Producers, distributors, exhibitors, and spectators are only a few of the many parties involved in the complicated process of distributing films. Producers are in charge of the content’s creation, but distributors are in charge of its promotion and release to cinemas, streaming services, and other distribution channels. But what do movie distributors spend on movies?
The quick answer is that it relies on a number of variables, including the film’s budget, genre, cast, and distribution plan. Distributors may spend several million dollars on a blockbuster movie with A-list actors and extensive marketing, but only a small portion on a low-budget independent movie. Depending on how confident they are in the movie’s prospects for success, distributors may also negotiate different terms with producers, such as revenue-sharing, upfront payments, or minimum guarantees.
The theatrical release is one popular method of distribution, in which movies are screened in theaters for a few weeks or months before being made available on home video or digital platforms. In this model, the exhibitors, who own and run the theaters, receive a portion of the box office receipts from the distributors. The proportion fluctuates based on the contract, but it often falls between 40% and 60%, with the distributor and producer receiving the remainder of the money. The COVID-19 pandemic, which drove many theaters to close or reduce their capacity and resulted in a rise in streaming and video-on-demand (VOD) releases, has however put this paradigm to the test.
Direct-to-video (DTV) or direct-to-streaming releases, in which movies are only made available on home video or online without a theatrical run, are another type of distribution mechanism. Depending on the distribution platform and the distribution rights, distributors in this model may provide producers a flat fee or a portion of the sales. For instance, The Cloverfield Paradox, a science fiction thriller that remained unadvertised during the 2018 Super Bowl, is said to have cost Netflix $50 million for the rights to be distributed globally. However, because the money is typically lower and the competition is greater, this approach might not be as lucrative as the theatrical release model.
How much money do movie distributors make then? Once more, it depends on a variety of variables, including their market share, their expenses, and the performance of the movies they distribute. The Motion Picture Association (MPA) said that $42.5 billion was made at the box office worldwide in 2019, with $11.4 billion coming from North America. 81% of box office receipts in North America went to the major five studios (Disney, Warner Bros., Universal, Sony, and Paramount), with independent distributors splitting the remaining 19%. The COVID-19 epidemic, however, has affected the movie business and reduced profits for both studios and independent distributors.
As a result, both the cost of film distribution and the revenue for film distributors are dynamic variables that depend on the state of the market, the caliber of the movie, and the distribution plan. While some people find success in the film distribution industry, there are dangers and uncertainties that must be carefully considered and planned for. Film distributors will need to innovate and experiment with new models and collaborations as the film business continues to change and adapt to new technology and consumer behaviors in order to be competitive and relevant.