This paper analyses the profitability of the movie business as seen from the view point of each individual films and takes into consideration the fact that each film is and must be seen as a separate project. In this paper the study of film’s commercial success or failures are made in context of each genre of films and the way each film has responded to the psychological appeals and tastes of the masses. It also explores the past, present and future of movie business from the commercial and economic viability taking into consideration the fact the changing mindset of the audience.
In this connection the influence of the film critics and the affect of the same in its profitability are also seen apart from the fact that the critical viewing among the progressively educated masses too are beginning to show on the gains made by a movie. Contrary to the popular belief that the motion picture industry or movie business is constantly reaping in huge fortunes, it is however seen that except for a handful of good successes, the scenario by and large is one of uncertainty, financial failures and half success when studied over a brief period of time.
True, there are some films that really mint money at the box offices and may look quite unbelievable to the outside world, yet there are several instances when a film or a series of films fail dreadfully at the theatres. This makes the movie business a project based venture that is fraught with risks and quite intimidating for entrepreneurs to invest their money. Filing of bankruptcy has increased over the years when big budget film fails to recover even the production cost or when a series of such movies are produced with most of them flopping while only a small percentage of them makes it to the break even point.
This kind of catastrophe even though exists in the real reel life there is still hope that really attracts all kinds of people from ordinary workers to writer, actors, musicians, producers directors, photographers and distributors to take a chance for it is seen that on many occasions several good movies have not only given its makers a good review, but has raked in handsome returns several times more than what they had invested. Thus, for many the movie business, even to this day, is worth taking the plunge. History of Films and Profitability
In order to make some of the basis of the argument regarding the profitability aspect of the film, one must look into the past history of the films and the commercial success of movie as a lucrative entertainment medium. It is a known fact that previous to the arrival of cinema there were theatres and dramas staged in halls or large public gathering for entertaining people. But with the advent of motion pictures or films the whole scenario changed and people were more enthusiastic in seeing the films than staged plays by artists.
Naturally, the masses thronged the movie theatres like never before and this became as an all time lucrative profession for both the owners and the artists. Although a proper cost analysis or proper system of cost effective analysis was never in operation then it was more through the behavior of the masses that the success of a movie was determined. One of the underlying facts of such a calculation is that the movies then were usually of low budget and required less of additional costs and being a new medium of entertainment there were no such things as failures other than those that were created by a turn of fate.
Besides, there weren’t many competitors and the films that were mostly silent movies looked all genuine and were treated with great respect. Along with this there was a steady growth in the technologies and the art of film making and with the arrival of color films along with sound the vast area of movies as entertainment medium underwent a revolution. Even still almost all movies were raking in huge money and the stars were already being paid handsomely. These were rough estimates yet they were more or less correct for there were no additional costs to bear.
However, the scenario changed with more and more people invested their money into the new rapidly progressing entertainment and theatre owners hiked the rates of their tickets and the new cinema saw rapid strides in state of art of film making that looked even more natural and exciting and needed huge investments. In fact, all genres of film began to be produced for entertainment and these included stories of love, war, revenge, passion, horror, murder mysteries, adventure, documentaries and many others that formed the staple diet of the people around the world.
People dreamed and lived a life that was partly the affect of the influence they got from the movies. Here, although it was unreal the people felt it quite like something they cannot disbelieve. Here, the impossible was being accounted for not as a violation of the function of reality, but as a function of the people’s inability to yet understand the reality that is known to exist. As such although there is violation and the thing may appear supernatural at the moment, yet it is implied that the phenomenon could be explained in the future (Weaver and Tamborini, 1996, p3).
Indeed with the reality being looked on in this perspective by the people the film business stood to gain phenomenally which it did in its earlier days. Analyzing the Success of Cinema A proper analysis of cinema or movie is not possible due to dearth of a proper and methodical economic tools available till date and as such a film’s gross earnings is not properly calculated after deducting the cost of production including crew salary and the lump sum money paid to the artists.
In many cases a film may have cost overruns which may be manageable or so huge that it might lead to winding up of the unit. Here, a proper analysis has not yet evolved making the film industry as unpredictable as in its past history. The cost overrun of most cinemas worldwide and particularly in Hollywood was due to the lack of correct assessment of their budgets with that of the overall cost of producing them.
In most cases a film was produced within an allocated budget, but it is seen that during the period of time due to the nature of changes so characteristic of film production, the changes in settings, frequent changes in shooting schedules, additional requirements of artists and crew and their related expenses and beyond all these the rough improper estimates made for costs like outdoor shooting expenses, technologically superior methods added or changed at the last moments or changes in scripts involving not only in time delay, but also allow the costs to escalate further.
It is not a small affect on the allocated budget of a film when the directors and producers opt for changes in sites especially when the shooting is taking place in some foreign country amidst the backdrop of some scenic settings. In fact, a little change in the original plan can lead to drastic changes in costs leading to significant changes in profits for the film. Cost overrun of a film is the actual cost incurred by the film over its budget allocation. Evaluation by Project based Assessment
There are five important ways that a film’s success is predetermined or its value among the viewers is ascertained and these are although not quite perfect yet they do go a long way in predicting whether the movie will cover its costs or whether it is doomed at the very outset or whether the movie would be able to cover its costs. (a) Financial Performance on the basis of First Week A film’s financial performance in the first week at the box office is the foremost way of predicting whether the film is a success or not. This has been done since a long time in the course of its history.
The primary reason for doing this calculation is that it is quite predetermined a factor when taking in view the factors like the price of a ticket, the bookings made by the public for viewing the particular cinema, the chain reaction that sets in with the word going around that the film is worth seeing and spending money for. Not only these, the film ought to run in full house for that first week and if it does so it is generally seen that it would make a good run and that its costs of production has been recovered. This is again for films which are made of average budgets of a good commercial cinema.
However, the financial performance by itself is not a determinant alone for it is based on rough estimates and there is always the possibility of a film making only half houses in the first few days of its running and then when the public realizes that it is a good movie the half full theatres become full theatres. Yet while calculating the success of an average cinema this method holds good given to reason that all other conditions also remains the same like the mindset of the public, the social, political and economic situation of the country.
(b) Influence of Film Critics The influence of film critics in making and undoing of a film’s box office is quite a well known fact. Their influence permeates even the most avid of theatre goers and generally determines the success and failures of a film at the box office. Thus in order to get the maximum benefit at the box office the film should have good reviews. These may be in the form of newspapers, magazines criticisms or by publicity campaign.
In the modern times there are pre-release interviews done by different TV channels as well as publicity shows performed by the artists, producers and directors of the film to get themselves good rave reviews. It is usually seen that a good review attracts more people to the cinema halls than a bad review or no reviews. This is also due to the fact that people either shows inclination to the comments of the newspapers or magazines or by word of mouth which is in fact largely influenced by the media itself.
There have been instances of movies with big budget flopping because the film critics didn’t feel it so good as well cases where many low budget films which became a hit with the film critics flowering enough praises for it. There can also be both positive as well as negative criticism for a picture because all critics may not look at a movie from the same angle, but ultimately the readers would make note of all the points of criticisms and then make their own decision.
Yet it is generally seen that film critics are always in consensus as far as the good and bad films generally although they may differ a bit here or there. This undoubtedly affects the film’s profit when it is released in the theatres. There are both journalistic view points as well as academic view points of film criticism although the former has formidable influence in the profits of the movie business. Yet in the long run it is the academic criticism that influences the mind of the people including those of students and children.
The fact is that the affect may not be immediately felt by the masses but in the distant future the values of film and outlook of films as a social mechanism apart from mere entertainment would be an acknowledged fact by the majority of the masses. For instance the influence of science fiction movies has greatly nurtured the progressive concept of science and its immense potential benefits among children and adults.
Research by Barnett and Kafka discusses the pedagogical advantages and challenges of using science fiction movies for elementary teachers in science classes (2007). Somewhat same in the line of thinking has been stated by the biological teachers that there was an increasing appearance of biology in movies and this gives the students ample opportunity from active learning and to facilitate critical thinking and investigative skills in the class rooms and thus gives them the ability to discover science in their everyday life (Berumen, 2008).
All these suggests that there is a wave of enthusiastic and ever increasing number of people who are quite forthright in their demand for good and educative movies and which would also reflect in profits of good films in the long run. Of course, all this would foster an even better way of criticism from the critics themselves whether they are from the media or the academy. (c) Star Values A film is seen to succeed when a star or super star stares in it and they are actually seen to make even the average film with an average story a big hit at the box office.
This is mainly due to the fact that the masses in general have started liking the star and his or hers particular style of acting and in many cases would try imitating them in their own lives as well and thus have developed a secret affinity to their heroes or heroines. With the plethora of gossip magazines, newspapers that cater to the star’s personal lives the people themselves have appeared to take many of the star’s extraordinary lifestyle and greatness on and off the screen for granted especially so if the star has a series of hits.
Thus, it is quite natural for the movie goers to throng to the theatres if they happen to see that the movie contains their favorite heroes and heroines in spite of the fact that the story may be mildly good or bad, but would nevertheless set the cash box ringing. Thus, to a great extent one can predict the outcome of a picture’s success by ascertaining the popular stars in it. This is also one of the prime reasons why the popular stars demand huge money quite wary of the fact that the producers and directors and the distributors depend a great deal on their crowd pulling capacity.
A star is nicknamed a ‘super star’ for the very reason that his appearance would undoubtedly bring in a quite a large crowd to the theatres irrespective of whether the movie has got enough reviews or publicity. Hence, a person can form an opinion as to whether a film would bring in profits just by looking at the different stars and starlets that stare in them. (d) Movie Awards and Publicity campaigns All movie awards announced before or after the films are screened to a great extent influence the profits of the cinema and its run at the box office.
Awards are announced by well known organizations and establishments and they have greatly influenced the profits of the movie business in general. Usually awards are announced after the film is screened before the public and they are given for the best picture, best director, best scriptwriting, best actor, best actress, best child artist, best supporting actor or actress, best editor, cinematography, best costume designs, make-up, visual affects, sound editing, sound mixing, songs and song writing.
A movie which has received any such awards may prove to be a big draw if it is still being screened in the theatres. This is mainly so in the case with far off areas and villages where the movie might attract good crowds after people come to know of the awards that it has received. Several producers try to canvas individuals like directors, actors and others for the sake of reducing their risks in the next film they produce.
By that time the masses would have had a complete overview of the award winners and any film that has a good number of award winners might prove to be a big hit when the film is screened. Many producers and directors try to exploit the advantage a particular movie has made if it has received several well known awards. For this the most prominent forms are those of sequel, remakes and adaptations of the movie which has received awards. This is to build up or to profit on what has already been etched on the minds of the public about the previous box office hit.
Naturally, the sequel too becomes a hit with the public would flock to the theatres with the hope that this movie too would prove to be as good as its previous make. Remakes are done so as to retain the original angle and contents of the story yet when viewed by the public would represent a film that is of totally different in kind and substance. Similar too is the case with adaptation although unlike the remakes the film has only parts of the original copied or adopted with slight changes in character behaviors or setting of the story.
Sequel is somewhat or in all likelihood the continuation of the original hit in terms of awards it has received and hence keeps the public guessing as to what would happen to the characters or to the situation of the previous story in the sequel and hence they are rather compelled to see the second movie too in order to lessen their anxiety and suspense. (e) Technology and Visual Affects Movies of modern times are full of technical affects and visual graphics and they are rather quite complex and require huge amounts of money to produce.
These movies try to attain the best possible bargain by outsourcing the methods that require specialization and other visual affects elsewhere within the industry. In such way the producers and distributors can curtail the ever increasing costs of producing films. Many big budget films are produced like the Titanic, Jurassic park, Harry Potter’s series and many others require high degree of computer graphics and animation without which it would be impossible for the spectators to comprehend as to what is being screened.
Gone were the days when the movie production was a studio phenomenon with a lot of artificial settings. Nowadays the audience requires a greater degree of authentication at least visually if what they see is perceived as merely artificial and lack cohesiveness. The art of film making has become transformed and this may not be all for the future of cinema is definitely worth watching both as a lucrative form of business as well as one of the best medium of creative endeavors. With the changes brought forth by technological innovations in all walks of life the production of movies too has become quite sophisticated.
In fact over the years video technology has been used to assist film directors after shooting of a scene and in order to control the costs. Nowadays, a computer based editing system called “Film 5” which combines computer technology and video tape with film such that it can save 50% of the cost of conventional process of editing (Donald, 1983). This has significantly contributed to the cost effectiveness of the movie business and hence a big budget film could be made profitably.
Among the other types of movies that were made and are still being made secretively are the pornographic films which instill the sexual passions and base emotions in human beings. Although they are not part of the mainstream cinema they are quite huge amount wise when taken collectively and thus warrant attention to some extent. However, these movies remain underground for their gross violation of the art, aesthetics, decencies and above all socially unacceptable standards and depiction of all baseness of human beings for the purpose of illegal profit making.
Even some pornographic elements are found in the mainstream cinema for which censorships and banning of public viewing has become mandatory for these films. But the marketing techniques that the pornographic film makers use and the tactics they apply to get good audience for their films is quite deplorable and has become sort of a black mark for the society at large. Research by Goodman has expressed the outrage at the marketing techniques which use sexuality in movies, television and commercials which generally aim at children (1981).
Thus, we see that the economic concept of movie as an entertaining and profitable medium for the society and the country is an undisputable fact and although many films fail to make it at the box office some that do are quite predictable as far their success is concerned by the parameters given above. In spite of the fact that such an analysis may not be cohesive and have many factors in variance yet they at best are good pointers as to the nature of performance of a particular movie with that of another and the feasibility of such movies being produced for the benefit of entertainment of the masses.
In a unique teaching method that uses powerful contemporary media, movie and television the author Sexton has demonstrated the enormous breadth and depth of economic concepts and the power of economic analysis (2006). In course of time this power of economic analysis can also pave way for a more systematic approach in analyzing the profitability of the business of movies. Budgeting of Films It is mandatory for all business including the movie business to make budgetary allowance before the actual shooting of the film begins.
This is as stated earlier that the film production is a project based venture and its expenses and revenues as well as the profits earned is calculated on each and every film produced separately. In other words, when one film project is made and completed the profits of the same is never transferred to the other films although the producers can make their own calculations on their own behalf as to how many of their movies reaped in profits and how many flopped at the box office over a period of time. This calculation is done to ascertain that if a few films did well then would it cover the losses of those that failed.
But for the purpose of calculation each film project is viewed separately and their profits ascertained individually. Economically speaking film production costs are mainly fixed costs and they have very little variable cost. Thus, a film produced on a fixed budget has to make a certain number of ticket sales such that it breaks even with the cost of production and the revenue being almost the same. From thereon, that is after the break even point the film always produces profits with hardly any further cost. This is because films unlike the other products are not out rightly sold out but only its copyrights are sold to the distributors.
Thus after covering its cost of production if the movie goes on to play full houses then all additional revenue that is received is actually windfall gain for the film distributor. However, all is not good for any type of films as low budget films needn’t rake in profits and perhaps might remain a big flop. This is because the low budget film does not necessarily allow the distributors to cover the cost of distribution as the film has to make the required box office performance in order that the distributors can recoup the cost incurred by him.
In contrast a heavily budgeted film needn’t be a flop given to reason it had rave reviews and super stars as performers and in spite of huge costs can attract full houses constantly and not only recoup its costs incurred but also reap in enormous profits. Thus, the underlining factor to be considered when producing a film is not its cost or price factor, but the attraction it would hold for the public. The only way out of for the producers or distributors is to enlarge the area of the sale of their movies and thus reap the benefits of renting the copyrights without incurring additional costs. Marketing and Distribution Strategies
A film is made for the public to view and hence must have good marketing strategies chartered out in order that it may be bring in good revenues. For this the right strategy ought to be adopted by the distributors in order that the public would throng to the theatres. Apart from the factors that have been analyzed before there are a few marketing strategies that would boost the revenue of the movie business. Firstly, for movies of the average variety or having new stars or directed by a new entrant in the movie field the film should be given good publicity in the form of advertisement in the newspapers and magazines.
It is a noticeable fact that only commercial cinemas like thrillers, action films, adventures, horror movies, love and passion and others of the same genres get not only rave reviews, but also fill up most part of the newspapers and magazines. Those movies that are generally on the average and having new stars might only get an average review or reviews that may not be immediately noticed by the public. Thus such films ought to be screened with good timing. In fact many such films are screened during the public holidays or during occasions when there is festivity in a particular area or town or city.
During such instances people would see any films for the sake of fun or mere pleasure and thus bring in good revenue to the theatre owners and the distributors. The better the distributor is placed in the market the better he would in capitalizing on such occasions and the better terms he would be with the theatre owners. All major distributors have great rapport with the theatre owners and they too reciprocate equally well as the distributor who has received the copyrights from the movie producer is actually in an enviable position to distribute any number of films which the theatre owners may want.
Both the theatre owners and the distributors to a great extent make mutual adjustments such that films rake in the maximum revenues. Further, a film may be sidetracked by another or several good films and the distributors are quite a notorious lot in selectively distributing films by correctly the present conditions, trends and public preferences of each particular market whether it be a village, a town, a city or part of any of these. Again, in order to further enhance their profitability per film the distributors who have received copyrights of it would even distribute the film abroad.
This comes with no additional cost and all becomes grist to the distributors business. At times those films which have flopped in the box office may be changed to be shown elsewhere where the season is appropriate for public to gather and have fun and entertainment or where there is a holiday. By carefully planning and studying the market conditions the distributors can in the long run recoup the losses of most of the films. Currently there is yet another way by which the clever distributor can recoup his losses on a film that had flopped during its first week run.
This is done by selling or introducing video tapes of the recorded film that has flopped and distribute them widely and prominently. By the time the people ascertain that the movie is a flop the video tape would have sold out in good numbers and enable the director to get back his money. Contracts and agreements of exhibiting good movies in schools and colleges and other social institutions can also be of immense help in recouping losses incurred on a good film as most students would be forced to see them as part of their routine life or as part of their curriculum.
Again, this depends upon the quality of the film and the business acumen of the distributors. Some movies or documentaries are funded by social institutions or trusts and can forgo their profit as the chief aim of these movies is to convey ideas or depict the issues that are there in the society. The distributor is allowed to run the movie in the theatres and earn profits as is done in the usual course of business yet it is seen that there are only few people who wishes to see these movies in spite of very good reviews.
However, there are exceptions as many such socially significant movies have also been found to rake money like the mainstream cinema. Even Government subsidized movies too come under such categories and these are mainly found in the developing world and in communist countries where films are made in order to serve as propaganda machinery for the consumption of the masses. Cost overrun is met by the producer by increasing his rental of his movie and with the support from the distributor he may recoup the cost overrun by helping the sale of his films abroad where there is little competition.
The practice of international distribution of the copyrights of the film is quite the characteristics of the Hollywood film makers. Other countries like France, India and China too have come a long way in the production of films and have assumed in many ways the technological superiority of the Hollywood film makers. Here most films are however made against the background of the social atmosphere prevalent in these countries and as such the tastes and preferences of these films vary when compared to that of Hollywood.
Yet the Hollywood movies are a big hit due to their superior production techniques and the unique way they are made with suspense packed dramatization that keep the people engaged till the end no matter even if the language could not be understood by the majority. In such cases the distributors of these films have even tried to dub them in the local languages with good success with some additional costs and have been able to make good money as in the case with the film Mummy and many others. Future Profitability of Cinema
Good cinema has contributed significantly to the political, socio-economic aspects and improvement in the level of awareness in the society as well made good profits for its producers and distributors as well for its stars and the crew. The fact that this cinematic influence on the people has been so awesome that a lot of dramatic changes in the society and educating the masses about the pros and cons of living in a world full of uncertainty and obstacles have greatly lessened the cost of educating the public than through other forms of communication where the Government budgetary allocation would have been mind-boggling.
The argument is amply justified when one makes a study of many developing economies like China, India, African countries and other Southeast Asian countries where the population is so large enough and still growing that budgetary allocation means through other medium of communication means great additional costs and brings little penetration of ideas and society’s plans for education and all round social improvement plans and their implementation.
This need not necessarily be conveyed through documentaries, but other good commercial movies too contribute a great deal in instilling the masses indirectly that ultimately pave the way for a good consumer based societies which in turn gives the all round boost to the economy. Films as a medium has been able to make good affect for modernizing of the public viewing them and many of the mindset of the public can be directly attributed to the work of good cinema. Profitability in movies has grown up phenomenally over the years although there may be flops yet it goes without saying tat the good movies are really being appreciated by the masses.
However, all movies are not good and this is where the hitch develops. Many are so heavily commercialized that they have wrong influence in the minds of the viewers. These are in fact full of crass depiction of behaviors, pornographic scenes, crime and violence, drug uses, wrong misinterpretation of facts misleading both the gullible public as well as children that they are a bane to the society, Still there is a hope and this hope comes mainly with the changing mindset of the public who are now critically looking at a film from all its angles are quite determined not to be taken for a ride by the producers.
What was previously known as ‘formula films’ which had the necessary ingredients of all aspects that instills any viewer to rush to the cinema theatres is now slowly receding into the background. If at all a producer or a film maker has to survive then he would have to bring in newer ideas, realistic or exaggeration, for the consumption of the masses otherwise the public wouldn’t give him a chance to make a profit.
There is also a new stranger attitude among the public to stay at home and watch and be entertained by the other media like TV of VCD or in other indoor and outdoor activities and their numbers are steadily increasing. Until and unless the movie industry keeps on producing high end valued films leaving the public to think and dream about for a long time even after the movie had gone off its way, it is going to be a formidable task for the makers of such movies to make any profits.
Governmental stipulations and regulations have also come a long way in pruning the reckless profiteering methods employed by the film makers. There are for instances regulations like censorship for viewing of unwanted stuffs in a particular film, refusal of admission to tickets at the theatre for children below 18 years, movies that have allowed to be screened should have parental guidance for children or movies that are banned for their instilling wrong ideas into the minds of the masses. These Governmental regulations are going to stay for a long time to come and even in fr