Film Production Budgets

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When I read about a film on Wikipedia, I check the budget and revenue. I have always wondered where the money goes for a film. The budget of a film gets split into four sections. The sections are development, pre-production, production, and post-production.

Development

Intellectual Property

A production company might want to make a book into a film. The company needs to pay the author for the rights of the book.

If a company wants to turn "What's the Deal with Podcasting?" into a film, they need to pay me.

Scriptwriting

When a production company buys a story, the story might need editing. The production company needs to hire a writer to create the script.

Pre-Production

Cast and Crew

In the pre-production phase, a company will start to hire cast and crew. The production company needs to find actors for the film. Then, they need behind the scenes people. The company needs to hire a camera crew, make-up, costume designers, and others.

Production

The production budget of a film is anything that is part of the actual film. This includes the sets of the film, the costumes, and the sound.

Post-Production

The post-production budget contains expenses that come after the film gets produced.

Editing

Once a film gets shot, editing needs to get done. The editing team needs to add music, special effects, and fix sound issues.

Marketing

To get their money back, production companies need to spend money to make people aware of films.

Trailer

Production companies spend money on trailers to give consumers a preview of a film. They need to hire a team to create the trailer.

Events

Some production companies will host an event and invite consumers to attend. They need to spend money on the venue, any equipment, and promotional materials.

Exhibition

To generate feedback for a film, a company might hire people to watch a film. For the exhibition, a company has to pay the people to watch the film. Then, pay people to collect feedback and pay for the venue.

The feedback might lead to changes in the film. Which will add more money to the budget.

Distribution

The production company needs to give copies of the movie to theaters. Some of the budget includes creating these copies for the theaters.

DVD Production

Not sure what "DVDs" are but I kept reading about them.

Crowdfunding

Some indie films will crowdfund financing. The backers will get rewarded for their contribution. Names in the credits or shirts are some rewards a backer might get.

The producers have to create a trailer or a short portion to show people for the campaign. People are more likely to fund a campaign with something tangible to see.

Film Budget Reducers

A smaller film budget means a film is more likely to turn a profit. There are some methods production companies use to reduce a film's budget.

Locations

In some cases, a film might need to shoot in a crowded area such as Time Square. There are costs associated with filming there. The company needs to pay to block off the area and remove anything that obstructs the filming.

Instead, That scene could get shot in Toronto in an area that looks like New York City. The company benefits from not having to pay to close down Time Square. Canada will give a production company a tax break to shoot in their location.

Other areas give tax breaks to production companies that will film there. Georgia is one of those states.

No Night Shots

When filming at night, there needs to be artificial lighting to capture a scene. By shooting during the day, companies save money. The sun provides free lighting for films.

Product Placement

Product placement is when a company pays a film to promote their products in the film. Some companies choose to give their products to films for free. For example, Lenovo might lend free laptops to the next Quentin Tarantino film.

Both benefit because Lenovo gets their products seen by millions of people for free. The production company benefits because they do not have to spend money to put laptops in the film.

In Pulp Fiction, Quentin Tarantino wanted to use Denny's. Denny's did not give him the right to use the restaurant in the film. The setting became a generic diner.

Percentages Not Dollars

Adding a famous actor to a film might add millions of dollars to the budget. A production company might offer actors a percentage of the revenue for a film. The company reduces risk because they are paying the actor with future earnings.

My Opinion

Crowdfunding

A crowdfunding campaign for a film might try to raise $10,000. The average crowdfunding donation is $25. Unless producers have a pre-existing audience, they might have trouble finding ~400 people.

Actors and Budgets

Paying famous actors millions of dollars might hurt films on occasion. The purpose of casting a famous actor is for them to draw their fans to a film. If the actor does not get the expected number of consumers, then the expected earnings go down.

When a production company funds a series of films, the budget for each film grows. The budget for the fifth film will be greater than the first. The cast and crew have more experience, and they get a raise for each movie. A higher budget means the next installment needs to make more money. For a series of films, a production company might be more willing to offer percentages to the actors. Percentages would lower the risk of the movie losing money.

There is a second risk for a production company to fund a series. After two or three films, consumers might get tired of seeing the same actors playing the same roles. When consumers get tired of seeing the same cast, they will stop seeing the films. The production company loses money.

Film Production and Coronavirus

Coronavirus impacts the budgets of films. The virus increases expenses. The production company needs to buy equipment to protect the cast and crew. The company needs to pay for personal protection equipment and testing. Some companies might go as far as quarantining employees to prevent spreading. Coronavirus has delayed the production of films, which increases costs.

Digital First Film Promotion Strategy

A film production company should create a digital-first strategy to promote films. Which they will still be able to execute in uncertain times.

Streaming

To promote a film, the company could stream events. Travis Scott released a music video of his song with Kid Cudi on Fortnite.

Some universities had graduation ceremonies on Minecraft. The companies can create some events on Minecraft for consumers to watch.

They can live-stream interviews on Twitch, YouTube, and Periscope.

Virtual Reality Films

People always talk to me about "the experience" of watching a movie at the theater. Production companies could stop using theaters and give consumers a new experience. An experience that they will have more control over. There is an opportunity in virtual reality movies. The consumer can watch them from anywhere, and having to interact with the film is a new experience.

Conclusion

The fact that a film's budget is $250 million does not make the film better. In some cases, the budget might hurt ticket sales. When consumers see ads for a film every time they watch TV, they might get tired of the film. Consumers that get tired of seeing the ads might not see the film.

Some films have budgets under $10 million but they make $200+ million. The reasons that lead to a film becoming profitable are unknown to filmmakers.