When a movie is successful at the box office, the money goes to the movie studio that produced the film. The studio makes money from box office receipts, merchandise, DVD and digital sales, and fees paid for the movie to be shown on TV or streaming services.
Salaries in the Film Industry
A film’s director or producer’s salary can be affected if they take a percentage of the profits from ticket sales instead of a paycheck up front. The producer typically earns more than the director. Unless actors agree to a percentage of box office receipts instead of a paycheck up front, they still get paid even if a film flops. After a film’s production fee, a producer may receive payments divided throughout production rather than all at once. Most producers are promised a percentage of the film’s profits.
Profit Distribution
Typically, a portion of theater ticket sales goes to theater owners, with the studio and distributor getting the remaining money. Traditionally, the studio got a bigger percentage during a film’s opening weekend. It is challenging for studios and distributors to profit from films lately due to decreasing theater attendance. A studio might make about 60% of a film’s U.S. ticket sales and 20-40% overseas. Exhibitor percentages depend on each film’s contract.
An average studio film makes a profit of $14.8 million. For a 1% investment of $115.2 million, the return would be $119.5 million, a profit of $4.3 million – a 3.7% profit margin.
Typically, investors are repaid in full. Remaining profit is split 50:50 between investors (investors’ pool) and certain cast/crew members (producers’ pool).
If a film loses money, it is considered a box office bomb, losing money for the distributor, studio and production company.
Hollywood spends big trying to make profitable films, yet half lose money, with only a 3.7% profit margin overall. Many factors like merchandising, streaming and more can help turn a profit.