Overview of Film Industry
Producers raise money to hire a director, cast and crew. If a film released in theatres fails to break even, it is a box-office bomb, thus losing money. It would be wiser to spend money setting up a structure that will permit deducting losses. Never start production without distribution. The film industry voraciously consumes money. Overall, films could be predators searching for the next victim.
Film Budgets and Losses
Blair Witch Project is a classic low budget film that made it big. A studio costs up to millions. Most films lose money. Eighty percent do because of oversupply and limited distribution. Movie budgets comprise everything from actor fees to promotion costs. After revenues, there may be no profit.
Examples of Film Failures
Cleopatra nearly bankrupted 20th Century Fox with production and marketing costs of US$44 million. Unfortunately, his John Carter was the biggest Disney failure ever. The movie had a $250 million budget. It crossed $300 million before tax deductions. Disney wasn’t always a media behemoth. This movie nearly ended the company.
The Promise pulled in $12.4 million worldwide, $77.6 million less than its $90 million budget. Overall, it lost $93.6 million. Despite a $90 million budget, it only grossed $78.3 million. Universal Pictures knew R.I.P.D was doomed before promoting it. It still lost $92.9 million after cutting marketing.
Industry Insights
Titanic was the first to gross over $1 billion in 74 days. Only six films ever crossed $2 billion. James Cameron directed three of them. Studios create shell companies. Each film set up to lose money by paying fees to studios. So losses vanish on paper.
Film Industry Challenges
Films lose money. Making movies costs millions. Success chance is 30%. If costs not covered, no profit. Oversupply causes limited distribution. Eighty percent of films lose money from this. Many costs become fees paid to studios. So studio losses disappear on paper.
The Biggest Flop in Movie History
Some big budget films lost over $90 million. Despite $250 million budget, poor box office caused loss. Marketing made it worse. Studios create shell companies for each film. These structures permit deducting losses. Thus vanishing losses.
First film to gross $1 billion took only 74 days. Recently, films crossed $2 billion. One director made three of the six. Films unlikely to recoup costs without huge box office. But many don’t get distribution to break even.
Conclusion
Free Twinkie if you fail. No industry spends millions, loses most projects, makes back on just a few. It would be wiser to never start production without distribution. Overall, films search as predators for the next victim to consume money.