an opening. While to the movie fan, such events are usually grand and enjoyable, it is actually a very tedious and complicated process. When opening a movie, the distributor must consider several factors: target audience, studio, stars, promotions, and season. A movie from an established studio and with a cast of the most in-demand stars will most likely guarantee a successful opening. Promotions are also very important, as people will be unlikely to go to a movie they do not know about. The distributor must, create hype around the movie and make sure that it is all over the media.

This involves everything from plastering eye-catching billboards all over the country and action-packed trailers all over the Internet to leaking juicy rumors about the movie’s cast. The distributor takes care, too, to consider the season when opening a movie. A romantic comedy will do well on Valentine’s Day, and a Christmas movie in December. An opening should be perfectly organized with all the conditions just right if a movie is to make the maximum profit.

Depending on the attitude of the audience as well as the predicted profit potential of the movie in question, the distributor decides between a wide release (more than 600 theaters) and a limited release (less than 600 theaters). As movie prints are quite expensive to produce, the distributor decides on the type of release that poses the least amount of financial risk. Sometimes, a movie may be given a wide release after a successful limited release.

This is true, for instance, in the case of Psycho. In 1960, Paramount signed a deal with Alfred Hitchcock for Psycho even when they found the story simply revolting, simply because of his career and reputation.  When the movie was finished, however, they decided that it was not to their liking and so decided to release it in only two theaters. Upon seeing that the film was highly successful even with the limitation they set, the distributor decided to give it a wide release. It went on to become the most successful film of Hitchcock’s career.

In the movie theaters

What about the movie theaters? How do they make money? It all starts, as with everything else in the film industry, with a financial agreement. The distributor arranges a special screening for the buyers who represent the movie theater companies. The buyers then decide if they would like  the movie in their theaters. The buyer can acquire the movie in two ways: bidding and profit sharing. The bidding agreement requires the buyer to pay a fixed amount for the rights to show the film. Everything that the movie makes thereafter goes into the theater owner’s pocket.

This is, of course, a gamble. Should the movie make less than the bidding fee, the theater loses. The profit-sharing agreement, on the other hand, requires the theater owner and distributor to agree on several things. First, the theater proposes a house nut with the distributor, or the money required to settle the theater’s weekly expenses. Next, the percentage split for the profit is set, as well as the length of time the movie will be shown in the theater.

In truth, it is always the distributor who gets majority of the money made by the movie. The theater rarely makes money from the film showing. It gets its profit, instead, from the concessionaires. The movie is only meant to attract people. The popcorn and soda are the real moneymakers.

The box office game

The term “box office” originally referred to the ticket booth, but has become a term used to measure a movie’s ticket sales. The box office, the analysis of a movie’s performance in the movie theaters, has evolved into a spectacle equal to the stock exchange. The studio and distributor’s ultimate goal is to fare well at the box office. Box office totals are also a source of interest for the audiences, who sometimes base the decision of whether or not to see a movie based on its performance. Box office figures often cover domestic and foreign ticket sales, and are reported weekly. The most important figures, however, are those of the movie’s opening weekend. Everyone wants a big opening.

In truth, the opening weekend figures are just estimates released by the studio and distributor. When the actual figures are released at the weekend’s close, their estimates are sometimes revealed to be much lower than the truth (they have been too optimistic). When the actual figures are higher than the estimate, it is always a reason to celebrate. While some frown upon the studio and distributor’s habit of reporting deceiving estimates, they cannot really be blamed. The box office, after all, is the ultimate measure of a movie’s success. They just want to look good.

Other perks: the additional rights

While much value is given to a movie’s performance at the box office, a movie makes money in other ways.  When a distributor purchases the rights to the film, they usually purchase not only the rights to distribute to movie theaters but to sell VCDs and DVDs, movie soundtracks, posters, toys, and other merchandise as well. Their rights also include the distribution to TV networks. While these things are often considered secondary, they are actually sometimes what rakes in the money. The movie Cleopatra (1963), for instance, was a flop when it was released in theaters. It only proceeded to make a considerable amount of money through years of VHS and DVD sales.