The Independent Moviemaker - Where Your Movie Ticket Dollar Goes

Many people have a fascination with the amount of money movies make. When Star Wars: the Phantom Menace was released, much the talk centered on whether it would overtake Titanic as the highest grossing film of all time. It didn't, by the way. Titanic's domestic gross is approximately $ 601 million. Phantom Menace grossed $431 million domestically. However, what many people don't know is what these numbers actually mean, and where this money comes from.

Some Basic Facts
The film industry is one of the few areas where America exports more than it imports. Movies rank second behind the aerospace industry as America's number one export.

Roughly 40% of a film's revenues come from foreign markets. Action movies, with their emphasis on visuals do the best overseas. Comedies do not fare nearly as well.

Domestic and Worldwide Gross
For a typical American film most of its money comes from domestic gross -- that is monies earned in North America. Although, this trend is shifting. Titanic's worldwide gross is 1.8 Billion, which means that it earned two-thirds of its revenue from foreign distribution.

Where Does Your Ticket Dollar Go?
Assuming a ticket price of $7.00, who gets how much of your money? Typically this number, the money split, varies depending on studio and the film. Most arrangements call for the film's distributor to receive a little more than half of a movie's gross receipts in the first few weeks of release. The exhibitor (theater) gets the remainder. If a movie remains in theaters for many weeks, the money split then leans toward the exhibitor. This arrangement partially explains why the studios push for such big openings - their cut is greater. This money that the studio makes is referred to as box office rentals.

Let's assume that the movie is a hit and the balance for splitting the money has equalized at 50/50. Out of your 7 dollar ticket, for a typical movie, approximately $3.50 goes to the distributor (typically a studio) and the remaining $3.50 goes to the theater. Out of this $3.50, a standard division of receipts is a 70/30 split between producer and distributor. While this sounds good for filmmakers on the surface, distributors collect their 30% off the top, then they take distributions expenses from the producer's remaining 70%. These expenses involve making release prints, advertising, guild residuals, etc.... So, out of your $7 movie ticket for a movie with no advertising (impossible) and no distribution fees (also impossible) the filmmakers receive $2.45 and the studios or distributor receives $1.05. Now here's where the accounting gets interesting. Take Batman for example, the highest grossing film Warner Brothers ever made (at the time of its release.) The movie was made for $35 million with a domestic total gross of $285 million, yet according to the Warner Brothers accounting department the film actually lost money to the tune of $20 million, by the time all the 'distribution expenses' were calculated. Even Hollywood insiders were shocked by those numbers. Forrest Gump was another film that somehow never seemed to turn a profit. Made for $55 million, with a domestic gross of almost $330 million, those good old distribution expenses just kept getting more expensive. It's a wonder the studios can stay in business then it costs that much just to release a film. But for the sake of argument, let's assume that you are dealing with an honest studio (no laughing) and the actual distribution expenses come to 75 percent of the producer's cut. Here's what we're looking at from your seven dollar movie ticket.

$3.50: exhibitor (theater chain)
$1.05: distributor (studio) + 75% of producer's cut ($1.84) = $2.89
Total: $6.39

This leaves $.61 of your seven dollars to go to those who made the film. And this is a generous number. Now let's assume that all the principals in the film received points - these are a percentage of the film's net receipts. High power stars and directors can negotiate for points based on gross receipts, but for this example we will deal with net points. We'll assume five points for each of the following principals: director, two stars, three producers, screenwriter, and DP. The remaining profits go to the film's two executive producers. This gives us a breakdown of $.03 for each principal or .24 for all of them. This leaves .37 for the film's two executive producers.

The Bottom Line
Out of your $7.00 movie ticket, you are paying the theater $3.50, the studio $2.89. Each of the stars is getting three cents, as is the director, producers, screenwriter and director of photography. Each executive producer is getting 17 cents of your money.

Of course every film is different, and the numbers can vary greatly from movie to movie. It is nice to know that you can get two hours of a major star's time for less than a nickel.