With global box office receipts reaching a new high of $42.5 billion last year, the film industry is hugely profitable. This high percentage does not, however, indicate that all films are successful; in reality, many films end up being lost.
Despite the fact that hundreds of films are produced each year, only a small percentage of them are made into feature films with the big budgets associated with Hollywood. While the rare low-budget creative film can break through and become a major hit, most blockbusters are on the higher end of the budget scale.
The average cost of a major studio picture is $65 million. However, production costs do not include distribution and marketing, which adds about $35 million to the overall cost of making and promoting a major motion picture, bringing the total cost to over $100 million. That’s a long cry from the $400,000 budget for “Napoleon Dynamite.”
According to The Guardian, film expenditures can be broken down into a number of categories, including screenplay and development (which accounts for about 5% of the budget), licensing, and the salaries of major actors and actresses, which typically include the producer, director, and major actors or actresses.
Then there are the actual movie production costs, which include the ongoing salary of all the workers essential to make the project a success; production costs account for about a quarter of the entire budget, accounting for roughly 25% of the total. And production isn’t the end of the story: depending on the content of the film, special effects can be costly, and music must be composed and performed as well.
Then, after the full picture is finished and ready to be released, the marketing and distribution process may begin. Spending $100 million or $200 million on a film that no one knows about is a waste of money. “Spiderman 2” had a $75 million marketing budget, even though it cost $200 million to make. Studios may claim to have lost money on a film that made more than its negative cost since marketing costs are not included in production costs.
Although the average cost of a movie ticket in the United States grew to over $8 in 2010, people still queue to buy tickets, eat popcorn, and see those expensive films.
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