How Film Producers Make Money?
For over a century movies have been a popular form of entertainment. With a plethora of stakeholders involved in its production and distribution, the film industry has evolved into a multi-billion dollar business. The producer is one of the most important contributors to the film’s success. Ensuring that the movie is profitable, the primary role of a film producer is to bring the creative vision to life.
One of the most exciting and glamorous professions in the entertainment industry is producing films. Responsible for bringing scripts to life, managing budgets, and assembling the cast and crew, film producers have an essential role in the filmmaking process. How film producers make money is however the big question. The film’s box office performance is one way in which film producers make money. There are various other sources through which producers earn money. Let’s discuss them.
1. Box-Office Revenue
Box-office revenue is the most obvious way through which film producers make money. A percentage of the ticket sales are kept by the theater and the rest goes back to the movie studio when a movie is released in theaters. The money is then divided up among the producers and various other parties involved in making the movie from there.
Depending upon their level of involvement in the project, the percentage of box office revenue that producers receive varies accordingly. For example, a co-producer who played a minor role could not get as much of the revenues as an executive producer who provided financing for the film.
Not every movie is a blockbuster success, so it’s worth noting that box-office revenue can be unpredictable. In fact, few films generate a sizable profit from box office sales alone. Other revenue streams come into play during this time.
2. Home Video Sales
Home video sales are another revenue stream for film producers. This includes the movie’s DVD, Blu-ray and digital sales. A portion, typically ranging between 10 to 20 percent of the money made from these sales goes to the producer.
3. Streaming Services
Movie producers can now make money from streaming revenue with the rise of streaming platforms like Netflix and Amazon Prime Video. For the right to stream their movie, these platforms pay a licensing fee to the film producers. Ranging from a few thousand dollars to millions of dollars, this licensing fee varies depending upon the platform.
4. Television Licensing
Another significant revenue source for film producers is television licensing. The producer earns a percentage of the licensing fee when a TV network buys the rights to air a movie on their channel.
5. Merchandising and Licensing
Film producers can make money through merchandising and licensing as well. Selling movie related products such as toys, accessories and clothing is referred to as merchandising and allowing other companies to use the movie’s characters and branding on their own products is called licensing.
By receiving a percentage of the revenue generated, film producers can earn money from merchandising and licensing. For successful movies, particularly those targeted at children, this can be a significant source of income.
6. Product Placement
When a brand pays to have their product or service featured in a movie is termed as product placement. For example, to have their vehicle featured prominently in a chase scene, a car manufacturer might pay the film producer. In this way, a portion of the sales generated by product placement goes to the producers.
7. Accolades and Awards
Accolades and awards, while not a direct source of revenue can lead to better deals for future movies along with increased box-office revenue. When their films win awards or critical acclaim, film producers often earn bonuses.
8. International Sales
The revenue generated from selling the movie to foreign distributors is referred to as international sales. A percentage of the revenue from international sales can be earned by the film producer.
9. Ancillary Rights
The revenue obtained from licensing the movie to television networks, airlines and other platforms is referred to as ancillary rights. A percentage of the revenue from ancillary rights can be earned by the producer.
Successful producers can earn substantial sums of money and achieve recognition in the entertainment industry; though producing movies can be a risky venture. It is essential to understand the financial aspects of the business if you are interested in a career in film production. To help you make informed decisions about your career and financial goals, a solid understanding of how producers make money is essential.