The film industry is enormous money, with global box office receipts reaching a new high of $42.5 billion in 2019. However, this large percentage does not imply that all movie are profitable; in fact, many films wind up being losing investments. Indeed, despite the fact that hundreds of films are produced each year, only a small number of them are turned into feature films with the large budgets that we identify with the Hollywood film industry. And, while the occasional independent, low-budget picture can break through and become a smash hit, most blockbusters are on the higher end of the budget spectrum.
A major studio film has an average cost of $65 million to make. However, production expenses do not include distribution and marketing, which adds roughly $35 million to the overall cost of producing and promoting a big film, bringing the total cost to around $100 million. That’s a far cry from “Napoleon Dynamite’s” $400,000 budget.
So what exactly is the cost of producing a movie?
According to The Guardian, movie expenditures may be split down into many main categories, including screenplay and development (about 5% of the budget), licencing, and wages of the big-name performers, who often include the producer, director, and major actors or actresses majorly.
Then comes the actual movie production expenses, which include the continuous wages of all the personnel required to make production happen; production costs account for a significant portion of the budget, accounting for nearly 25% of the total. And production isn’t the end of the storey: special effects can be expensive, depending on the genre of film, and music must be created and performed as well. Then, after the entire film has been completed and is ready to be released, it’s time to begin the marketing and distribution process. After all that money, you can be sure that marketing isn’t an afterthought.
It’s pointless to spend $100 million or $200 million on a film that no one knows about. The marketing budget for “Spiderman 2,” which cost $200 million to produce, was $75 million. Because marketing costs are not included in production costs, studios might claim to have lost money on a film that made more than its negative cost.
Despite all of the enormous figures and the possibility for catastrophic losses, the movies continue to come. Despite the fact that the average cost of a cinema ticket in the United States increased to over $8 in 2010, people continue to queue to buy tickets, consume popcorn, and see those costly movies.