Anja Riemer
Being apart of the filmmaking process is stressful in itself. Whether you’re an actor, director, or cinematographer it is hard work, which can be obvious. Something that is not obvious however is how much economics goes into the film making process.
There are a lot of factors that come into play when it comes to having a film be successful, one of them being-probably one of the biggest factors- is the consumers. As this is important in all kinds of business and economies. Considering consumers taste change constantly in the film industry any film is a risk. “According to the Motion Picture Association of America’s (MPAA) Theatrical Market Statistics Report for 2017, the U.S. and Canadian box office came in at $11.1 billion. This was a 2% decline from 2016. Globally the box office for films hit $40.6 billion in 2017” (Zipin). This shows that consumers taste is constantly fluctuating which can make it challenging to know if a film will do well or not. Going along with that, if a film being made already has a built-in-audience it can help them. An example of this would be something like the Harry Potter franchise or the Hunger Games franchise. Both of these already have built-in-audiences because they have people who have read the books and already are interested in seeing the film.
Along with consumers playing a big role in the economics of films, movie budget and costs have a lot to do with it. The cost and budget can be a lot even for smaller films. The estimate for each film isn’t fully accurate considering it doesn’t count for advertising and marketing costs. “For example, the production budget for a summer blockbuster such as Marvel’s "The Avengers" is recorded as $220 million, but if you factor in marketing and advertising costs, that number spikes” (Zipin). For smaller films their cost is going to spike because they need the advertising in order to peak peoples interest.
Along with consumers and budget playing a big role in economics of films, movie stars and merchandise play a role in the economics. Robert Downey Jr has earned at least $150 million, and perhaps as much as $300 million. Jeff Spross, economics and business correspondent at The Week, says that's not so surprising.The purpose of a movie star, especially in this current environment that we're talking about, is to get people into the movie seats, he said” (Arnold). This not only shows movie stars themselves are getting a high revenue but they’re one of the things that help with film publicity. When it comes to merchandise this is a big promoter of money and has a big impact on the economics of a film. One example would be Marvel films, they have a lot of merch and other branches of products. Mattew Lieberman, a director at PwC in Los Angeles said: “The ability to make money on these films is something that is quite unique, because there are often multiple releases, spin-off television franchises, and unbelievable revenue that can be created from consumer products. Think sheets, T-shirts, cups, mugs, all of those types of items. Many of the studios have banked on making only these franchises instead of either mid-size or smaller fare.” Merchandise and movie stars are definitely something that film companies strive for.
In conclusion there is a lot of economics that go into making a film like consumer needs, budget/cost, movie stars, and merchandise.
Works Cited
Arnold, Ann, and ABC Radio National. “Is There Any Money Left to Be Made in the Movies?” ABC News, 26 Feb. 2017, www.abc.net.au/news/2017-02-25/economics-of-movie-making/8292352.
Zipin, Dina. “How Exactly Do Movies Make Money?” Investopedia, Investopedia, 29 Jan. 2020, www.investopedia.com/articles/investing/093015/how-exactly-do-movies-make-money.asp.
This post was enjoyable because a lot of us are uninformed of movie's costs. It's easy to understand that movies have a set budget, but you never really consider what goes into that budget, whether it's the actors or the effects. You tend to overlook this type of stuff, and this explained the basics of what movie production entails cost-wise.
ReplyDeleteFinally something not about the Corona virus! I never really thought about all of the things that go into film making including all of the cost aspects. Do you have any thoughts on what is going to happen with the film industry after the craziness that is happening right now? Will they be able to just pick up where they left off or no?
ReplyDeleteIt was really interesting to see the fluctuating profits that come into the box office every year from the film industry. It’s making me wonder how this COVID-19 pandemic is going to affect the income. I know that some movies that were supposed to be premiered in theaters are available to watch at home for $20, which is $10 more than the average movie ticket in Wisconsin. Will that actually cover the loss of income though? I don’t think it will. Additionally, many movies and shows that are in the filming process have come to a halt as well. Are they losing money due to props and things that they have to rent while shooting the show/movie? It’s all very interesting to think about.
ReplyDeleteReading this post was very interesting since a lot of people aren't very informed on the production cost of movies. Most people when they watch a movie don't think about the production cost or the revenue that big movies bring in. Do you think that upcoming movies are going to lose revenue due to the Covid-19 pandemic? Will film making industries have to find an alternative way to release these movies to keep their production cost at a minimum and their revenue as high as possible?
ReplyDeleteAnja, your ideas on economics going into the film industry are very intriguing. Looking into your first part about how all movies are putting themselves at risk, I completely agree. It is interesting to see trailers that are making the movie look good when in reality, they go into theaters and aren’t as good as promised. This does take a toll on the amount of money the production company makes. With the decreasing amount of people seeing these movies, the production company isn’t making as much as they spent on advertising. Another big effect that plays into these is the actors. In your evidence with Robert Downey Jr, you talk about how much money he made with Marvel movies. With consumer interest in the actor himself and the movie franchise, it is clear that all the Marvel movies will be successful. Although some do better than others, the overall amount of money they take in is substantial. In the end, I completely agree with your statements as to how much economics play a role in the film industry.
ReplyDeleteIn college, I'm majoring in Motion Pictures and minoring in International Business so this was really interesting for me to read! It is very challenging to anticipate how consumers will react to movies, which creates more difficulty to plan a budget. This is why advertising and marketing teams are essential to this industry so that trailers, posters, and media opportunities generate interest. Film publicity is crucial to this industry. I think that the company producing the film also has an impact. Disney, Marvel, Universal, and other companies have huge influence on consumers going to see movies, so these companies can plan a larger budget. Do you know how the coronavirus will impact this industry? Will streaming affect this industry?
ReplyDeleteI really liked this topic because a lot of people especially our age aren't that informed on the production and economics side of movies. I wonder how much revenue will be lost if the COVID-19 virus continues, or if movie productions are still continuing through the pandemic, and if they will have to think of new ways for viewers to see the movies in the future?
ReplyDeleteI have really never thought about the impact economics has on film making! It was super interesting to see how much money and time goes into the production of a movie. With times like they are today, I think COVID-19 has had such a huge impact not only on businesses and our economy, but also with film and other smaller less common corporations. I also think it was really insightful to read about the varying scale of profit that these film makers actually receive. It does seem like a tough profession! Overall, this post was super interesting to read about and gave me a different perspective with the film industry.
ReplyDelete-Ellie Adams
I am very into the film culture and have never thought about film through the lens of an Economists. With the pandemic being the center universe, we know the damage it brings to the economy. However, we aren't really aware of how much or who it truly affects besides ourselves. I never really thought about how much of an impact it takes on the film industry. To be quite frank, I figured that content creators would be making an abundance amount of content since there is so much time for creative thought. I wonder with all this time, when the Corona virus passes over, will there be an overwhelming amount of films?
ReplyDelete-hAN
I really like the topic that you chose for your post because of how unique and interesting it was! It's super easy to not pay any attention to what goes on behind movie production, but I thought that this post was a cool exploration into the behind the scenes economics of it all. In particular, I never really made the connection between how the movies that are based on popular books often jump straight in with a high budget because they have a consumer base already. This makes a lot of sense when you consider risk and reward when producing the first movie to a series.
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