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.