How to earn from film industry?

It my curiosity since my childhood to know how film producer,distributors and theater earn  and who bear  loss in case of flop film.Here is the answer in details.

One can earn big money by film making ,of course ,equal chances of big lose also.If a person produced a Hindi film very first time with all the new cast, crew etc. and suppose the Project is good enough, he can approach to all the big distributors, can show them, than they arrange a presenter of the movie, who will get profit sharing but depends of project strength. In India, there are so many movies has been produced in such a way, and got hit.Here,in film industry, a presenter  is a usually a well-known executive producer credited with introducing a film or filmmaker to a larger audience. For example: “Presented by Reliance Entertainment”.

Film making goes through various stages which include development, pre-production, production, post production & then distribution. Distribution is one of the most important parts of the system of film business. Without this part of movie making, producers & distributors will not get their benefits from the movie.

The Producer usually earns a salary (included in the budget) and a percentage of the profits from the sale of the film which is divided between the Producer and his Investors. In some cases, If the Producer sells all the rights of his film to one Distributor, the Producer is entitled to a share of the Distributor’s profit.

A Distributor is the one who has everything to lose in releasing a film. In India, Distributors purchase a film from a Producer – based on Star Cast, Director, Producer, Lyricist and Music Director – and pay the Producer the amount of the budget + some profit. The bigger the Actor(s) the more the Producer will earn. For Example, if a Salman Khan film has a budget of 40 crores, the Distributor will easily purchase it for 45 crores giving the producer and his investors 5 crores in profit, the Distributor then has to pay for the cost of Prints and Publicity which would add another 5 crores to his cost of the film. In this scenario, if the Producer keeps the Satellite Rights he makes more money from that, but the Distributor doesn’t get a share from it. So, if the Producer of a 40 crore film sells its Satellite Rights for 15 crores all that revenue goes into his pocket in addition to the 5 crores profit he received from the Distributor. Plus there are also Music Rights, if the Music Rights are sold for another 5 crores, the Producer has already made a profit of 25 crores before the film is released. The Distributor on the other hand is in the hole for 50 crores and can only recover it from a successful theatrical run where the film generates more than 110 Crores.

This article will be concerned with the whole procedure of film making with more focus on film distribution in the movie industry. Here are comprehensive views with infrastructure of the film distribution which will help to clear out the doubts related to the distribution of the movies. Any doubts can be discussed in the comments section below.

Introduction to Film Making

Film distribution strategy in India: Explanation

This is the final stage of the film making. This is a process in which movie is made available to the audiences to view it. This task is performed by professional film distributors who are responsible for determining the marketing strategy for the film, the media by which a film is to be made available for viewing for the audiences and finally who may set the release date of the film & other related matters.

Here are some terms related to film distribution:

Producer: A producer is a person who invests in the film. Basically they are responsible for the physical facilities & are also given the credit of “produced by”. Among various producers, they are the traditional producers who invest in film under “production house”. For example: A very well known film producer “Sanjay Leela Bhansali” invests in movie under the banner of (production house) “Bhansali Films“. Production house may be owned by the producer or may be unrelated. Producers are responsible for all the expenses in film such as payment for the artists, technicians, other daily expenses during filming.

Film release:

Cost of the Film/Budget of the Film: Cost of the film is sum total of pre-production, film production, post production & advertisement expenses. (Note: 2%-4% of the poster publicity expenses will be taken care by Exhibitors.

Cost of film = pre-production + production + post production + advertisement expenses

Distributors: A film distributor is a person responsible for marketing a film i.e. one who distributes the film through the theatres after post-production. Distribution companies are different from production companies. Distributors also deals with an important part of financing a film, they set the release date of the film & the method by which the film is to be showcased or made available to the public for viewing. Distributors buy “Distribution Rights” from the producer either from the beginning of the film or after preview of the final cut of the particular movie. Distributors buy their distribution right according to the past success of casts, crew, director, story & producers which will greatly impact on the film success. It has been in trend that producer himself hold the distribution right without involving other individual distributor for film in order to avoid the distributor expenses.

The distributors decides the price of the movie according to

  • The state of the local economy and the ability of exhibitors to get the credit necessary to finance purchases
  • The prices of comparable films
  • The prices of films with the same cast
  • The prices of films from the same director or studio
  • The track record of the sales agent and his/her relationships with local exhibitors
  • Whether or not a territory allows practices such as block booking
  • Whether or not the agent has other high demand films they can use as leverage

On the basis of entertainment taxes & state-to-state connectivity, Film distribution Association of India divided state provinces in to 6 circuits in 1930s for Hindi Cinema (Bollywood Movies). Namely,

  • Bombay circuit
  • Eastern circuit
  • Delhi-U.P. circuit,
  • P., C.I., Rajasthan circuit
  • Punjab circuit
  • South circuit

But, later on territories for distribution of Hindi Films were divided into 11 circuits.

CIRCUIT NAMES TERRITORIES
Tamil Nadu Circuit Tamil Nadu, Kerala
Rajasthan Circuit Rajasthan
Nizam Circuit Telangana, Parts Of Maharastra & Karnataka
Mysore Circuit Bengaluru & Parts Of Karnataka
Easten Circuit West Bengal, Bihar, Jharkhand, Orissa, Assam & North-Eastern States, Andaman & Nicobar Islands As Well As Bhutan And Nepal
East Punjab Circuit Punjab, Harayana, Chandigarh, Himachal Pradesh And Jammu & Kashmir
Delhi Circuit Delhi,  Uttar Pradesh & Uttaranchal
Central India Circuit Parts Of Madhya Pradesh
C. P. Berar Circuit Maharastra, (Eastern), Madhya Pradesh (South & West), Chhattisgarh
Bombay Circuit Mumbai, Gujarat, Goa, Parts Of Maharashtra & Karnataka
Andhra Circuit Andhra Pradesh

Distributors directly may distribute films to all these circuits (or) sometimes the main distribrutors sell films to a local film distributor.

Exhibitors: A person who own theater is called an Exhibitor. Exhibition is the retail branch of the film industry which involves not the production or the distribution of motion pictures, but their screening. This involves usually for paying customers in a site devoted to such motion pictures, the movie theater, multiplexes etc. Exhibitors get right for the movie exhibition by two methods. First way is, they can get the rights on the basis of pre-agreement with the film distributors who hire theater to show their movies. The Second way is, the theater owners give advance payment to the distributors to get the right to showcase upcoming film in their theater. Exhibitors choose the movie to display according to the previous success of the cast & crew, director, producer etc. Distributors get their return or profit from the theater known as “Distribution Right“. This distribution right is calculated on the basis of an agreement which is made with the theater owner or Exhibitors. Exhibitors control how films are programmed, promoted and presented to the public. They have significant influence over the Box Office success as well as the reception of films.

The exhibition of film requires the ownership, management & operation of theaters. Exhibitors have to face various situations related to shifting market conditions, strong competition, efforts to achieve monopolization of the field, government regulatory actions, and costly investment in new technologies.

Film promotion: The advertising of film (or) the practice of promotion in film industry in coordination with the process of film distribution is called “film promotion” or “film marketing”. People who are responsible for the film promotion are Distribution Company because they distribute the films to the cinemas & distribute the promotional material around the country & world. This is sometimes called as “press junket” or “film junket”. Publicity is handled by the distributors & exhibitors.

Film promotion includes

  • Press release
  • Advertising campaigns
  • Merchandising
  • Franchising
  • Media
  • Interview with actors, directors etc

Marketing budget = 1/2 of production budget

Techniques to promote film include:

  • In theaters: This contains trailer of the movie, film posters, slide shows, standees, cardboard 3 displays etc.
  • Television & radio: promotional events includes extended preview of the movie, interviews with casts of the film, paid broadcast of behind the scenes etc.
  • Internet: online digital screener, viral marketing, internet marketing, social media marketing etc.
  • Print: paid advertisements in newspapers, magazines, comic special editions of special editions, cross promotion of original novel, book etc.
  • Merchandising: paid co-branding, co-advertising, promotional give-aways.
  • Promotional tours & interviews: Film actors & producers are seen in TV shows, cable, radio, print, colleges, road shows etc.
  • Audience research: Audiences are asked various questions about title, advertising materials, screening etc. This is the strong factor in determining the ability of a film to sell in theatres, which is ultimately how films make their money.

Holdover: An exhibitors keeping of a film for exhibition beyond the minimum period exhibition time specified during licence agreement. Holdover may occur either due to exhibitors own action with consent of distributor or due to holdover clause.

Holdover clause: Holdover clause in simple terms means continue to show the film beyond the previously scheduled ending which means to extend the number of performances in the case of a successful show which continues to draw big audiences.

Holdover figure: The negotiated weekly minimum amount of money collected in a week which should be equal to or exceeded from the film exhibition in required amount of time for the exhibitor to showcase the film for an additional week is called handover figure. This figure is mutually agreed by the distributors & exhibitors at the time of license agreement.

Box Office Model Explained In Tabular Form

Box Office Model Explained

Box Office Terminologies:

  • Cost of Film= [Budget + PA (Promotion & Advertisement) Expenses]
  • Non Theatrical Revenues= Satellite Rights + Music Rights + Overseas subsidy etc.
  • Footfalls= Total number of tickets Sold
  • Gross Collections= Total money collected from ticket sales
  • Net Collections = [Gross collections – Entertainment Tax]
  • Distributor share: percentage of the collection after the entertainment tax.
  • Profit / Loss (Distributor)= [ Amount at which film was bought – Distributor Share ]

Distributor Share is generally calculated as below:

Duration Percentage Share
Multiplex Single Screens
First Week 50% 70%-90%
Second Week 42% 70%-90%
Third Week 37% 70%-90%
Thereafter 30% 70%-90%

Now, let’s calculate the gross collection, footfall, distributor share, net collection of Week 1 at the Box Office. Let us suppose:

Number of audiences in Week 1 (in multiplex & single screen each): 50,000

Average ticket price at Multiplex:  ₹ 250

Average ticket price at single screens:  ₹ 100

Multiplex Single Screen
Footfall 50,000 50,000
Average Ticket Price ₹ 250 ₹ 100
Gross Collection 50000*250 = ₹ 1.25 Crore 50000*100 = ₹ 50 Lakh
Entertainment Tax 0.3 *1.25 Crore = ₹ 37.5 lakh 0.3 * ₹ 50 Lakh = ₹ 15 Lakh
Net Collection ₹ 1.25 Crore – ₹ 37.5 lakh = 87.50 Lakh ₹ 50 Lakh – ₹ 15 Lakh = 35 Lakh
Distributor Share 50% 70% 90% Avg.
First Week ₹ 43.75 lakh ₹ 24.50 Lakh ₹  31.50 Lakh ₹ 24.50 to 31.50 Lakh

Here is summary of Film Making Process In Bollywood Industry:

 

process of film making

If you have any doubts regarding the Film making issue we will love to have your query in comment section below.

Taken from :
 http://kicktotalcollection.com/film-distribution-process-in-india/1235 [ Author – Suruchi Dev]

Economics I understood

Prashant Pandya View All →

I am a full-stack engineer whose passion lies in building great products while enabling others to perform their roles more effectively. I have architect and built horizontally scalable back-ends; distributed RESTful API services; and web-based front-ends with modern, highly interactive Ajax UIs.

I deal with:

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My Qualities ,I believe :

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