Free Essay

The Business of Making Movies

In: Business and Management

Submitted By cmunsch
Words 697
Pages 3
Carmen Munsch
Article Summary - “The Business of Making Movies”

In recent years, the movie industry has gone through some very significant changes which has led to an increase in the cost of making movies. Some of these include increased production and marketing costs, the cost of piracy, the use of digital technology and the increase in different types of entertainment available to people. These and other factors have changed the types of movies that will be made. Movies are a significant source of income in the US as well as for many other countries. They are of great importance in reflecting cultures. It could also be argued that movies can incite change in the world. India leads the charge as far as largest number of films released followed by the US and China. In the US, the motion picture business is made up of six major studios. Some of these studios also own smaller subsidiaries that produce independent films. The number of these that are made available to the general public is very small. There are tens of thousands of independent films every year that never make it to the big screen. The process of making a movie includes six stages: development, pre-production, production, post-production, marketing and distribution and exhibition. This article focused on the first four stages. The producer of the movie is the person who has ultimate control of the project and is responsible for keeping the movie budget on track. The producer follows the film from the idea all the way through distribution. Producers of major movies often earn seven-figure salaries plus bonuses and profit-sharing. The Producers Guild of America (PGA) is the group responsible for the rules of how someone is able to get credit and be considered a producer on a film. They have very specific guidelines that must be met. In the development phase, the producer purchases the story rights to the movie. This could be based on a novel, short story, play, video game or a sequel or remake of a film. This can be very expensive. Then the producer hires a screenwriter in order to transform the story into a usable script. The producer often also needs to obtain initial financing.
When all of this is complete, the studio will then determine if they believe the movie will be successful. Decision makers in this process will typically compare the movie to similar types of films in order to make their decision. If they are convinced that the movie has money-making potential, they will then give the producer to go ahead with the start of the movie.
Major motion pictures have been become extremely expensive to produce. In 2006, the average cost was around $100 million. Some studios finance films on their own and some partner with other studios to help reduce risk. Another method of financing movies is called slate financing, which involves working with a hedge fund manager. The hedge fund will finance a portion of the film in return for a portion of the profits.
In the pre-production phase, the producer hires the director, cinematographer, unit production manager, production designer and principal cast as well as scout locations and approves the final budget. Hiring the cast also involves working with their agents and business managers. In addition, there are also many other technical people to be hired such as set designers, camera operators and lighting specialists. Many of these technical people are a part of unions.
In the production phase, the producer will start the process of shooting the movie. This is the phase where the budget needs to be closely monitored. In post-production, the producer works with all those responsible for editing and putting the movie together into its finished state.
In reading this article, it became very clear that we as the general public only see a very small fraction of movies that could be produced. It is very cost prohibitive in a lot of cases, so it feels like we are missing a lot of great ideas. This is unfortunate, but just the way it is based on the extremely high cost of making major movies.

Similar Documents

Free Essay

Mogul History

...However, they were only viewable by one person at a time, as you had to peer through a peep-hole. The Lumiere brothers in France had a better idea for a way of viewing the movies. They invented the Cinematograph in 1895. This was a breakthrough as the films could now be viewed on a projection screen by large audiences. The first commercially successful projector in the United States was the Vitascope, invented by Thomas Edison. Edison is known as the “Father” of motion pictures due to his inventions, which changed the motion picture industry forever. With the breakthrough of sound and motion together, the movies were forever changed. The invention of new technology allowed the industry to grow and develop into what we know it as today. The movies began to turn into a business, a multimillion dollar industry. It was the movie stars who made the motion picture industry explode as it did. Without stars, movies are nothing. Look at the movies today that people watch. If it doesn’t have a major star, many people don’t bother taking time to watch it. The stars in a movie are what give it such character. The stars are what the audience comes to see! The motion picture stars during the 1920s and 1930s turned the movie making business into an extremely large industry. Moguls began to mass-produce movies and it brought in an enormous amount of money. Movie stars were celebrities and they brought in millions of dollars....

Words: 1661 - Pages: 7

Premium Essay

Article Summary 2 Film Making Accounting

...Kezrin Asfar “The Business of Making” Movies Article Summary The article, “The Business of Making Movies”, written by Mark Young, James Gong and Wima Vanderstede, describes the economical sides of making movies today. It is extremely informative and very interesting especially from the standpoint of a student accountant who loves to enjoy movies as entertainment. It starts off by putting the industry in perspective and showing the reader how complex and important to our economy and culture the industry is. The movie making industry actually has a major influence on the United States Economy, at the very beginning the authors state the motion picture industry in the U.S. is ‘one of the country’s largest exporters and exerts cultural influence worldwide’. The industry is worldwide and very competitive. About 3,000 movies made it to theatres in 2006 in the U.S., but that is less than 1% of the entire amount of movies that made it film festivals alone. Predicting what movies are going to be successful is an extremely thorough process that does not allow many ideas or movies to ever make it. And even if they do make it, sometimes movie goers just don’t appeal to it as much. There seems to be a group of major studios that have control of the market and which movies get to make into theatres. I never knew that DreamWorks, the studio that made movies like Shrek, was actually a subsidiary company from the larger studio of Paramount Pictures. These major studios seem to ultimately...

Words: 718 - Pages: 3

Premium Essay

Dvd Rental Industry Los Angeles offering videos for rent at $10 a day with a $50 or $100 membership to raise capital[1]. Since that first home theater store George opened, there have been a plethora of mom and pop video rental stores that sprouted up. As video renting became more popular due to the availability of the VHS recorder and the DVD player, larger movie rental chains entered the market with better buying power and lower prices. These larger chains were able to offer rental movies at lower prices with a larger selection[2]. The technology revolution has changed the landscape of video renting. Using Porter’s Five Forces model, entrance into the video rental business will be examined. Technologies used to stream movies, download full length movies, renting movies from store front, and renting from kiosks are the available avenues for the budding entrepreneur. With new TV commercials glamorizing owning movie rental kiosks, Porter’s model will be used to examine the attractiveness of the kiosk movie rental business. Buying Power Buying power for the video rental market is quite high in general. Buyers have many options when renting videos. These buyers have the choice of downloading the movie instantly to their web connected PC or HDTV, driving to the...

Words: 1622 - Pages: 7

Premium Essay

Parks Url

...Section 003 Case: Netflix’s Business Model and Strategy in Renting Movies and TV Episodes 1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer. Substitutes: There is a strong force of substitutes. Consumers can buy DVDs at retail stores, rent movies via vending machine like Redbox, rent online, watch movies via TV packages and premium movie channels, pay-per-view movie rental, watch movies on the internet via youtube and, and consumers can obtain pirated DVD. Buyers: There is a strong force by the buyers, there are a lot of substitutes and companies have to fight with rivals for a competitive price and customer service. Pleasing the consumer is huge in this industry. Suppliers: There is a mediocre or low force by the supplier because there are a lot of different companies that offer the same goods. The DVD rental industry has a lot of substitutes with the same product just a different way of obtaining the movies. Potential for new entrants: The potential for new entrants is weaker because existing companies like Blockbuster are struggling to earn healthy profits. The convenience of movies online and through TV companies are over powering the in store business models that Blockbuster and Movie Gallery had. Rivalry: The force of Rivalry is very fierce because companies are coming out with new ways of obtaining movie rentals. The internet based companies are making it hard for other......

Words: 954 - Pages: 4

Free Essay

Analysis, Recommendations of Decrease in Box Office Hits in Film Industry

...Business Research Methods (2014) Decreasing number of box office hits per year in Telugu film industry (Tollywood) - analysis and recommendations Business Research Methods Submitted to Dr Arun Abraham Elias Victoria Management School Victoria University of Wellington New Zealand Submitted by M Rohit PGP/17/151 – Section C Indian Institute of Management, Kozhikode India M Rohit (PGP/17/151) Page 1 Business Research Methods (2014) Abstract This paper talks about the emergence of Telugu films and subsequent growth and development of Telugu film industry (Tollywood). Indian film industry on a whole is facing serious issue in the decrease in number of hits per year. An attempt has been made to study this trend in Tollywood. Entertainment industry is a major source of income in the Indian GDP. Hence this topic of research has been chosen. The industry has seen transformation from Puranas to mass folklore to technological breakthroughs in the form of colour films and many more innovations. Tollywood holds a special place in Indian film industry in terms of quality of films, number of films released, box office collections and cultural and political impacts on India. This paper approaches the industry with behaviour over time analysis and then identifies various stakeholders involved in this complex network. The paper gives a brief idea of the effects of various parties on the industry. An attempt has been made to address various issues relating to technology,...

Words: 4198 - Pages: 17

Premium Essay

Block Buster

...entertainment by providing outstanding service, selection, convenience and value.” Blockbuster is an American based chain of retail stores renting DVD, Blu Ray, and video games. They have over 9,000 locations in the US and 25 other countries worldwide. It is headquartered in the Renaissance Tower located in Dallas, Texas. The first store was opened in Dallas, Texas 1985 by David Cook. Cook had started a company called Cook Data Services Inc. in 1982 selling software to Texas’s oil and gas industries.[i] When the industry went flat Cook was searching for another source of revenue. His wife a movie fan suggested getting into the movie rental business. At the time rental stores were small, specialized, and inefficient. These stores were mainly family oriented stores that provided few former big hit movies. Cook recognized if they displayed the movies, provided a large former big hits selection, and set up a computerized system he could provide a higher...

Words: 13411 - Pages: 54

Premium Essay

The Importance Of Piracy In The Movie Industry

...of piracy. However, focusing to dispose unauthorized websites and copyright infringement will not tackle the issue. The movie industry should create new ventures that will attract consumers to find authorized provider of movies. To lessen piracy and avoid the unequal profit distribution, the industry should make a new business design underscoring admission to authorized online streaming sites in an inexpensive and timely manner. The first thing that hurts the economy is the use of unauthorized software and websites to upload and download different movies. This illegal site has taken the profitability of the industry especially in the field of movie production because of the free and illegal access they give to the consumers. It does not only bring pain to the economy, but it also carries liabilities that may be impose to the consumers. As what...

Words: 762 - Pages: 4

Premium Essay

How Industrial Forces Mainly Technological Changes Have Killed the Cinema Industry

...SCHOOL OF BUSINESS DEPARTMENT OF BUSINESS ADMINISTRATION DSM 601 Strategic Management MBA PROGRAMME MARCH 2011-03-17 ASSIGNMENT TWO; ‘HOW INDUSTRIAL FORCES MAINLY TECHNOLOGICAL CHANGES HAVE KILLED THE CINEMA INDUSTRY.’ PREPARED BY ANNE. N Introduction The cinema industry in is one of the biggest recipients of the negative impact of industrial changes. Currently the industry is literally falling. Opinions may differ on the exact cause of downfall of the industry. Cinema owners, contractors and spectators were unanimous in their view that, changing buyer life styles, cable network, complaints of obscenity, costly tickets, mobile, internet, computers, DVDs and dish antenna have together contributed to the decreased number of cine-goers in recent years Most cinema halls’ property has been bought or is hired by Pentecostal churches in the country which is now redeveloping the buildings as a worship centers’, others have been converted to shopping exhibitions for clothes and mobile phones. a) Technological changes The range of products that are available for consumers to buy is constantly changing. Consumers of only 40 years ago could not even dream of personal computers the internet, mobile phones, quality sound home theatres and even air conditioned cars just to mention but a few. By researching into and developing new products, some businessses have created huge new and profitable markets. Some......

Words: 1119 - Pages: 5

Free Essay

Netflix with Data Hbr Case Stud

...customers to offer them different services. The basic factor contributing to Netflix’s success is highly customized experience based on the strong data collection and analysis system. Thanks to it, Netflix first developed an advanced recommendation engine, making it possible to offer every customer the movies he or she most likely watches. This not only saves customer’s selection cost, making watching movies a more relaxed and convenient experience, but also helps Netflix maintain a good relationship with those movie creators because Netflix can bring some lesser-known movies and even some movies that won’t enter theaters to customers. Besides this, the system could also predict the demand, preference and taste of customers, thus helping managing inventory more effectively with less stocks. The second important factor is the better experience customers can have when they rent movies from Netflix rather than Blockbuster. Monthly subscription without due dates and late fees means more freedom and flexibility, online browse and selection means quantity and variety across genres, and receiving and returning movies via mail means comfort and time-saving. All this satisfy people’s desire for convenience and also love for movies, so it becomes appealing to customers and attract increasingly more subscribers. Of course, these are still some other factors, including less operation cost due to less warehouse and less stock requirement, more stable cash flow due...

Words: 803 - Pages: 4

Premium Essay

Netflix vs Blockbuster

...Introduction: Netflix: After selling his first company Pure Software Reed Hasting founded this completely new business. Hasting sensed the opportunity for online movie rentals business and founded the company Netflix in 1997. Netflix launched its online subscription service in 1999. Netflix was successful in acquiring about 2million customers in four years. Netflix found that a lot of new customers are attracted towards its online movie rental service because of the information provided by Netflix about each movie in Netflix’s rental library which included critic reviews, member reviews, online trailers and ratings, and the ease with which they could find and order movies; the elimination of late fees and due dates; and convenience of being provided the postage return envelope for mailing the DVD back to Netflix. The company ran a marvelous advertising and marketing campaign from 2001 to 2008.For this reason, company achieved a high level of consumer awareness of Netflix name, its logo, and its movie rental service. Netflix had 2007 revenues of $1.2 billion (up from $501 million in 2004) and its 100,000 movie titles (up from 55,000 in 2005).By July 2008 Netflix had 8.4 million subscribers. Block Buster: Blockbuster was founded in Dallas Texas in 1985. Blockbuster had followed an extensive growth strategy, and achieving a peak of 9,094 companies operated and franchised movie stores worldwide by the year-end 2004. Blockbuster had 3,291 international store locations at the...

Words: 2629 - Pages: 11

Premium Essay

Composing a Marketing Plan

...COMPOSING A MARKETING PLAN COMPONENTS OF A MARKETING PLAN Executive Summary Movie 24-7 is going to be a television channel that will broadcast Hollywood Movies of all categories including Action, Drama, and Comedy. We have chosen to be a Hollywood movie channel as there is the large market that we can cater because of the ever increasing interest and demand for English films among the youngsters. Movie 24-7 will play movies at the request of its viewers. It will be available on most cable and satellite providers at no additional cost to subscribers of Movie 24-7. We wanted to stick to a topic that would come to no one's mind quickly thus leading us to have a unique problem and this is how we decided on to launch new movie channel in Pakistan. The project will be focusing on the marketing strategies of the 24 – hour Movie Channel i.e. Movie 24-7. It will also be discussing strategies adopted by Movie 24-7 on entering the market of general entertainment space. Moreover, we will discuss the key aspects of the marketing plan and the environmental analysis. Along with this, the project will also talk about marketing and the marketing mix strategies adopted by Movie 24-7 and we will further suggest competitive strategies to remain in the same genre. 1. SYNOPSIS: Introduction: Today we live in a capitalist economy where each one of us is busy in our corporate worlds. Either you are a clerk, software engineer, businessman or CEO of a......

Words: 4949 - Pages: 20

Free Essay

Practices of Banking

...Bengali Cinema History Origin: The history of the cinema of Bangladesh dates back to 1898, when the Bradford Bioscope Company arranged the screening of a film at the Crown Theatre near Dhaka Harbour, which became the first film ever to be released in Bangladesh. Bangladesh started the journey of its own production in 1913, with "New Picture House" becoming the first theater to be built in present-day Bangladesh. On 28 December 1895 in Paris De Café, the Lumiere brothers started the first commercial bioscope show. After 6 months, the Lumiere Brothers started the screening of their films in Dhaka, becoming the first established bioscope of the subcontinent. The first ever films to be released in Bangladesh were The Jubli Michil, Greek-Turkey Battle, The Jump of Princess Diana, The Game of Snow and The French Underground Railway. Silent Era: The first Bengali silent film, Bless the World, was released on 8 November in 1919 under the direction of Jotish Banerjee from the French Madden Company. There were eighty theaters in Bangladesh during that time. In 1927-28, the Dhaka Royal family stepped forward and produced a short film named The Good Girl. After the success of The Good Girl, the Royal family went for a bigger venture. They set up the Dhaka East Bengal Cinematograph Society and produced a full-length silent movie titled The Last Kiss, the first Bangladeshi full-length silent film. Early Development: By 1947, there were around 80 cinemas in what is now......

Words: 1310 - Pages: 6

Free Essay

Acting Demand in Making a Movie

...Name: Instructor: Course: Acting Demands in the Making of a Movie Film production is an art that tries to reveal the realities of a given society at present, in the past or the anticipated future occurrences in a society or the whole universe. Besides entertainment, movies are made with the object of perpetuating a given theme. Actors’ choices and circumstances are the major tools for enhancing a given theme in a film (Gong, 27). Moreover, films are produced with an insightful and educative view to bringing to light past occurrences in a given situation or a society with different themes embedded. To build these themes in a film of a given genre, the actors are faced with numerous and varying demands that requires them to feature in multiple scenarios and faces numerous circumstances. This paper seeks to analyze the acting demands faced by the main actors in the movies: Spartacus and The Year of Living Dangerously. Spartacus is an epic film produced in 1960 by Edward Lewis with Stanley Kubrick as the director. The film was inspired by the heroic struggles of Spartacus a slave leader who led a widespread rebellion against the Romans in the quest for freedom for the slaves (Olivier, 1960). The film was based on Howard Fast’s novel of the same name incorporating events of the third servile war and the life story of Spartacus. The film went on to win four Academy Awards and has been ranked among the most successful film of the 20th century. However, the......

Words: 1762 - Pages: 8

Free Essay


...Netflix’s  Business  Model  and  Strategy  in  renting  Movies  and  TV  Episodes     Reed  Hastings,  founder  and  CEO,  launched  Netflix  as  an  online  rental  movie   service  in  1999.    Netflix  is  a  company  that  distributes  movies  and  television  by   streaming  online  and  mail  delivery.    There  are  eight  different  membership  options   to  choose  from  each  varying  in  number  of  DVDs  rented  out  at  a  time.    Netflix  also   offers  to  stream  movies  and  television  series  directly  from  their  website  to  different   devices  (i.e.  Pc,  Mac,  iPad,  iPhone,  Wii,  PS3).      The  over  all  goals  for  Netflix  are   simple:  to  build  the  world’s  best  Internet  movie  service  and  to  deliver  a  growing   subscriber  base  and  earning  per  share  every  year.             1. Identify  the  key  elements  of  Netflix’s  strategy.    What  competitive   advantages  is  Netflix  trying  to  achieve?       Key  Elements  of  Netflix  Strategy       ! Providing ......

Words: 3754 - Pages: 16

Premium Essay

External Environment Analysis for Redbox rental business via self service kiosks. Redbox is wholly owned subsidiary of Coinstar Inc. Laws and Regulations: There are some specific laws and regulations under which the movie rental business like Redbox should operate. But due to the growing popularity of renting videos through mail, online and kiosks, most of these laws will probably have to change or modified to fit the new way of people renting and watching movies. Age of Renters – This law for who can rent specific videos follow the same guidelines set by Motion Picture Association of America. These guidelines are based on their content, language, sexuality, violence and themes. Privacy Laws – This law protects the video rental records of individuals as the records can be damaging to a person’s reputation and they cannot be disclosed without written consent. Public exhibition – Videos and DVDs are not allowed to be publicly exhibited outsides of a persons home unless for non profit use or educational purposes without a license. Federal Copyright Act – This law governs how copyrighted materials can be used and distributed. The movie studios who own copyrights are the only parties who are authorized to license sites to display movies for protection of their intellectual properties. Antitrust laws – these laws promote or maintain market competition by regulating anti-competitive conduct by prohibiting agreements or practices that restrict free trade and competition between business. The......

Words: 1397 - Pages: 6