How Film makes its money back - kapiticollege

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How film makes its money back
Alex Cameron, Sept 2009
data sources
UK FILM COUNCIL
BRITISH FILM INSTITUTE
CINEMA EXHIBITORS ASSOCIATION
BRITISH VIDEO ASSOCIATION
ENTERTAINMENT RETAILERS ASSOCIATION
FILM DISTRIBUTORS ASSOCIATION
SCREEN DIGEST
NIELSEN EDI
HOLLYWOOD REPORTER
IMDB PRO
OFFICIAL UK CHARTS COMPANY
why
A film is created to make money from it being exhibited.
commercial lifecycle
Copies of the film are released for exhibition in different stages.
PROMOTIONAL
SCREENINGS
CINEMAS
HOSPITALITY
COMMERCIAL VENUE EXHIBITION
DVD RENTAL
PAY TV/VoD
DVD RETAIL
FREE TV
LIBRARY
EXHIBITION AT HOME
Source: UK Film Council, CEA, BVA, ERA
the bottom line
A film recoups most of its budget through DVD.
25%
75%
RENTAL
RETAIL
7%
CINEMA, 25%
TV, 28%
CINEMA
DVD
DVD, 40%
TV
OTHER
Source: Screen Digest, BVA, ERA
many middlemen
The more times and places a film is exhibited, the more money it generates.
INTERNATIONAL
DISTRIBUTOR
INTERNATIONAL
SALES AGENT
INTERNATIONAL
DISTRIBUTOR
TERRITORY
DISTRIBUTOR
PRODUCER
CINEMA CHAINS
RENTAL OUTLETS
DOMESTIC
DISTRIBUTOR
COPY
MANUFACTURER
RETAIL OUTLETS
TV PLATFORMS
BROADCASTERS
Source: UK Film Council, BFI
International buyers
There are around 45 international territories in which the rights to exhibit films
are regularly traded.
TERRITORY
Benelux
Canada
UK
FR Canada
France
Germany
Greece
Italy
Iceland
Israel
Portugal
Spain
Scandinavia
Czech.
Hungary
Poland
Romania
CIS
Yugoslavia
Turkey
Egypt
MAIN LANGUAGE
Dutch/French
English/French
English
English/French
French
German
Greek
Italian
Icelandic
Hebrew/Arabic
Portuguese
Spanish
Various
Czech/Slovac
Hungarian
Polish
Romanian
Russian
BCS
Turkish
Arabic
Figures in 000s
MAX MIN PROB
25
10
20
50
20
20
50
20
10
25
10
10
60
15
20
75
25
50
10
5
5
60
10
20
10
2
4
10
2
5
10
2
3
60
15
20
50
20
20
10
2
4
10
2
5
10
2
2
10
2
2
15
5
5
10
2
3
10
2
4
10
2
2
ACT
20
20
10
0
0
50
0
20
0
0
0
20
20
0
0
0
0
0
0
0
0
TERRITORY
A/C/U/P
MAIN LANGUAGE
Spanish
MAX
20
MIN
2
PROB
5
ACT
5
Brazil
Columbia
Portuguese
Spanish
20
10
7
2
10
5
0
0
Mexico
Spanish
15
5
5
0
Peru/Equa/Bol
Venezuela
Spanish
Spanish
10
10
2
2
2
2
0
0
C.America
West Indies
English
English
10
10
2
2
2
2
2
2
India
Pakistan
Hindi/English
Urdu/English
30
10
10
2
10
4
0
0
Hong Kong
Indonesia
Chinese/English
Indonesian
15
10
5
2
5
3
5
3
Japan
Japanese
100
20
50
0
Korea
Malaysia
Korean
Malay
80
10
40
2
50
2
50
2
Philippines
Singapore
Filipino/English
English/Chinese
15
10
5
2
5
2
0
0
Taiwan
Thailand
Mandarin
Thai
25
10
5
2
5
5
0
0
Burma
South Africa
Burmese
Zulu/English
10
25
2
10
3
10
0
10
Australasia
English
50
10
20
20
USA
English
200
20
50
20
Source: Nielsen EDI, UK Film Council, BFA, British Council
world markets
There are around 20 major international marketplaces.
NAPTE, New Orleans
(January)
Karlovy Vary, Czech
Republic (July)
Sundance, Utah (January)
MIPTV, Cannes (April)
San Sebastian, Spain
(September)
AFM, Los Angeles
(February)
Venice Festival, Italy
(September)
Cannes, France (May)
MIPCOM, Milan
(October)
Rotterdam Festival, Holland
(January)
Berlinale, Berlin
(February)
Bangkok Festival, Thailand
(January)
BAFICI, Buenos Aires
(April)
Filmart, Hong Kong
(March)
Toronto Festival, Canada
(September)
PUSAN, South Korea
(October)
Source: IMDB Pro, UK Film Council
agent guess-timates
Sales agents for film rights tend to use the same set of generic internal
percentages to make estimates as to how a film will sell internationally.
NORTH AMERICA
EUROPE
4%
9%
FAR EAST
NORTH AMERICA,
33%
FAR EAST, 16%
LAT.AMERICA
OTHER
EUROPE, 39%
NORTH AMERICA
33%
US
CANADA
EUROPE
39%
GERMANY (10%)
UK (8%)
FRANCE (7%)
ITALY (4%)
SPAIN (4%)
NORDIC (3%)
OTHER (3%)
FAR EAST
16%
JAPAN (10%)
S KOREA (3%)
TAIWAN (1%)
OTHER (2%)
LAT.AMERICA
OTHER
4%
9%
BRAZIL (1%)
AUSTRALIA/NZ (3%)
MEXICO (1%)
EAST EUROPE (3%)
ARGENTINA (1%) MIDDLE EAST (1%)
OTHER (1%)
S. AFRICA (1%)
OTHER AFRICA (1%)
Source: Sales Agents (private communication)
real-world sales
In practice, only a core set of territories have a regular and dependable
appetite for buying film rights outside the US.
86
10
ASIA, 192
EUROPE, 357
ASIA
EUROPE
S.AMERICA
MIDDLE EAST
Figures in 000s
COUNTRY
ASIA
JAPAN
INDONESIA
KOREA
HONG KONG
INDIA
TAIWAN
PHILIPPINES
OTHER
AUSTRALIA/NZ
EUROPE
GREAT BRITAIN
GERMANY
FRANCE
ITALY
SCANDINAVIA
SPAIN
OTHER
SOUTH AMERICA
BRAZIL
MEXICO
OTHER
MIDDLE EAST
HIGH
LOW
AVERAGE
60
20
60
20
10
35
15
25
50
10
10
15
10
3
10
3
5
20
35
15
38
15
7
23
9
15
35
70
80
70
80
85
75
60
35
30
35
30
25
20
15
53
55
53
55
55
48
38
40
50
35
15
15
20
10
4
28
35
23
10
Source: Distributors (private communication)
box office structure
A film exhibition sale is generally a 75-25 split between a vendor (cinema / retailer
/ TV) and a distributor, who deducts 35% commission + costs “off the top”.
PRODUCER
COSTS (50%)
VAT
VAT
VENDOR (75%)
DISTRIBUTOR (35%)
DISTRIBUTOR (35%)
DISTRIBUTOR COSTS (50%)
PRODUCER
VENDOR (75%)
SHARE
REMAINDER
VAT
17.5%
82.5%
VENDOR (75%)
62.0%
20.5%
DISTRIBUTOR (35%)
7.2%
13.3%
DISTRIBUTOR COSTS (50%)
6.7%
6.7%
PRODUCER
6.7%
0
Source: UK Film Council
uk cinema overview
Cinema hasn’t been seriously affected by the recession.
EXHIBITOR
ODEON
SITES SCREENS
%
SCREENS
3660 screens in 726 sites with 865, 599 seats, and
an average ticket price of £5.18. An average of 236.4
seats per cinema, and 4.7 screens per site.
107
834
23.1
CINEWORLD
74
758
21
VUE
63
608
16.8
NAT. AM
21
274
7.6
WARD ANDERSON
24
206
5.7
APOLLO
13
77
2.1
CITY SCREEN
18
51
1.4
REEL CINEMAS
13
48
1.3
MOVIE HOUSE
5
39
1.1
AMC
2
28
0.8
20
MERLIN
OTHERS
9
375
26
657
0.7
18.2
15
TOTAL
726
3,610
100
2009 ADMISSIONS (M)
25
10
5
0
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
Source: Screen Digest, CEA, UK Film Council
painful truth
40% of independent British films never gross more than 100k at the box office.
COSTS
Age certification
35 film prints
Paper printing
Trailer
PR
Advertising
Shipping
Misc
Balance
RETURNS
GROSS BOX OFFICE
(less 17.5% VAT)
Distributor revenue (25%)
(less 35% fees, 11,170)
(less costs, 25,500)
Balance
1,000
5,000
4,000
4,000
4,000
6,000
1,000
500
25,500
150,000
127,659
31,915
20,745
-4,755
-4,755
Source: CEA, IMDB Pro, Nielsen EDI, UK Film Council
release planning
Opening in over 100 screens significantly increases cost.
COSTS OF THEATRICAL RELEASE/SITES (M)
4
3.5
3
2.5
2
1.5
1
0.5
0
>500
400-499
300-399
200-299
100-199
50-99
10-49
<10
Source: UK Film Council
british independence
“Slumdog Millionaire” has now overtaken “Four Weddings & A Funeral” as the
most successful 100% independent British film in UK cinemas.
BUDGET
SLUMDOG MILLIONAIRE
WEEKS SITES
UK GROSS
DIST
15,000,000
14
449 31,283,374
PATHE
FOUR WEDDINGS & A FUNERAL
7,000,000
16
27,760,000
CARLTON
TRAINSPOTTING
3,500,000
8
13,500,000
8
386 12,180,000
ENT
KEVIN & PERRY GO LARGE
3,200,000
8
357 10,460,000
ICON
EAST IS EAST
1,900,000
16
253 10,370,000
FILM4
40,000,000
16
449
ST TRINIAN'S
VALIANT
12,430,000 POLYGRAM
8,520,000
ENT
Source: IMDB Pro, BIFA, UK Official Charts Company
british receipts
In the last few years, most 100% British independent films have used
cinemas as a marketing platform for DVD and international sales.
SLUMDOG MILLIONAIRE
HOW TO LOSE FRIENDS & ALIENATE PEOPLE
ADULTHOOD
OUTLAW
HAPPY-GO-LUCKY
THE EDGE OF LOVE
BRIDESHEAD REVISITED
I WANT CANDY
THE COTTAGE
BRICK LANE
EDEN LAKE
FLASHBACKS OF A FOOL
A BUNCH OF AMATEURS
THE CHILDREN
HALLAM FOE
SHIFTY
SOMERS TOWN
OF TIME AND THE CITY
FILTH AND WISDOM
BUDGET
15,000,000
28,000,000
10,000,000
2,500,000
7,000,000
N/A
20,000,000
1,000,000
2,500,000
N/A
N/A
N/A
N/A
N/A
3,800,000
100,000
600,000
500,000
1,000,000
WEEKS
14
4
4
3
5
6
4
2
3
2
3
1
2
2
2
4
1
1
6
SITES
449
453
179
286
114
177
256
257
260
96
184
272
186
132
98
51
62
25
10
UK GROSS
31,283,374
4,100,000
3,350,000
1,519,736
1,413,253
1,127,119
874,658
730,452
598,221
413,015
404,758
246,072
201,849
199,259
132,972
131,181
121,345
57,195
12,000
SALES
DIST
PATHE
PATHE
INTANDEM
OPTIMUM
INDEPENDENT
PATHE
PATHE
PATHE
SUMMIT
MIRAMAX
CAPITOL
LIONSGATE
HANWAY 2 ENTERTAIN
EALING STUDIOS
MAGNOLIA
PATHE
PATHE
THE WORKS
OPTIMUM
PATHE
OPTIMUM
ARCLIGHT
BVI
ODYSSEY
CINETIC
PROTAGONIST
VERTIGO
INDEPENDENT
BVI
PROTAGONIST METRODOME
THE WORKS
THE WORKS
HANWAY
HURRICANE
KATAPULT
PATHE
Source: IMDB Pro, Nielsen EDI
rental deals
49% of all DVD rentals are now generated online.
ROYALTY MODEL
“OFF THE TOP” MODEL
The distributor pays the
producer a 35% royalty.
The distributor takes 35%
commission + 25% costs.
14.4%
16.61%
17.5%
17.5%
VAT
26.8%
41.3%
VENDOR (50%)
DISTRIBUTOR (65%)
10.3%
14.4%
VAT
VENDOR (50%)
41.3%
DISTRIBUTOR (35%)
DIST. COSTS (25%)
PRODUCER (35%)
PRODUCER
VAT
VENDOR (50%)
DISTRIBUTOR (65%)
PRODUCER (35%)
SHARE REMAINDER
17.5%
82.5%
41.3%
41.3%
26.8%
14.4%
14.4%
0
VAT
VENDOR (50%)
DISTRIBUTOR (35%)
DIST. COSTS (25%)
PRODUCER
SHARE REMAINDER
17.5%
82.5%
41.3%
41.3%
14.4%
26.8%
10.3%
16.5%
16.61%
0
Source: UK Film Council, Screen Digest, BVA, ERA
sell-through deals
DVD sales data is closely guarded and rarely released other than for overall
market statistics.
ROYALTY MODEL
“OFF THE TOP” MODEL
The distributor pays the
producer a 12.5% royalty.
The distributor takes 35%
commission + 50% costs.
13.5%
5.2%
17.5%
17.5%
VAT
36.1%
41.3%
VENDOR (50%)
DISTRIBUTOR (87.5%)
VAT
13.5%
VENDOR (50%)
DISTRIBUTOR (35%)
14.4%
41.3%
PRODUCER (12.5%)
VAT
VENDOR (50%)
DISTRIBUTOR (87.5%)
PRODUCER (12.5%)
SHARE REMAINDER
17.5%
82.5%
41.3%
41.3%
36.1%
5.2%
5.2%
0
DIST. COSTS (50%)
PRODUCER
VAT
VENDOR (50%)
DISTRIBUTOR (35%)
DIST. COSTS (50%)
PRODUCER
SHARE
REMAINDER
17.5%
82.5%
41.3%
41.3%
14.4%
26.9%
13.5%
13.5%
13.5%
0
Source: UK Film Council, BVA, ERA
walmart syndrome
Supermarkets have come to dominate DVD sales, pushing the average
retail price of a DVD to £7.42.
9%
SUPERMARKETS,
23%
AUDIO-VIDEO
SPECIALISTS, 35%
MAIL ORDER, 15%GENERALISTS, 18%
AUDIO-VIDEO SPECIALISTS
GENERALISTS
MAIL ORDER/ONLINE
SUPERMARKETS
WHOLESALERS
Source: Screen Digest, BVA, ERA
pay-tv deals
Pay-Per-View & VoD tend to be more profitable as the costs of
sale are borne by the TV platform.
SHARE REMAINDER
VAT
17.5%
82.5%
VENDOR (50%)
41.25%
41.25%
DISTRIBUTOR (35%)
14%
27.25%
PRODUCER,
27.25%
PRODUCER
27.25%
0%
DISTRIBUTOR
(35%), 14%
VAT, 17.5%
VENDOR (50%),
41.25%
VAT
VENDOR (50%)
DISTRIBUTOR (35%)
PRODUCER
Source: UK Film Council
broadcast deals
Subscription & free TV fixed-fee licensing deals depend on the performance
history of the film.
DISTRIBUTOR,
40%
PRODUCER, 60%
DISTRIBUTOR
PRODUCER
Source: UK Film Council
the corridor
Recoupment is organised into a “corridor” and made from a central collection
account.
Source: Film Finance Handbook, UK Film Council
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