Tuesday, November 1, 2011

The Risky Nature of Film Revenues

As Drake points out in his outline of the five peculiarities of Hollywood films, the revenues are spread out over a long period of time - and for most films, are in a sense never ending. While this seems like a positive, there are also some reasons that Drake chose to include this fact in his section on the risky nature of filmmaking and distribution. One negative aspect is that all of the money spent on a production, large or small, will not necessarily be recouped during opening weekend in theaters, or even during the movies full domestic release. Many movies (such as big budget movies like Transformers 3) rely on the overseas sales to break even and actually make money on the film. Additionally, there are more down-the-road money makers for movies, including DVD sales, movie memorabilia, and royalties for cable and broadcast television spots. The problem with these sources of revenue are 1.) they are extremely difficult to quantify in the pre-production phase of a movie, when all of the upfront money is paid, and 2.) many of these profits come months, even years after the release of the movie. The above reasons characterize why the revenue stream of a Hollywood film contributes to the risky nature of the film industry, and was thus included in Drake's list.
Movie marketing can certainly help reduce the risk that the longevity and variable nature of profits entails. By Building a fan base through advertisements and marketing, a producer can increase his/her confidence in the money that will be recouped through not only ticket sales in the first couple months after the movie's release, but through merchandise sales, DVD sales, television royalties, and more. Advertising and marketing makes the film less of a risk because it helps bring more in more consumers who will decide to spend their money on that film. Additionally, as Drake points out, the marketing can be catered towards each specific film, emphasizing the star cast, the popular and promotable topic, and so on to help the movie producers to get the best bang for their buck.

No comments:

Post a Comment