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How Does the Film Industry Actually Make Money?

21 points by kfk 14y ago

chrisbennet 14y ago
As I understand it, there is a big difference between what the studios say that made and what they actually made - see "Hollywood accounting". Example: According to this, "Return of the Jedi" did not turn a profit. http://www.techdirt.com/articles/20110912/13500315912/hollywood-accounting-darth-vader-not-getting-paid-because-return-jedi-still-isnt-profitable.shtml http://www.techdirt.com/articles/20110912/13500315912/hollyw...
- anamax 14y ago
  This is actually a more general issue. Profit/loss is wrt an entity. A given entity's profit/loss says nothing about the profit/loss of related entities. For example, many "non-profits" have associated entities that are very profitable.
- gee_totes 14y ago
  Also, if you're interested in "Hollywood accounting", I suggest checking out the book The Hollywood Economist[0] [0]http://www.amazon.com/The-Hollywood-Economist-Financial-Reality/dp/1933633840/ref=sr_1_1?ie=UTF8&qid=1341278717&sr=8-1&keywords=holywood+economist http://www.amazon.com/The-Hollywood-Economist-Financial-Real...
- kfk 14y ago
  That is true indeed. But I think the article makes some points that give us a different picture on the profitability of the movie industry. I always thought why not many good movies are shot per year if they are so profitable, I think it's because the returns on a movie are not that great after all.
rprasad 14y ago
Most blockbusters make money. They simply record the income in a different entity (or entities) than the entity (or entities) which recorded the expenses. A large part of not getting screwed in a Hollywood contract is making sure your percentage relates the right entity.
larrys 14y ago
"For the cost of “Men in Black 3,” for instance, the studio could have become one of the world’s largest venture-capital funds, thereby owning a piece of hundreds of promising start-ups." That assumes you know how to do that of course. People know and are comfortable with what they know. Drawing a comparison to a skill in another industry that takes years to hone really makes no sense.

21 points by kfk 14y ago

As I understand it, there is a big difference between what the studios say that made and what they actually made - see "Hollywood accounting". Example: According to this, "Return of the Jedi" did not turn a profit. http://www.techdirt.com/articles/20110912/13500315912/hollywood-accounting-darth-vader-not-getting-paid-because-return-jedi-still-isnt-profitable.shtml http://www.techdirt.com/articles/20110912/13500315912/hollyw...

anamax 14y ago
This is actually a more general issue. Profit/loss is wrt an entity. A given entity's profit/loss says nothing about the profit/loss of related entities. For example, many "non-profits" have associated entities that are very profitable.
gee_totes 14y ago
Also, if you're interested in "Hollywood accounting", I suggest checking out the book The Hollywood Economist[0] [0]http://www.amazon.com/The-Hollywood-Economist-Financial-Reality/dp/1933633840/ref=sr_1_1?ie=UTF8&qid=1341278717&sr=8-1&keywords=holywood+economist http://www.amazon.com/The-Hollywood-Economist-Financial-Real...
kfk 14y ago
That is true indeed. But I think the article makes some points that give us a different picture on the profitability of the movie industry. I always thought why not many good movies are shot per year if they are so profitable, I think it's because the returns on a movie are not that great after all.

rprasad 14y ago

Most blockbusters make money. They simply record the income in a different entity (or entities) than the entity (or entities) which recorded the expenses. A large part of not getting screwed in a Hollywood contract is making sure your percentage relates the right entity.

larrys 14y ago

"For the cost of “Men in Black 3,” for instance, the studio could have become one of the world’s largest venture-capital funds, thereby owning a piece of hundreds of promising start-ups." That assumes you know how to do that of course. People know and are comfortable with what they know. Drawing a comparison to a skill in another industry that takes years to hone really makes no sense.