How film makes its money back Alex Cameron

How film makes its money back Alex Cameron, Sept 2009

data sources UK FILM COUNCIL BRITISH FILM INSTITUTE CINEMA EXHIBITORS ASSOCIATION BRITISH VIDEO ASSOCIATION ENTERTAINMENT RETAILERS ASSOCIATION FILM DISTRIBUTORS ASSOCIATION SCREEN DIGEST NIELSEN EDI HOLLYWOOD REPORTER IMDB PRO OFFICIAL UK CHARTS COMPANY

why A film is created to make money from it being exhibited.

commercial lifecycle Copies of the film are released for exhibition in different stages. PROMOTIONAL SCREENINGS CINEMAS HOSPITALITY DVD RENTAL PAY TV/Vo. D DVD RETAIL FREE TV LIBRARY COMMERCIAL VENUE EXHIBITION AT HOME Source: UK Film Council, CEA, BVA, ERA

the bottom line A film recoups most of its budget through DVD. 25% 75% RENTAL RETAIL 7% CINEMA, 25% TV, 28% CINEMA DVD TV OTHER DVD, 40% Source: Screen Digest, BVA, ERA

many middlemen The more times and places a film is exhibited, the more money it generates. INTERNATIONAL DISTRIBUTOR INTERNATIONAL SALES AGENT INTERNATIONAL DISTRIBUTOR CINEMA CHAINS TERRITORY DISTRIBUTOR PRODUCER DOMESTIC DISTRIBUTOR RENTAL OUTLETS COPY MANUFACTURER RETAIL OUTLETS TV PLATFORMS BROADCASTERS Source: UK Film Council, BFI

International There around 45 international territories in which the rights to exhibit films buyers are regularly traded. TERRITORY Benelux Canada UK FR Canada France Germany Greece Italy Iceland Israel Portugal Spain Scandinavia Czech. Hungary Poland Romania CIS Yugoslavia Turkey Egypt MAIN LANGUAGE Dutch/French English/French German Greek Italian Icelandic Hebrew/Arabic Portuguese Spanish Various Czech/Slovac Hungarian Polish Romanian Russian BCS Turkish Arabic Figures in 000 s MAX MIN PROB 25 10 20 50 20 10 25 10 10 60 15 20 75 25 50 10 5 5 60 10 2 4 10 2 5 10 2 3 60 15 20 50 20 20 10 2 4 10 2 5 10 2 2 15 5 5 10 2 3 10 2 4 10 2 2 ACT 20 20 10 0 0 50 0 20 20 0 0 0 0 TERRITORY A/C/U/P Brazil MAIN LANGUAGE Spanish Portuguese Columbia Mexico Peru/Equa/Bol Venezuela C. America West Indies India Pakistan Hong Kong Indonesia Japan Korea Malaysia Philippines Singapore Taiwan Thailand Burma South Africa Australasia USA Spanish English Hindi/English Urdu/English Chinese/English Indonesian Japanese Korean Malay Filipino/English/Chinese Mandarin Thai Burmese Zulu/English MAX 20 20 MIN 2 7 PROB 5 10 ACT 5 0 10 15 10 10 30 10 15 10 100 80 10 15 10 25 10 10 25 50 200 2 5 2 2 10 2 5 2 20 40 2 5 2 2 10 10 20 5 5 2 2 10 4 5 3 50 50 2 5 5 3 10 20 50 0 0 2 2 0 0 5 3 0 50 2 0 0 0 10 20 20 Source: Nielsen EDI, UK Film Council, BFA, British Council

world markets There around 20 major international marketplaces. NAPTE, New Orleans (January) Karlovy Vary, Czech Republic (July) Sundance, Utah (January) MIPTV, Cannes (April) San Sebastian, Spain (September) AFM, Los Angeles (February) Cannes, France (May) Venice Festival, Italy (September) MIPCOM, Milan (October) Rotterdam Festival, Holland (January) Berlinale, Berlin (February) Bangkok Festival, Thailand (January) BAFICI, Buenos Aires (April) Filmart, Hong Kong (March) Toronto Festival, Canada (September) PUSAN, South Korea (October) Source: IMDB Pro, UK Film Council

agent guess. Sales agents for film rights tend to use the same set of generic internal timates percentages to make estimates as to how a film will sell internationally. NORTH AMERICA EUROPE 4% FAR EAST 9% LAT. AMERICA NORTH AMERICA, 33% FAR EAST, 16% OTHER EUROPE, 39% NORTH AMERICA 33% US CANADA EUROPE 39% GERMANY (10%) UK (8%) FRANCE (7%) ITALY (4%) SPAIN (4%) NORDIC (3%) OTHER (3%) FAR EAST 16% JAPAN (10%) S KOREA (3%) TAIWAN (1%) OTHER (2%) LAT. AMERICA OTHER 4% 9% BRAZIL (1%) AUSTRALIA/NZ (3%) MEXICO (1%) EAST EUROPE (3%) ARGENTINA (1%) MIDDLE EAST (1%) OTHER (1%) S. AFRICA (1%) OTHER AFRICA (1%) Source: Sales Agents (private communication)

real-world sales In practice, only a core set of territories have a regular and dependable appetite for buying film rights outside the US. 86 10 ASIA, 192 EUROPE, 357 ASIA EUROPE S. AMERICA MIDDLE EAST Figures in 000 s COUNTRY ASIA JAPAN INDONESIA KOREA HONG KONG INDIA TAIWAN PHILIPPINES OTHER AUSTRALIA/NZ EUROPE GREAT BRITAIN GERMANY FRANCE ITALY SCANDINAVIA SPAIN OTHER SOUTH AMERICA BRAZIL MEXICO OTHER MIDDLE EAST HIGH LOW 60 20 10 35 15 25 50 10 10 15 10 3 5 20 70 80 85 75 60 35 15 38 15 7 23 9 15 35 30 25 20 15 40 50 35 15 AVERAGE 53 55 55 48 38 15 20 10 4 28 35 23 10 Source: Distributors (private communication)

box office A film exhibition sale is generally a 75 -25 split between a vendor (cinema / retailer structure / TV) and a distributor, who deducts 35% commission + costs “off the top”. VAT COSTS (50%) PRODUCER VAT VENDOR (75%) DISTRIBUTOR (35%) DISTRIBUTOR COSTS (50%) DISTRIBUTOR (35%) PRODUCER VENDOR (75%) SHARE REMAINDER VAT 17. 5% 82. 5% VENDOR (75%) 62. 0% 20. 5% DISTRIBUTOR (35%) 7. 2% 13. 3% DISTRIBUTOR COSTS (50%) 6. 7% PRODUCER 6. 7% 0 Source: UK Film Council

uk cinema overview Cinema hasn’t been seriously affected by the recession. EXHIBITOR ODEON SITES SCREENS % SCREENS 107 834 CINEWORLD 74 758 21 VUE 63 608 16. 8 NAT. AM 21 274 7. 6 WARD ANDERSON 24 206 5. 7 APOLLO 13 77 2. 1 CITY SCREEN 18 51 1. 4 REEL CINEMAS 13 48 1. 3 MOVIE HOUSE 5 39 1. 1 AMC 2 28 0. 8 MERLIN OTHERS 9 375 26 657 0. 7 18. 2 TOTAL 726 3, 610 100 3660 screens in 726 sites with 865, 599 seats, and an average ticket price of £ 5. 18. An average of 236. 4 seats per cinema, and 4. 7 screens per site. 23. 1 25 2009 ADMISSIONS (M) 20 15 10 5 0 JAN FEB MAR APR MAY JUN JUL AUG Source: Screen Digest, CEA, UK Film Council

painful truth 40% of independent British films never gross more than 100 k at the box office. COSTS Age certification 35 film prints Paper printing Trailer PR Advertising Shipping Misc Balance RETURNS GROSS BOX OFFICE (less 17. 5% VAT) Distributor revenue (25%) (less 35% fees, 11, 170) (less costs, 25, 500) Balance 1, 000 5, 000 4, 000 6, 000 1, 000 500 25, 500 150, 000 127, 659 31, 915 20, 745 -4, 755 Source: CEA, IMDB Pro, Nielsen EDI, UK Film Council

release planning Opening in over 100 screens significantly increases cost. COSTS OF THEATRICAL RELEASE/SITES (M) 4 3. 5 3 2. 5 2 1. 5 1 0. 5 0 >500 400 -499 300 -399 200 -299 100 -199 50 -99 10 -49 <10 Source: UK Film Council

british “Slumdog Millionaire” has now overtaken “Four Weddings & A Funeral” as the independence most successful 100% independent British film in UK cinemas. SLUMDOG MILLIONAIRE BUDGET WEEKS SITES UK GROSS DIST 15, 000 14 449 31, 283, 374 PATHE FOUR WEDDINGS & A FUNERAL 7, 000 16 27, 760, 000 CARLTON TRAINSPOTTING 3, 500, 000 8 13, 500, 000 8 386 12, 180, 000 ENT KEVIN & PERRY GO LARGE 3, 200, 000 8 357 10, 460, 000 ICON EAST IS EAST 1, 900, 000 16 253 10, 370, 000 FILM 4 40, 000 16 449 ST TRINIAN'S VALIANT 12, 430, 000 POLYGRAM 8, 520, 000 ENT Source: IMDB Pro, BIFA, UK Official Charts Company

british receipts In the last few years, most 100% British independent films have used cinemas as a marketing platform for DVD and international sales. SLUMDOG MILLIONAIRE HOW TO LOSE FRIENDS & ALIENATE PEOPLE ADULTHOOD OUTLAW HAPPY-GO-LUCKY THE EDGE OF LOVE BRIDESHEAD REVISITED I WANT CANDY THE COTTAGE BRICK LANE EDEN LAKE FLASHBACKS OF A FOOL A BUNCH OF AMATEURS THE CHILDREN HALLAM FOE SHIFTY SOMERS TOWN OF TIME AND THE CITY FILTH AND WISDOM BUDGET 15, 000 28, 000 10, 000 2, 500, 000 7, 000 N/A 20, 000 1, 000 2, 500, 000 N/A N/A N/A 3, 800, 000 100, 000 600, 000 500, 000 1, 000 WEEKS 14 4 4 3 5 6 4 2 3 1 2 2 2 4 1 1 6 SITES 449 453 179 286 114 177 256 257 260 96 184 272 186 132 98 51 62 25 10 UK GROSS 31, 283, 374 4, 100, 000 3, 350, 000 1, 519, 736 1, 413, 253 1, 127, 119 874, 658 730, 452 598, 221 413, 015 404, 758 246, 072 201, 849 199, 259 132, 972 131, 181 121, 345 57, 195 12, 000 SALES DIST PATHE INTANDEM OPTIMUM INDEPENDENT PATHE SUMMIT MIRAMAX CAPITOL LIONSGATE HANWAY 2 ENTERTAIN EALING STUDIOS MAGNOLIA PATHE THE WORKS OPTIMUM PATHE OPTIMUM ARCLIGHT BVI ODYSSEY CINETIC PROTAGONIST VERTIGO INDEPENDENT BVI PROTAGONIST METRODOME THE WORKS HANWAY HURRICANE KATAPULT PATHE Source: IMDB Pro, Nielsen EDI

rental deals 49% of all DVD rentals are now generated online. ROYALTY MODEL “OFF THE TOP” MODEL The distributor pays the producer a 35% royalty. The distributor takes 35% commission + 25% costs. 14. 4% 16. 6% 17. 5% 26. 8% 41. 3% VAT VENDOR (50%) DISTRIBUTOR (65%) PRODUCER (35%) SHARE REMAINDER 17. 5% 82. 5% 41. 3% 26. 8% 14. 4% 0 17. 5% VAT VENDOR (50%) 10. 3% DISTRIBUTOR (35%) 14. 4% VAT VENDOR (50%) DISTRIBUTOR (35%) DIST. COSTS (25%) PRODUCER 41. 3% DIST. COSTS (25%) PRODUCER SHARE REMAINDER 17. 5% 82. 5% 41. 3% 14. 4% 26. 8% 10. 3% 16. 5% 16. 61% 0 Source: UK Film Council, Screen Digest, BVA, ERA

sell-through deals DVD sales data is closely guarded and rarely released other than for overall market statistics. ROYALTY MODEL “OFF THE TOP” MODEL The distributor pays the producer a 12. 5% royalty. The distributor takes 35% commission + 50% costs. 13. 5% 5. 2% 17. 5% 36. 1% 41. 3% VAT VENDOR (50%) DISTRIBUTOR (87. 5%) PRODUCER (12. 5%) VAT 13. 5% VENDOR (50%) DISTRIBUTOR (87. 5%) 14. 4% PRODUCER (12. 5%) SHARE REMAINDER 17. 5% 82. 5% 41. 3% 36. 1% 5. 2% 0 41. 3% VAT VENDOR (50%) DISTRIBUTOR (35%) DIST. COSTS (50%) PRODUCER SHARE REMAINDER VAT 17. 5% 82. 5% VENDOR (50%) 41. 3% DISTRIBUTOR (35%) 14. 4% 26. 9% DIST. COSTS (50%) 13. 5% PRODUCER 13. 5% 0 Source: UK Film Council, BVA, ERA

walmart syndrome Supermarkets have come to dominate DVD sales, pushing the average retail price of a DVD to £ 7. 42. 9% SUPERMARKETS, 23% MAIL ORDER, 15% AUDIO-VIDEO SPECIALISTS, 35% GENERALISTS, 18% AUDIO-VIDEO SPECIALISTS GENERALISTS MAIL ORDER/ONLINE SUPERMARKETS WHOLESALERS Source: Screen Digest, BVA, ERA

pay-tv deals Pay-Per-View & Vo. D tend to be more profitable as the costs of sale are borne by the TV platform. SHARE REMAINDER VAT 17. 5% 82. 5% VENDOR (50%) 41. 25% DISTRIBUTOR (35%) 14% 27. 25% PRODUCER, PRODUCER 27. 25% 0% 27. 25% DISTRIBUTOR (35%), 14. 43% VAT, 17. 50% VENDOR (50%), 41. 25% VAT VENDOR (50%) DISTRIBUTOR (35%) PRODUCER Source: UK Film Council

broadcast deals Subscription & free TV fixed-fee licensing deals depend on the performance history of the film. DISTRIBUTOR, 40% PRODUCER, 60% DISTRIBUTOR PRODUCER Source: UK Film Council

the corridor Recoupment is organised into a “corridor” and made from a central collection account. Source: Film Finance Handbook, UK Film Council