Tuesday, 4 May 2010

Hollywood Babble On & On #501: Where Does All The Money Go?

Welcome to the show folks...

Judy asked...
Ah Furious D you said a mouthful about movie budget money...where oh where does that green stuff go?
Well the answer is actually both simple and complicated.

The simple answer is that the most important thing a movie's budget buys is

It all begins with...

DEVELOPMENT: Also known as "hell" by writers. This is the period where studios buy "options" on scripts they might want to produce. An option is where the company pays the writer a set amount to let them have a chance to make a movie from their script for a certain length of time, usually two years. If a film is made, then a final payment is made on the first day of production of the full negotiated price. If the two years pass and there's no film made, the writer is then free to sell the option to someone else. The amount paid for the option and the final fee depends on the track record of the writer and the tenacity of the writer's agent.

The studio is paying for the writer's time, whether a film gets made or not.

This also goes with directors and actors that get involved in the development process. They too have to be paid for their time, and for being available to make the movie, no matter how it works out.

Studios think it's cheaper to develop properties they already own, like remakes, sequels, and comic book characters, than pay for original material, but that's not always the case. It's not like optioning a spec script, because the writer is usually paid their final fee for adapting the pre-existing material whether the film is made or not.

All this means that the development process can become extremely expensive. Especially when it involves indecision or incompetence on the part of those who give movies the green-light.

Superman Returns had around $50 million spent before a single frame of film was shot, most critics saying the waste was all on the head of Jon Peters, the film's producer, and his obsession with robot spiders.

If the development process has been survived, we move onto...

MAKING THE DAMN THING: Making a movie takes a lot of accumulated time. It's a lot like managing an army, large numbers of people have to paid, fed, housed (if on location), and transported, in order for them to design and build sets, make costumes, run the cameras, or any of the the thousands of little jobs that need doing during the making of a film. On a major studio film these are not volunteers or low paid semi-amateurs. These are skilled tradespeople who make a damn good living, with pension and health benefits, all paid out of the films budget.

Then comes the costs of materials, equipment, facilities, locations, and all the physical stuff needed for a movie. It's all expensive.

Then comes post-production, which involves editing, sound, special effects, and music. Once again this involves expensive equipment, and highly paid professionals.

But I haven't yet mentioned...

STAR SALARIES: A joke going around these days is that these days a movie star comes with two prices $20 million or free. It expresses the fundamental truth that unless the film is something that will guarantee a movie star an award, artistic street cred, or a guaranteed big profit share* windfall, they are going to demand as much as they can up front.

This is true for the supporting cast as well. They are going to try to make as much money as they can from each film, because acting is a feast or famine business. One day you're working steady, the next day you're in line with Lindsay Lohan to audition for the same part in a commercial that will air only in Kazakhstan, and it's not an endorsement deal.

It's also true for "star" directors and producers who collect big fees and depending on their clout, profit shares for the time they put into making films.

Once that's all out of the way we move onto:

SELLING & SHOWING: This is all about P&A, Prints and Advertising. Basically getting the films into theaters, and getting people to go to these theaters. Both costs literally shitloads of cash, depending on the size of the release. The more theaters, the more prints, the more ads. This may come down with the advent of digital projectors that don't need expensive prints to show movies, but I don't see it coming down too much. Most times the P&A costs will match, but often even exceed, the cost of actually making the movie, because ad men cost money to hire, and the TV spots and banner ads all take up lots of money and time.

Now let's say the movie does well. Over 50% of your ticket price goes to paying the theater's costs for showing the movie, that's called the house nut. The rest of the ticket price goes to the distributor, and is called the rental.

The distributor, usually a studio, then collects the rentals and the money then disappears into the black hole of...

STUDIO OVERHEAD: Basically this is the fine art of putting the costs of your crap onto the budgets of movies, and it eats up the rental like ravenous piranhas. It can mean anything from actual overhead, like salaries, facilities, etc., but is often misused and abused to the point of self parody.

All this means that movies are really, really, expensive to make and release. They are even more expensive when ego and incompetence get involved, because that eats up a lot of precious, and costly time.

I hope that answers your question.

*No profit shares are ever guaranteed thanks to studio accounting.


  1. Thanks Furious D for the lucid explanation.Okay so movies are really really expensive to make,so shouldn't the studio execs be wary about what they green light? Why would anyone green light Furry Vengeance.Also aren't producers supposed to oversee the making of the film and prevent crap from happening and winding up in your local cineplex? Isn't this known as quality control?

  2. That's another post in itself. But I can sum it up with William Goldman's explanation: "Nobody knows nothing."

  3. D, sometimes I'm surprised you don't write for cracked.

    Anyway, for your next article can you talk about how you would bring down movie budgets should you be in charge of the world? (as you should be)

  4. Hey you know if Hollywood employed FD's common sense it might discourage development ideas like talking animals meet Freddy Krueger,meet Will Ferrell. I don't know about the in charge of the world stuff let's see what he does with changing Hollywood first.

  5. Furry Vengance, like crap in the 70's like ZARDOZ or HEAD the Monkee's movie I would like to say DRUGS may be involved in the writing, greenlighting and production.