WASHINGTON DC, US, 28 May 2015
A film is considered a hit if the filmmakers (producers) and distributors (20th Century Fox, Warner Bros, Paramount, etc.) recover their investments in entirety and the film starts generating a reasonable profit. A film’s hit or flop status is not about how well the film is made (although the film’s quality does play an important role in ringing the box office cash register). Hence, every film has a different benchmark. A low-budget film will be a hit in no time, while a big budget movie may take more time to recover its investments and profits. However, if the big-budget movie features well known stars such as Daniel Day Levis, Tom Hanks, Bollywood Khans, and others, the film will recover its investments in the first week itself and start generating profit by the following weeks. So, it is the monetary revenue that determines the fate of a film. Farah Khan’s lousy Happy New Year was an instant hit while Ridley Scott’s Blade Runner, one of the finest sci-fi films ever made, was a flop.
By this definition, I can shamelessly say of both of our earlier films: Phun Anu Thanu and Richard Gere is My Hero, that no matter how good or bad they were, they were hits. Since we do not have any established film marketing mechanism in our community, we were the producers, distributors, and exhibitors combined. We were also the ticket sellers, projector runners, and in some cases even the gate keepers.
Now, how does the money flow among the filmmakers, distributors, and exhibitors (cinema theatre)? Well, there are numerous kinds of deals involved, but I would like to write about the most common one here. First the producer/filmmaker hires director, crew, and cast, and gets ready to make the film out of their own pocket. He then either sells the film to a distributor for a lump sum or breaks into a revenue-sharing deal. But why does the filmmaker need distributors to screen their films? Well, distributors have a wide connection with exhibitors all over the place. The exhibitor or the cinema theatre then screens the film on a 50/50 revenue-sharing basis with the distributor. If a particular theatre sells $40,000 worth of tickets, the distributor receives $20,000, which is further shared among the producer and others after deducting numerous expenses such as promotion, theatrical prints, shipping, etc. etc.
Needless to say, stars and actors play an important role in generating revenue by pulling audience to the theatre. For instance, which film would you prefer to watch: Air Force One featuring Harrison Ford, or A Man Under the Bed featuring Ragu Ram. Of course, you will watch the former. You don’t want to spend your money to watch a stranger named Ragu, right?
So, it makes complete sense to pay the stars the most money. Tom Cruise on average charges US $60 million for a film, while India’s bankable actor Aamir Khan does not charge any fees but participates in profit-sharing deals with the producers. The golden rule of thumb is that if the producer has a $100 budget, he should not hesitate to spend $80 to hire a bankable star and spend the remaining $20 to make the film. Believe it or not, this is how the film industry works.
Other good chunks of revenue for the distributors and producers are through various micro outlets such as the cable-based video on demand (VOD), internet streaming, foreign sales, DVD distributions, merchandise rights, and others.
This pretty much sums up the standard aspects of how a film generates money and share among the chains. By the way there is no film A Man Under the Bed featuring Ragu Ram!
About the author
Tashi Wangchuk is a TV Producer at the Voice of America in Washington DC. He has been a filmmaker and the co-founder of Tibet Motion Pictures and Arts, now Seykhar Films. His work includes the films Phun Anu Thanu and Richard Gere is My Hero, and India's Doorshan commissioned film, Democracy in Exile.